The 3 stages of startup growth: An introductionDec 17, 2022
If you’ve been following this blog, you may have noticed a recurring trend. I tie the advice and recommendations I make here directly into one of the three stages of startup growth.
Although I’ve addressed them in passing within those blogs, the time feels right to provide a bigger picture look at the 3 stages of startup growth. That’s because understanding these stages, even at a high level, can help you pinpoint challenges, set goals and ultimately, break through barriers to help your business grow. Having an understanding of these stages and how they apply to your business can also help you better digest and use the information provided here on the blog and on my podcast, Hardwired for Growth.
Why are there 3 stages of startup growth?
Through working with many startups over the years, and studying many successful and unsuccessful startups while writing my book, it became startlingly clear to me that the challenges, goals and priorities facing startups really fall into three large buckets.
There’s also something extremely simple about three stages. I’m going to dig into a high-level overview in a minute, but by reviewing the three stages you should know immediately where you fall. When there’s debate and back and forth, it can make it difficult to identify a path and move forward.
Your introduction to the 3 stages of startup growth
At this stage of your startup journey, you’re officially “in business.” You have your first few customers, and have your sights set on acquiring more. You assume 100% of the responsibilities for your business, and your revenue is at or below $200k annually.
I dig into Stage 1 more in this introductory post, but in most cases, startups here struggle (and often fail) due to market fit. Perhaps their product isn’t the right fit, or maybe the market for their product is simply too small to sustain and grow the startup.
If you’ve made it to the foundational stage, first give yourself a hearty congratulations. Many startups don’t make it this far! Your startup is in this stage if you’ve grown to the point where you have a few hires or partners — your business is growing beyond just you. You’re backing away from day-to-day operations a bit, and your annual revenue falls somewhere between $200k and $2 million.
I probe further into Stage 2 in this post, but a common challenge here stems from FoundersCapacityTM — your business is growing, but you’re struggling to scale while preserving the quality of your product, service and/or customer experience.
Congratulations! If you’re in this stage, your business has successfully scaled. You’re adding new customers and new hires at a strong rate, and you’ve almost entirely removed yourself from day-to-day operations in order to focus on strategy and growth. Your revenue at this stage is typically at or above $2 million annually.
The challenge here is incredibly common, and can stem from a myriad of reasons. Growth stalls after a year over year growth. I dig into this challenge more in this post dedicated to Stage 3.
Where is your startup? What challenges are you facing?
For more on the 3 stages of startup growth, check out these posts on Stage 1, Stage 2 and Stage 3. For a go-to resource, be sure to download this piece as well.