The “life” of a business is very much like that of any living creature. With a business, just as in life, there is a logical order of events in which certain things happen. This is usually called a lifecycle. A lifecycle is especially present in startup ventures. These states mark the path from a single idea to business startup, launch, growth and eventually, success or failure. Understanding what happens during the startup lifecycle will help entrepreneurs with planning their business strategy. It can also help them prepare for each stage of developing and growing their business venture. Take a look at the startup lifecycle.
Every new business begins with an idea. Every one of the world’s largest corporations began as nothing more than a tiny kernel of an idea, nurtured until reaching fruition and ultimately, finding sustainable success. The Ford Motor Company was at one point, nothing more than a spark in Henry Ford’s mind. Apple, Google, Starbucks, Microsoft, Nike and and countless others, all grew from what started as a fleeting thought that flourished and bloomed. The Idea Stage of a startup is where you begin to construct your concept and create your business model. A good question to ask during this stage is, “What problem can my product or service solve?” The idea stage is also the research stage. This is where founders come up with their value proposition and take the initial steps that may lead to the launch of a strong, sustainable business.
During this stage, founders must see if their product or service has a chance on the market. Several important milestones happen during this stage. At this stage, it is essential that you explore your startup concept from every angle and with a critical eye. Make a mistake and your startup idea could implode before it even gets off the ground. Or worse, you could invest significant amounts of time, money and other resources into launching the business only to have it ultimately fail, all because the business model was not properly validated. Some of the key questions entrepreneurs ask during the validation stage include:
- How big is the market for my product, service or technology?
- Will the technology or product function as expected?
- Is my concept unique enough to stand out from the competition?
- Is my value proposition strong enough to motivate potential customers to buy?
- Is the problem my startup solves, important enough that people care?
- Does my startup idea create sufficient barriers to prevent or slow other entrants to the space?
- Are my projections sound, reasonable and based on solid assumptions?
- Have I tested my product, service or technology with a sufficient number of potential customers?
The list of key questions at the validation stage goes on and on and can at times, seem never-ending. Unfortunately, far too many entrepreneurs do not spend enough time validating their product, service, technology and business model. And because they do not, more often than not, they pay the price and often fail.
After Validation, the Development Stage is where the critical magic happens. Companies improve their business models and tweak their value proposition. During the Development Stage, entrepreneurs assemble all of the resources they need to launch and grow the business. Management teams are assembled, business and marketing plans are finalized and the startup actually begins to take shape. This is also the stage during which entrepreneurs typically raise the capital they need to launch the business. This often includes pitching the startup concept to potential investors.
Once the resources are assembled and the startup becomes an actual operating company, it is time for launch and to formally introduce the company to the world. The Launch Stage is where the company is actually ‘born.” This is the stage to shine.
Growing your business during this stage is about growing your team and customer base. The Growth Stage is a time to refine your business concept and refine your value proposition. Just some of the key questions entrepreneurs ask during the Growth Stage include:
- What are my growth goals?
- What steps need to be taken to achieve those goals?
- How can my company stay ahead of the competition?
- What are the growth avenues for my company, its products, services or technologies?
- How can I keep my company relevant and front of mind among my target customers?
- What are my untapped markets?
Growing a startup is always a challenge. Inevitably, mistakes are made and opportunities are lost. Many startups never survive the Growth Stage so traits such as tenacity, resourcefulness and a certain degree of humility are critical to success. Care must also be taken so the startup grows at the ideal pace. Grow to fast and a host of problems can arise. Common issues with growing too fast include eroding customer service and loss of connection with customers, insufficient organizational infrastructure, cash flow crises, leadership failures and more.
The Maturity Stage is where the startup has become established and has finally reached demonstrated levels success. Customers know you for a trustworthy company with great products and services and people refer your company to others. While the Maturity Stage can be mean success, it is also represents a perilous danger zone. A company that becomes complacent in Maturity will lose market share to competitors and be left behind. The challenge of the Maturity Stage is to continually find ways to stay relevant and ahead of the competition.
This is the stage that most entrepreneurs hope to avoid. The Decline Stage happens if you fail to beat your competitors and fall behind on marketing strategies. The most common signs of this stage include persistent slowing or declining sales and revenues, Some entrepreneurs are able to reverse their fortunes and stage a comeback from the Decline Stage but few are able to pull it off in a sustainable manner.
The lifecycle of a startup can take years or months. There is no rule of thumb as to how long a startup lifecycle lasts. Each lifecycle is as unique as the company it represents. Being aware of these stages can help you to develop a roadmap for your startup to successfully navigate each stage and to thrive.