“It’s important for young entrepreneurs to be adequately self-aware to know what they do not know” - Mark Zuckerberg
Every startup dreams about the day they hit the $1 million revenue per year milestone. Alas, less than 5% reach that craved goal. Among those that hit it, few succeed in keeping the focus and fewer are able to fully realize where they stand in their business.
That’s to say what stage of the business they are in, what their major setbacks are, and what to do in order to grow.
Understanding these three factors will grant confidence and help decide what the priorities are and how to move forward.
Marketing Software company Yazamo Co Founder Jeremy Ellens has identified five stages startups go through before they reach their first million bucks.
Finding a Product That Can Satisfy The Market
At this point the startup is easily distracted by the various opportunities to make money. Of course there are so many, but keeping the focus on the market at this point can be a little difficult. It’s important to focus on your plan, however, and be authentic about where the company stands - it’s good for yourself and to others.
In fact, at this point it is worth it to do some free work and give good discounts in order to create case studies. Also “don’t be shy to ask family and friends for referrals,” Ellens says.
Going From Part-Time to Full-Time
Now the startup has customers and has already built a small reputation. This is pretty much when the company starts to feel a little overloaded with sales and orders.
This is when it starts making sense hiring more people to help, but at the same time revenues aren’t usually enough. It may seem like a catch 22.
This is time to focus on sales as much as you can, as overwhelming it may seem. Until the company increases its sales to a point where it feels comfortable to hire more employees.
Create a Business Model
At this stage the startup may already have a few employees but the amount of work might be a little overwhelming. Also, the training procedures aren’t completely established so the performance and productivity aren’t yet what would be expected. Job roles aren’t so clear either which may be difficult to hold people accountable. It’s hard, at this point, to envision how to scale.
This is when the company needs to shift from the referral model to one where you can estimate sales and lead generation. Advertising is a great help at this stage.
This is also when you need to start tracking your team and sales more accurately according to your business model.
Framing Infrastructure for Growth
This is the fourth stage where the need for better systems and infrastructure becomes more evident. Since metrics aren’t well established, most decisions are still emotional. Accurate job descriptions, standard procedures, and performance indicators are necessary for the startup to be ready for growth. The revenue per customer must be increased so that sales reps can be hired and advertisement better planned.
Scaling Team and Systems
At this time, investment in technology, staff, and infrastructure will put some stress on the cash flow, but once the startup starts better understanding its finances the stress is lessened. The focus at this point should be transferred to hiring and training and the technology should be improved.
Most of all, it’s important that the management understands what stage the company is at so everyone can gain awareness and anticipate what are the next steps to be taken. It’s also important that everyone in the company knows how close they are to achieving success.
Is your company aware of what stage it’s in? How else can a company build awareness? Share your thoughts with us through our Facebook page or in the comments below.