A startup is a newly opened business focused on addressing a problem in a unique way. Startups have a life cycle that includes a few stages. Entrepreneurs need to be patient and never skip any phase. The startup stages are discussed in the following:
1. Identify a problem:
Startups should be able to solve a problem in a unique way. Otherwise, they are condemned to failure. The goal should not be to solely make a profit but to add value by genuinely solving a problem. This stage is about talking to customers, identifying their needs, getting their feedback, and finding their pain points. In the end, the success of a business depends on the revenue it generates and higher profits are only possible by having satisfied loyal customers. This step requires to be validated by getting positive feedbacks from potential clients about an obvious problem. The feedback received from clients from this step can be used as a cornerstone used for generating ideas in the next stage of the startup life cycle.
2. Idea generation and brainstorming:
Feedbacks gathered from customers can be used as a basis for brainstorming ideas. These ideas provide a solution to customer problems in a unique way. It is crucial to search for competitors' solutions and define the additional value that you are bringing to your customer's life.
3. Test the fit between problem and solution:
Even after the validation step as a result of customer feedback, your original solution may fail at the initial stages. Entrepreneurs should have a flexible mindset and be ready to modify their solutions to better solve clients' problems over time. Only your solution is validated if a few customers have started using your products.
4. Create a Minimal Viable Product (MVP):
The purpose is to create a prototype product with minimal essential features based on the solution identified for the problem. Entrepreneurs should be minimalist at this step and believe in "less is more". You do not want to spend 6 months building a product and then realize nobody wants to use it. MVP is the best approach to minimize and avert financial risks.
5. Test the fit between product and market:
MVP provides a yardstick to measure the compatibility between your product and market needs by the feedback provided by customers. This step is validated only if you can acquire and retain your customers with the minimum cost of advertising. The greatest indicator of product/market fit is when your customers recommend your products to others. Additionally, the competitive advantage of your business should be completely laid out and pictured in this step.
6. Traction and Growth:
Traction is the most exciting phase of startups. It is when entrepreneurs start getting the result that solidifies their confidence and trust in their businesses. This step is basically the acceleration step. Focus on acquiring more customers, retain the previous clients, improve your marketing practices to increase the conversion rate, and constantly accumulate customer feedback, and improve your products.
7. Maturing and exit strategy:
The business is profitable at this stage and it's constantly growing. Mechanisms are in place to handle different aspects of the business. Every entrepreneur may start to think about selling his business or converting it to a public company. A few entrepreneurs may hire a new CEO or management team to free up their time.