Stages of a Startup or Small Business
Starting a business can be intimidating, but breaking the process down into distinct stages can make the endeavor more approachable. Investors usually filter companies into 4 key stages of business development: Ideation, Venture, Scale, and Growth.
In the Ideation Stage, founders investigate whether their idea can succeed by refining the business plan. This phase requires the least amount of resources but is arguably the most critical. The intent of ideation is to hone your business idea through market research. This is where most businesses fail, as the time and energy required to sharpen an idea filters out the “doers” from the “dreamers.”
The Venture Stage is the first execution stage and is often called seed stage, early-stage, or pre-series A. In this phase, about one out of ten companies succeed while the rest fail or barely scrape by. The intent of the Venture Stage is to launch the company, perfect the product-market fit, and develop a scalable sales process. For small and medium businesses, success in this stage will likely lead to the end of development, as their customer base and repeatable sales process yield sufficient profits. Businesses that plan to expand, however, will move onto the next 2 stages: Scale and Growth.
In the Scale Stage, often called Series A, companies either see rapid expansion, slow growth, or burn through their capital and die. The intent of this stage is to scale the repeatable sales process for rapid growth by investing in infrastructure and expanding teams. More precisely, the tools and infrastructure you invest in will allow your sales team to handle more sales, your customer support team to handle more requests, and so on.
The Growth Stage is the final stage and is commonly known as Series B or Series C. This perpetual phase ends in a company becoming a titan of industry, plateauing, or failing to reach the necessary size and dying. The intent of the Growth Stage is to grab as much market share as possible through the scaled, repeatable sales process. To keep up with dynamic industry environments, companies will likely require slight adaptations to their processes and infrastructure. Due to the large size of companies in this stage, however, significant changes can be difficult to implement.
We hope this breakdown of development stages lessens the intimidation of pursuing your business idea!
Check out our next post on the Key People and Teams of a Startup
“The critical ingredient is getting off your butt and doing something. It’s as simple as that. A lot of people have ideas, but there are few who decide to do something about them now. Not tomorrow. Not next week. But today. The true entrepreneur is a doer, not a dreamer.” – Nolan Bushnell, Entrepreneur
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- This Week in Startups, Episode 869, https://www.youtube.com/watch?v=B0seWrrz3Dg
- Angular Ventures, “There are Only Three Stages for Startups”, https://medium.com/angularventures/there-are-only-three-stages-for-startups-b8783d6b0f1