90% of startups fail. The most common reasons include the absence of market demand, lack of funding and personal money, and a weak team. The good news is that you can still be one of the lucky 10% and start a successful business. All it takes is getting familiar with the startup development stages and following a specific plan.
While every startup is unique, most enterprises go through the same growth and development phases, called the startup lifecycle. In this article, we will discuss these stages and help you to start a successful business.
Phases Of A Startup – A Detailed Overview
At the moment, there are almost 31 million small businesses solely in the US. While some of them are relatively small and only barely generating profits, there are so-called unicorns that earn $1 billion. As of the beginning of 2020, there were more than 600 unicorns in the world.
Even though these companies occupy different niches, they have one thing in common: working on the idea, exploring market demand, and testing products. Below we will tell about 5 startup lifecycle stages that may help your business become a unicorn.
1. Idea Development
Everything starts with an idea. Maybe it is born from your own needs or is based on requests from your friends and relatives. Unfortunately, having a brilliant idea is not enough, and that is the reason for our first startup lifecycle strategy.
At this stage, you should ask yourself what specific problem the product will solve and whether the solution can efficiently fix this problem. It is called the problem/solution fit and ensures that the market will greet your startup. Here are the things to do at this stage:
- Ensure that your product meets the requirements of the problem/solution hypothesis.
- Draw a picture of your target audience.
- Talk to people who might become your potential customers. Ask what they do to solve the problem and what they think about your solution.
- Make a list of their so-called pain points.
- Test the demand by creating landing pages.
- Start making lists for the future MVP.
2. MVP Creation
Working on the MVP model is the second stage of the tech startup lifecycle. Minimum Viable Product or MVP is a basic version of the product that is enough to satisfy the needs of first customers and give future development feedback. MVP helps to reduce costs and minimize risks. With a prototype, you won’t have to use tons of time and resources to learn what people think about your startup.
Depending on the industry and niche, this stage may take a different amount of money, time, and specialists. For example, if you start a resource-heavy business, it is important to begin searching for funding from the very beginning. Whether on crowdfunding platforms or among friends and relatives.
At this stage, you need to continue working on the prototype and testing the MVP with the target audience until you have a working product. It doesn’t have to be perfect. You just need to prove that the idea is worth investments and time. Here are the best instruments to test your minimum viable product and to check the startup’s purpose:
- Personal interviews. You can ask first customers what problems they had with the product, what things could be improved, and whether the MVP made a positive impression.
- A/B testing. This research instrument introduces users to two variants and asks which one they like more. The A/B testing may concern the design, usability, and other features.
- Landing pages. These are web pages that contain information about the product or service, are usually linked to social media accounts, and aim to introduce clients to your brand and increase conversion. Landing pages are commonly used for lead generation.
- Fundraising. Voting for the product with money is a great way to determine whether customers are ready to pay for what you offer.
- Advertising campaigns. They involve promotion via the Internet, television, and print and allow attracting the target audience to the product.
3. Launching The Rroduct
It is one of the most responsible stages of startup development because it shows whether the market is ready to accept your product. Once all features work correctly, it is the right time to enter the market.
Achieving a good product/market fit, i.e., meeting the customers’ demands, is an ongoing process because the goals always change. This phase includes constant research and testing. To create a demanded solution, you should communicate with the customers and be attentive to their pain points. The product/market fit is evaluated by customer retention, so constantly ask customers whether they will return to the product and if they are planning to recommend it to others.
4. Startup Scalability
Business scaling means the continuous growth of the company, its revenues, and its capacities. You can enter this phase once you have a viable product and loyal customers. Here you should focus on the product’s strengths and understand how to empower them. The best scaling tool is to hire specialists to boost productivity and help you reach new markets.
One of the biggest mistakes of this stage is relaxing and waiting for the revenues to come. Remember, business development is an on-going process that involves resources and time. Fortunately, with the right team and professional software scaling a business becomes much simpler.
When the business is adult, the profits decrease while the cash flow remains relatively stable. This stage is called maturity and can be considered the last one in the startup lifecycle. However, some companies don’t stop there and expand their businesses by reinventing themselves and investing in new markets and technologies.
Finding new channels helps to ensure growth and increase profits. To build new versions of the product, you should return to the first stage of researching and planning—however, you need to remember about existing capabilities and data at this time.
Businesses can choose one of two options: to add new products to existing markets or enter new markets with an existing product. At this stage, funding sources may include banks, joint ventures, and governments.
The secret to becoming a thriving business lies in understanding its worth and overcoming all the difficulties that you may face along the way. The best way to achieve that is to be familiar with every startup cycle and prepare in advance. If you know which direction to go and have a skilled team, the chances of launching a viable and successful business increase significantly.
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