Most broadly speaking, every successful startup goes through 5 stages of the business lifecycle: idea development, startup, growth and establishment, growth and expansion, and finally – maturity.
The road from the initial idea to the final stage is steep and thorny, which is why so many startups fail after just a few years. But the 20% that succeed and continue on to grow their revenue and market share show us what it takes to climb the top.
The final – maturity stage is reached when consistent revenue is earned year after year. At this point, you will not be as involved in day-to-day activities but will shift your focus on further development and steps that will follow to facilitate steady growth.
Those focused, ambitious, and determined who are near the last stage and can already see the light at the end of the tunnel cannot simply put their feet up and wait for the ship to sail into the harbor. Because there, new challenges await and you need to be prepared. You need to have a plan in place regarding how you intend to overcome them and set a strong foundation for future growth.
The most important questions you need to ask yourself:
Will you grow your product/service offer?
During the initial stages, startups are advised to maintain focus since the lack of it is one of the most common reasons for failure. Thus even if you have multiple ideas, branching out early causes you to scatter your limited resources and usually fail to achieve the results you were aiming for.
As you near the maturity stage, you get a chance to revisit some of the ideas that were pushed to the side. These can include anything: from installing additional features for the product you’ve created, building completely new products, advancing your service offering, and more. Regardless, you are now required to define your future steps, decide whether or not this additional work is manageable and whether it will be profitable.
Will you expand to other markets?
Startups tend to test the waters on a local, familiar market. It allows them to test the customer interest, gain feedback and tweak their offer without any greater initial investment. But once you near the maturity phase and receive positive reactions from the current audience, you can start thinking about expanding your reach – to neighboring countries or remote locations.
Here you’ll be faced with tough decisions, mainly related to maintaining optimal cash flow which is why you need to have a person in your team who has actionable financial intelligence. That person should be able to evaluate the overall state of the business and determine where improvements are necessary. Regular management reporting will come into play and provide you with information that will help you deal with matters like pricing, spending, employment, etc.
Will you grow your team?
Naturally, further expansion of your offer and reach means you’ll need a larger workforce to handle the workload. At this point, it is necessary for startup owners to think more about finding capable employees rather than directing all of their attention to growth and expansion.
So how can you find a dependable team that will aid you in achieving the new goals you set? The answer is far from simple and many businesses struggle to find the people who have the required skills and experience but will not charge you more than you can afford.
This is especially problematic if you’re running a tight-niched business: you won’t always be able to find talent in your vicinity and even if you do – due to their scarcity, they are likely to charge higher for their services.
In such cases, startups are advised to seek help overseas and look for qualified professionals in countries where the cost of services is lower. This trend is prevalent among startups who are on the hunt for talented IT engineers since offshoring IT practices enables them to get a team they can rely on and mitigate possible risks of experiencing excess financial losses.
Can you hold unsuccessful expansion and financial loss?
What is your plan of action if, despite all your efforts, you still start nearing the red instead of skyrocketing your profits?
To improve the cash flow, startups can choose one of the following paths:
- Invest profits back – instead of using the profit to pay less-than-urgent debts, to distribute investor dividends, or anything else, the money can be used to better your service offer, grow your offer, start the development of new ideas, or improve marketing strategies.
- Look for outside funding – Be it that you decide to sell equities to outside investors or you take a bank loan, the additional working capital will keep you firmly grounded. Still, this option is best to be left as the last resort so you wouldn’t risk borrowing what you cannot return or diluting your ownership stake.
Which cycle have you reached? How far along are you and is your startup about to reach its maturity? If so, do you think you’re ready for what awaits?
