The 3 Stages of Startup Growth: Stage 1

business differentiation growth growth journey Dec 17, 2022

In this post, I gave a high-level overview of the 3 stages of startup growth. Understanding these stages can help you identify and overcome struggles and barriers to growth that kill a majority of startups. 

If you’re here, you’re either in Stage 1 of startup growth. Or perhaps you’re hoping to take a side hustle to the next level, and want to plan and get ahead of challenges that may arise. Regardless of why you’re here, welcome! This post will go into a bit more detail to help you understand Stage 1, and what a startup in this stage may be facing. 

Key characteristics of Stage 1 Startups

If you’ve been working a 9 to 5 while trying to build up a side hustle, you know that it is a LOT of work. Giving 100% to your day job while trying to give another 100% to your side hustle is draining and hectic. But it’s also very rewarding. When you’ve gotten to the point where you can walk away from the 9 to 5 and focus solely on your side hustle, you are officially in Stage 1 for your startup. Congratulations!

At this stage, your startup…

> Has officially shed the “side hustle” moniker

> Has customers — You’ve got enough customers to pay the bills so you could walk away from your full-time job, but you have room (and desire) to grow

> Is ALL you — You are 100% of the business at this point, handling every task

> Generates revenue that is typically at or below $200k annually

You might think that after leaving your 9 to 5 to focus on your startup, you’ll be less busy. After all, you were previously working two full-time jobs (basically). Now you only have to focus on one. Right?!

Not quite! When you are the be-all, end-all of your business, it is definitely a slog. You will be working and focusing on a lot, but with the right priorities and focus, your determination and focus are much more likely to propel you into the next startup growth stage.

Priority focus areas for Stage 1 Startups

Okay, so you’re in Stage 1….now what? In addition to the hard work you deliver for your clients (and work getting new ones), you’ll want to focus energy and resources in the following areas:

Determining what type of company you’re building. Is your goal to build and maintain a solopreneur structure, or do you hope to build a full-fledged company? Identifying your goal early is critical to help you make the right decisions needed to facilitate proper growth.

Engaging DEEPLY with your customers and prospects. The information you gather at this point will help you refine and improve your product or service. Plus, customers love to be heard — they want to feel valued, and by showing genuine interest in them, you’ll accomplish that goal. 

Developing messaging and positioning. This is a critical step that can often be glossed over in the early days of startups. You must be able to define the problems you’re solving for your ideal customers, along with how you solve them. In addition, identify what makes you different — you’ll need proof points to illustrate this differentiator in your messaging. (And be sure to avoid terms like “#1” and “world’s best,” which are clear indicators a startup hasn’t done its homework when it comes to messaging and positioning.)

Validating that there is indeed a market fit and adequate market size to accommodate your business and your desired growth.  You can make a fantastic product or offer a phenomenal service, but if people don’t want it, your startup isn’t going to get out of Stage 1. And, if people are interested, but there aren’t enough of them to sustain growth (or even treading water), your startup may flame out pretty quickly. 

The key threshold for Stage 1 startups

Many startups who feel stuck at Stage 1 are often in that position due to market fit. They’ve either skipped the last recommendation above, they didn’t put in adequate research and effort, or they ignored their findings and pressed on. I’ve seen many startups get stuck at this point, and it can be worked through (although oftentimes, the startups fizzle out) with the right guidance and plan. 

What are the goals of your Stage 1 startup? 

Have you put time and energy into the priority focus areas above? Do you need help identifying the challenges that are holding you back? I can help. Shoot me a message through my website and let’s connect.