Stages of a Startup

Different Stages of a Startup

As an entrepreneur, you must know the different stages of a startup. Once you know the stages, you can plan everything better about your Startup for the future.

Following are the Stages of a Startup-

Stage 1- Pre-Startup Phase or Pre-Seed Stage – (Ideation, Idea validation and Business Formation)

It is the first stage of the Startup. It is the ideation stage. In this stage, you find out a problem you want to solve.

You validate your Startup idea. You form the company legally and acquire the necessary licenses. You also build a core team and are ready to work.

In this stage, you have an unclear business model and make a constant investment in your startup.

Stage 2- Early Stage-

You convert your idea into a Minimum Viable Product or MVP in this stage. You sell your MVP and improve that constantly as per the early customers’ feedback. And based on the feedback and market requirements, you come up with a full feature product and launch it into the market.

I call this the struggle stage also. Unfortunately, most of the startups end up in this stage only. They never reach the next stage. To avoid this, you should focus on creating a workable business model, and your focus should be on building the right product for the right people.

Stage 3- Growth Stage

In this stage, your Startup is already built and stable. You have a workable business model and generate considerable revenue to grow the Startup. Your focus is on its growth. You do all necessary activities to increase the number of customers to make more revenue & profits.

Most startups remain stuck in this stage and struggle to move further.

It is when the Startup must concentrate on expanding its business and increasing profitability and the number of clients. It would be best to focus on sales & marketing; however, don’t overlook the importance of consistently developing the product to adapt to the Startup’s growth. You should start building a team to support you in growth. You must hire more people and build the departments as your Startup grows.

Stage 4- Expansion Stage

It is the stage where your Startup is well established, generating enough revenue and making some profit.

It is when you can plan to expand the business into new markets and segments.

This phase requires more financial support. If not done so far, it is time to approach the investors to raise funds. You may also use your own funds if available.

In this stage, you should bring professional managers and leaders to your team to reduce your involvement in the business. Never try to expand your business if you are not ready enough. In one of the last chapters of this book, I have explained how to scale a business properly.

Stage 5- IPO or Exit Stage-

After a startup’s long and arduous path, the approach (or not) of the sale (exit) may come. Either you may sell the startup or can scale it to such a level where you can list it for IPO.

My Advice- Here, I would highly recommend that as an entrepreneur, you should never build a business with an intention to sell or to be acquired by someone. Selling or acquisition will happen if everything goes right and it’s a by-product. So I would ask you to focus on the growth and scalability of the startup and take it to the IPO.

So, these are the typical stages of a startup, and it is of utmost necessity that you should be aware of these stages to plan better for your startup future

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