Stages of A Startup: From the Idea to The Final Product
In the last articles we were talking about keys to evaluate your business idea and the best ways to get funding for your project. But do you know what the stages of a startup are? Here we share with you the life cycles of these companies.
In these stages, there are a variety of divisions and therefore there is no established consensus about it. Here is one that can bring together the main steps through which a startup moves.
- Seed Stage
- Early Stage
- Growth Stage
- Expansion Stage
It’s the initial stage of a project, it’s the business idea and the development of a product or service. It is the first step, where normally the team is very small and where the first draft is assembled. In this beginning there is not yet a 100% defined business plan.
Working at this stage with the help of mentors and professionals could help you get your startup on the right track.
At this stage funding is not an obstacle, because there are no big needs to complete it. It usually starts with input from the founders, family or friends. There are also business angels, who are willing to make their small contribution.
This is where the startup begins to grow, there’s already a product on the market that customers are starting to buy. Even though the growth is very incipient, there are starting to be advances. At this stage it is likely that new people will join the staff to respond to these new challenges.
Developing a product based on feedback is vital for the startup. Detecting which are the most important characteristics or functionalities is one of the most important tasks in this phase, as well as establishing the first relationships or commercial agreements for the future.
On the other hand, when the first benefits arrive, the business model arrives. At this point you will need a financial boost, which usually comes from funds and investors specialized in this phase of the company’s life cycle.
It’s time to grow up. In this stage the startup is already built, established, more or less consolidated and with some stable benefits. This is where the product or service begins to make improvements and become more competitive.
Here is where the startup must focus on its growth and increase both profits and the number of customers. But don’t forget the part of continuously improving the product to be able to adapt to the growth of the startup. This is usually the stage where more staff are hired.
On the other hand, external financing is important, but the company’s own cash flow solves many of the day-to-day needs, so the cost structure has to be controlled.
Once the company is consolidated, it is time to take the leap: open up to new markets and segments. It is a very delicate moment, at this stage there has to be a very clear and measured strategy. The risk of error is higher.
This phase requires even greater financial support. It can be through investment, with the company’s own funds. In addition, reaching agreements with large companies already established in the different countries or in the different sectors to be reached may be an easier way of carrying out this process.
After the long and arduous path of a startup, there may come the approach (or not) of the sale (exit).
We can not only talk about a company that sees in it an opportunity (it can be a merger or keeping both brands and firms in an independent way in the market). There are also the IPO (Public Offer of Sale), that is, the entry to be listed on the stock exchange.
This is the life cycle of startups. These are moments you will have to go through and you will have to adapt at every step.
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