No startup wants to stay a startup forever. However the road to success is long and dangerous one, so many startups fall along the way.
For every success like Grab or ByteDance, we’re looking at ten thousand failures. From not understanding your market well enough or running out of money halfway through, there are many pitfalls awaiting founders.
Every startup is driven by the market, the market has an unsolved problem or an opportunity gap which your idea can fulfill and make decent money in the process.
But identifying the correct market and problem is not easy. If you end up making a solution for a problem which nobody has or is insignificant, you risk losing all your effort and resources into failure.
There are a lot of roadblocks on the path to success, and one needs to have everything in place to get things off the ground. So, let’s get started and understand the transformation of a business from the startup phase into the successful phase in detail.
Phase 1: Development and ideation
The very first stage of any startup is the development of an idea. It is the genesis of something great or another one for the startup graveyard. To improve your chances of success, this is where you get market validation and feedback from people in the industry.
Some things that you should consider before validating your idea is to look at the following:
- Is market ready for my idea?
- Is this idea filling a gap in the market?
- How much would it cost to get off the ground?
- Will this idea make money?
Phase 2: Starting
Not many people realise that being a startup is actual a single phase in your business life cycle. Unfortunately, it is also considered to be one of the most stressful phases. This is where you build and test out your idea in real life with real customers.
It is also a crucial phase of your business, as mistakes made at this stage may leave an effect on the company even in the later stages of the business. Some of the major challenges faced by business owners at this stage include:
- Raising money
- Selling unproven solutions
- Hiring
- Management of your finances
Phase 3: Establishing your business
Post-startup phase is the first step towards an established and successful business. This usually means you have established sustainable cash flow and ironed out most of the kinks in your business model.
The challenges are now different and include the following:
- Managing time for operations and customer service
- Adopting new strategies for client acquisition
- Dealing with the competition
- Maintaining employee morale
Phase 4: Growth and scale
You’re almost there folks.
This is the stage where your business is growing at a steady pace and is ready to reach real scale. Every stage brings with it extra challenges and issues, but this is something that can be managed. Some challenges you can face at this stage include:
- Scaling your team to match revenue
- More money, more problems – dealing with increased cash flow
- Increased competition
- Operations issues
Phase 5: Maturation
This is the final stage of a business life cycle and you now have an established and successful business.
However, now that you’re a big fish in a big or small pond, this means you’re now a target from competitors and others. You will now face even more challenges and questions that include:
- Does the business have the potential to sustain further growth?
- What is the exit plan?
- Can growth be sustained?
- Where can you go next?
Dealing with challenges
Looking at the same CB Insights research, problems often stem from cash for small business. They suggest the following solutions:
- Focus on a sales and profits strategy to bring in more cash flow revenue
- Technology can help automate your invoicing and ensure better backend processes
- Extend the date of accounts payable as long as possible to maintain a positive cash flow
- Negotiate with vendors or partners to save money and reduce unnecessary expenses