The 6 Growth Stages of a Startup: Where are You?

The 6 Growth Stages of a Startup: Where are You?
The 6 Growth Stages of a Startup: Where are You?

When pitching, you may have noticed that potential investors want to know what problems you are solving, backgrounds of the founders and other information. However, the basic question has always been, “At what stage is your startup?” This important question allows investors understand your progress and how they should be thinking about the reward/risk matrix during evaluation.

Understanding the 6 stages of startup growth will help you gauge your own progress as well as set your sights on the next critical milestones. No startup is an overnight success, you should practice realistic evaluation, perseverance, and patience at all times. The stages laid out below work well for both B2B and B2C startup companies.

Stage 1: Quit Your Job

Is your idea good enough that you will quit your job or have someone quite their job to join you? If you are approaching potential investors and still working a full time job or you will “quit once you’ve raised money,” chances are high that the interview will end before it starts. As the founder, you have to be passionate about your idea that you would be willing to work at building it to success, full-time.

Stage 2: Build Your Product

With today’s Amazon servers on the fly infrastructure , APIs and open source code, it is much easier to build a minimum viable product. Actually, no institutional investor would be willing to meet you if you do not have a working product – one of the most critical steps after building your team. This important stage demonstrates the difference between an idea and an actual working product.

Stage 3: Product and Customer Testing

This important phase means more than most entrepreneurs think; it means that you have to get actual clients to try out your product. You can call in favours, call your friends or pay someone to try the product, if you have to. At this stage, you get to learn about deficiencies in your product, important features and receive feedback from the real world – and someone who is not on your development or business team.

During this stage, many founders will give away their products for these valuable lessons. It also helps in reducing pressure in case the product fails to work as expected.

Stage 4: Demonstrating Efficacy

At this stage, you are required to be in constant touch with your trial customer base. It is rare for a product to take off on the first release, so you should be willing to have different options that run for a period of about 3 months so you are able to optimize. Your primary goal should be gathering data that you will then use to create case studies as opposed to concentrating on monetization.

Stage 5: Enter the Paying Customer

This is one of the most critical, yet difficult milestones for a young startup to reach. This is the stage where your product MIGHT actually fit a certain market niche. It is also one of the most incredibly difficult stages to get to because you are asking your best customer to stake their reputation for you.

Stage 6: Growing Your Business

Once you have acquired your first customer, how do you repeat the same customer acquisition strategy to get other paying customers? After developing your recurring business model, you are already on the path to creating a successful entrepreneurship. At this last stage, you already have a product that fills a certain market void (for example, the service at targets a specific client) and you can start focusing on opportunities where you can get customers at a lower than lifetime value of the customer.