Week 31: Startup Cycles

I had some interesting chats with people this week. Some were not feeling so great about the financial health of their business. Then I had to remind them to recheck where they were in the cycle.

Remember that being an entrepreneur isn’t easy. You’re juggling a few things. Finding opportunities. Securing resources. Oh, and building the infrastructure of the operation. All of that is in a constant state of change during all cycles of the financial aspects of the business.

Development Stage – This is of course when we’re trying to figure out what the hell our business is actually going to be. What are the products and services that we’re going to bring to the market? This can be anywhere from the same day of our idea to 18 months before we actually start. One of my favorite stories on this stage was when I got the idea to start a tutoring company. I was sitting in a coffee shop at La Cienega and Wilshire Boulevard when the idea popped into my head. I posted an ad for math tutoring on Craigslist. One hour later, I got my first order from a mom with three kids.

That would later turn into a tutoring company where I’d end up tutoring the grandson of the Saudi Crown Prince. There was zero business plan on that one.

Startup Stage – This is that fun stage the first six months. There’s a lot of excitement. It’s fun. We might even have a few customers. Hopefully, we can see the opportunities that can be turned into value for future investors. Then at about six-months and one-day reality sets in and we move into the next stage.

Survival Stage – This typically is from that mark to eighteen months into the venture. It’s normal to freak out during this phase. Yet, it is important to remember all businesses go through this phase. When we’re in this phase it can be extremely painful. Especially, if we personalize the ups and downs. Guess what? The phase does end. It either ends in the death of the business or a transformation into a financially successful one. 

If a business survives then it will experience to other phases that are worth exploring a bit.

Rapid-Growth – After the pain, the rapid growth happens. Now, here’s the challenge for ventures that jump from startup to rapid growth and have a shortened survival stage. The pain of getting through the survival stage helps to allow us to celebrate the rapid-growth phase. This is also where founders will tend to have a challenge because they may not be able to internalize the success. Or, they may begin to believe the success is from them and not their customers and teams. This usually takes place from that eighteen-month mark up to year four.

Early-Maturity Stage –  This materializes around years four-and-a-half to the sixth year. 

Are you aware of your stage? If not, please find it. Most likely you’ll find that many of your struggles and challenges are normal. It will help you to move through them.

Got a question email  roger@ygetarts.com

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