Most business owners will agree that starting a company is not easy. Even in booming entrepreneurial markets, bringing together all the various elements that make a startup viable is a daunting task. To best prepare yourself and your business for success, you will need to know the different stages that all startups go through. From pre-planning to owning a fully-fledged enterprise, these crucial phases help form and reshape your overall business goals and strategies. As such, you should know how to properly navigate your startup through them if you want to create the next flourishing company.
Here are four of the most important stages in a startup’s lifecycle and some advice on how to handle them:
Developing an idea
All great companies begin with an idea. Some business concepts will be more viable than others, so it is crucial that you determine the potential of your idea by asking yourself several questions: Does my idea have good value? Will consumers in my target market see this value and pay to take part in my services and products? Only by finding the answers to these questions can you truly begin the work that will catapult your startup into reality.
For extra help evaluating your idea, it’s a good idea to seek the counsel of outside sources. You can start by pitching your idea to close friends and co-workers, but you should also engage with professionals in your intended industry if possible. The more input you can get to solidify your ideas, the better.
The idea-development phase is often the most trying and emotional of all startup phases, because the weight of doubt, rejection, and stress can easily lead to discouragement. As such, it is crucial that you look within yourself and determine whether you possess the skills and drive that it will take to bring your idea to fruition.
Searching for funding
After making it through the tricky idea-development phase, you will need to acquire funding to get your ideas off of the ground. Of course, not all entrepreneurs have the necessary seed money already waiting in their bank accounts, so you will most likely need to enlist the help of others.
You can start by approaching family and friends who have a more personal interest in your success. To thank them for their investments, you can award them business shares prior to your initial public offering (IPO). However, there are countless other avenues that you can pursue if your early-stage startup is strapped for cash.
Small business loans are one funding tool that entrepreneurs often use. However, you can also turn to such entities as venture capital firms or angel investors who are looking to take part in a budding business. If your business pitch does not go over well with these sources, then you can turn to a more recent addition to the entrepreneur’s funding toolkit: crowdfunding. This method of generating capital can not only help you reach your financial target, but it can also spawn an excited customer base before you even release your product.
With your much-needed seed funding and well-developed ideas in place, you can finally focus your attention on launching your startup. As you navigate through this stage, you will need to make a number of decisions, including how much of your life you should devote to your new company. Some entrepreneurs choose to leave their careers to devote all their time to their business, whereas others manage the responsibility of launching a startup on top of a full workload. You must also carefully select your team, which may initially include a few engineers, co-founders, and other supporting staff members. Whomever you choose must be ready to commit to the company and experienced enough to help turn your ideas into a business.
Upon launching your startup, you must lay a lot of groundwork. In addition to honing your product, you must allot time to budgeting and process development, if you want to prepare your business for the long haul. Your planning and decision-making at this stage have an enormous impact on your business. In fact, poor design is one of the most common reasons that startups fail within the first five years. Because of this, the initial period after launch is widely regarded as the trickiest stage of a startup’s life cycle.
To successfully move your startup through this phase, you need to be able to adapt. As you and your team find your footing in the marketplace, you may need to make changes to your product based on consumer reaction. If you are able to overcome these obstacles, organize well, and keep a level head, then your company will soon move into the final startup phase.
Maturing and growing
Once you have proven the viability of your startup and reached your initial target number of dedicated consumers or users, your company will be ready to move into the growth phase. During this stage, you will notice your revenue becoming steadier due to your ever-growing customer base.
Even with this success, you will need to initiate a new round of business development initiatives to help your startup’s profitability increase even further. One of the most important things you can do is to re-evaluate your hiring process. Your startup’s ongoing growth will depend on the cohesion and diversity of your team. At this point, you might also consider taking your company through an IPO or even expanding to new locations.