Startup Growth Stages Every Entrepreneur Should Understand  

Startup Growth Stages Every Entrepreneur Should Understand  

Just like a human’s life cycle, all businesses also go through a certain life cycle that influences growth. There are four stages of a startup as they develop. Each stage requires a different timeline, method and strategy, as well as struggle. As a founder, knowing where you are in your startup journey can help manage your time and resources efficiently, thus driving success and profit. Without further ado, here are four main stages, and what you should focus and expect from each one.

See also: Comprehensive Guide to Build a Website for Your Startup 

Stage 1 – Problem and solution fit 

In this stage, startups are focused on validating whether they are solving a meaningful problem and whether anybody would hypothetically be interested in the solution. Many research and data gathering should be conducted to get an accurate result for the development of a startup. Stage one is also the time when the founding team is formed, team joining an accelerator or incubator, friends and family financing round, first mentors and advisors come on board. 

Generally, stage one needs 5 to 7 months in the process. 

Stage 2 – Product and market fit 

This stage is a place to achieve product or market fit as a necessary prerequisite to kicking into growth mode. Product/market fit means being in a good market with a good product. Testing, validation and determination of core features, driving initial growth, first paying customers, gathering product feedback and using it to build up a version customers will pay for and that can succeed in the market. 

Generally, stage two needs 3 – 5 months in the process.

Stage 3 – Repeatable and scalable business model 

Finding a repeatable and scalable business model means determining how to acquire customers at an acquisition cost, ideally 3x, lower than the lifetime value of the customer. In this stage, the founding team should focus on optimising user acquisition and conversion funnel, building a viral loop, retention strategy implemented, value proposition refined, user experience overhauled, finding repeatable and scalable user acquisition channels. 

This stage will take 5 – 6  months in the process. 

Stage 4 – Scaling 

This stage, also considered as the final stage of an early startup, is to step on the gas pedal and try to drive growth aggressively. Massive customer acquisition, back-end scalability improvements, series A round, and hiring are needed. It will need 7 to 9 months in the process until the startup is considered a growth startup that can compete among other successful businesses. 

Read also: 7 Elements of Best-Selling Product for Startups