As with all types of businesses, startups have lifecycles. Although there are several factors that influence the reach of the business, it is essential that the entrepreneur knows all the possible a startup phase.
There are 7 main a startup phase. Not all companies will go through all of these phase, nor in the order discussed in this article. For example, some will transition from startup stage to exit stage, while others will remain at the established stage.
What will determine the success or failure of a company is its ability to adapt to the changes of the Lifecycle. Thus, it is essential to understand in what phase your company finds itself in order to prevent certain common challenges and consequently make the right business decisions.
Seed stage
The idea is the beginning of a startup phase and requires multiple tests on their phase in order to ensure that this is achievable. Therefore, it is necessary to get advice and opinion on the potential of the business idea from as many sources as possible. Examples of these sources are family, friends, colleagues and industry experts.
Likewise, the success of the business will depend on the entrepreneur's capabilities, the availability of the market and the associated financial base.
The main difficulties in this phase they are market acceptance, finding a market segment where needs are not well explored, establishing a business structure, and determining the profitability of the idea.
as this phase there are still no clients or market, the obtaining of money must come from the entrepreneur, family and friends. The alternatives are suppliers or subsidies from the government or else Early rounds of investment.
Startup Stage
Once confirmed the potential of the business idea and the company legally established, it can be said that it is in the startup stage. in this phase, the product is ready and the first sales occur. It is important that this is adaptable to the feedbacks obtained by the first consumers and to the market's needs, always with the aim of developing the best version of this one.
Here, the focus is on establishing a customer base and market presence and conserving cash flow.
The main difficulties are the establishment of a secure customer base and monetary management. In addition, managing sales expectations and strengthening market presence are some resistance.
typical investment sources in this phase They are the same as in phase previous, namely the entrepreneur himself, family, friends and government subsidies.
Growth Stage
The business is consistently generating revenue and more and more new customers are appearing. As a result, current expenses become more and more attenuated and new business opportunities are opened.
At this point, competition starts to emerge. The main focus is on managing the company properly in order to deal with the increase in sales and customers, therefore, it is advisable to recruit new professionals.
The main difficulties in this phase it is in the correct division of resources in the new requirements: managing the rising levels of income, serving customers, dealing with competition and hiring new workers.
As sources of money at this stage are the banks, profits, partnerships and concessions.
Established Stage
The business has matured into a successful company and its presence in the industry is well established as well as having loyal customers. Sales continue to grow, but in a controlled way making business life a routine. in this phase, the business should focus on productivity and constant improvement.
The main difficulties in this phase is to continue to maintain the company's focus as the market is persistent and competition is increasing.
typical sources of money they are the banks, investors, the government and the profits made from the sales of the product.
Expansion Stage
This is one of the last a startup phase. Here, the business presents a high level of stability, the desire to broaden its horizons and enter new markets and distribution channels appears. Therefore, careful planning of this expansion should be done. The analysis of resources, effort, costs and possible returns must be considered, however, without neglecting the impact it will have on the current quality that the product guarantees to existing customers.
The focus will be on adding new products or services to the existing market or expanding the business into new markets and new types of customers.
The main difficulties in this phase they are the elaboration of a suitable plan to expand the business in a new market or develop a new product and deal with the increasing competition in the market.
Banks, new investors and partners are the financing source for businesses that are at this stage of their lifecycle.
Decline Stage
Changes in the economy, society, market can drastically reduce sales and consequently the profits of a company. It should seek out new business opportunities and ventures as well as reduce costs and find methods of sustaining the flow of money.
The main difficulty in this phase is to determine how long the business can support the negative cash flow.
Suppliers, customers and the entrepreneur himself are the sources where the business can get money in this difficult phase.
Exit Stage
At this time the company meets with steady profits resulting from good management of the phase above. Here, the entrepreneur has two choices: continue to expand the business or leave it, which is a great opportunity to profit from this hard work. On the other hand, it can also represent the closure of the business resulting from a bad experience in the market.
The difficulties encountered in these last a startup phase In the case of sale, it is important to determine a realistic and appropriate value of the business, always taking into account the current market value. In case of closure, it is necessary to deal with all the financial and psychological aspects of the people involved in this company.
It is advisable to consult financial advisors in order to define the best tax strategies for the sale or closure of the business.
In short, it is important to reinforce that understanding what the phase that your startup and which is phase that one intends to achieve, is essential for its success. Since investment plays a fundamental role in the success of a business, the entrepreneur must know the investment rounds existing as well as financing source possible.
However, it is also essential to understand that to achieve the much desired success it is necessary to have a lot of patience and dedication, since this path can take years to be achieved.
