4 Stages of a Business
Continuing with the theme of helping any new business owners or big dreamers who are planning to start a new business this year, I wanted to clear up the vocabulary that is often used when defining what stage your idea/business is in.
Typically you will hear things like Seed, Series A, Series B, pre-seed, etc. It is not that these words/titles are insignificant or that they do not carry meaning, but as a founder or someone thinking about jumping in, these things only serve to cloud your understanding of what you should be focused on. To simplify things, you are only concerned with the 4 stages of a business.
I like to call these stages Ideation, Venture, Scale, and Growth.
The Ideation stage is the initial stage that kicks everything off. This stage is the least expensive in terms of money but is arguably the most important stage. Your goal is to do as much market testing as you can do, in order to verify and hone your business idea. This is where most businesses die, as your first version of it will usually not be the best version, and the time and energy needed hone and verify usually filters out those who are big dreamers but not big doers.
The Venture stage is the first execution stage, usually given titles like seed, early-stage, or pre-series A. For those that make it to this stage, its time to put your money where your mouth is. In this stage only 1 and 10 companies usually make it out, the rest either die or become “zombie companies”. The goal here is to prove through traction, that you are ready and can scale. The things you are proving are product creation, deploying a product(s) with early customers, demonstrating product/market fit, proving out the sales dynamics that will support efficient growth, and making sure that you have a solid team that is ready to execute.
The Scale stage is a transition stage and usually goes by the name of Series A and sometimes given prefixes like post series A or pre-series A. Once here, companies either become lifestyle business through slow growth (not a bad thing), see rapid expansion, or they burn through their capital and die. The goal here is to take the processes and strategies you have created in the Venture stage and figure out how to scale them. The things being done in this stage are usually the deciding and implementing of infrastructure and hiring the team needed to scale your business to support rapid growth.
The Growth Stage is the final stage a company gets to and is usually called things like Series B, Series C, etc. This is a perpetual stage that usually ends in a company turning into a unicorn (becoming a titan of industry), plateauing by surviving, or not hitting the size needed and dying. The goal here is to take the systems and processes that are now ready to scale and expand them to grab as much market share as you can. This stage usually has your company executing your processes and utilizing the systems in pace over and over like a flywheel trying to take market share. There is usually only slight changes made to these processes and systems at this point for honing and adapting, but these things and your company are usually at a size or scale that makes it hard for you to make any large changes without disruption to the day-to-day activities.
I hope this simplification and summary of the stages of business decrease the intimidation of starting or continuing forward with your business/idea this year!
If you have any questions or feedback, feel free to reach out!
“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
Sources: Personal Experience/Knowledge, This Week in Startups, https://medium.com/angularventures/there-are-only-three-stages-for-startups-b8783d6b0f1
