When you have spent years putting everything you are into starting up your own business, dealing with constant challenges and battling for your place in the market, it can be somewhat of a shock to realise your company is now defined. It is successful and what lies before you now is the next stage of growth.
Moving into this growth stage means you are past your startup phase but for many, it can be difficult to realise when the time is appropriate to push yourself out of what has, no doubt, become a rather comfortable and secure place to be.
Here are some key signs which will alert you to the fact your company is ready to move on out of the startup phase:
1. Your company now has a physical product/ service
As a startup you would have been focused on telling anyone who would listen what your company is about and what potential your idea(s) have. However, now your company is actually producing goods/services and so now you’re telling everyone what you’re actually doing. Your product is real and so you can move forward confidently into the market.
2. Your company now has a business model/ plan
So many startups fail because they rely on their idea being so great that investment will just flood in and then they won’t have to worry too much about making an actual plan for the future. However, you will never be able to move out of the startup phase if you don’t make a plan.
Your company should have a viable business model in place to enable it to move forward. This plan should include your Key Performance Indicators (KPIs), be forward-looking (i.e. the next 3-5 years) and contain the key milestones that you aim to achieve in this time.
3. Your team has evolved into your company
As a startup you probably had a good team around you, possibly made up of friends or previous colleagues, all of whom were willing to work for a pittance (or perhaps nothing at all!) because they were passionate about your idea. However, now you’re finding that you’ve attracted other people into the team and you’re swiftly becoming a larger company, with real employees! You’re now at the stage where you can think about hiring more staff and growing your employee base.
4. You are aware of, and understand, your company’s place in the market
Every good startup starts with a great idea and quite a few end up making their ideas into a reality. This involves a lot of market research; you cannot give people what they want, unless you actually understand what they want. You have learnt from your marketing efforts, your mistakes and from the market feedback you have collected over the past couple of years and now, you have a tailored product absolutely suitable for your target market.
5. You have sales data!
One of the best signs that you are ready to move out of the startup phase is when you have the sales to back you up. If you are making enough sales, then your company obviously has great potential in the marketplace. This is essential data for showing to potential investors, for instance if you can show that your company has achieved a regular revenue of $1 million – then this will most certainly impress investors and get your company moving along in the right direction, i.e. the future revenues of $5-10 million and beyond!
6. There are actual processes in place
As a startup you were probably winging it a little bit. Everyone was mucking in where they could, despite not being qualified bookkeepers, web experts etc. Flexibility was absolutely key. However, when moving out of the startup phase, it is important to be focused on quality. This means a system must be implemented in order to ensure your company is running as efficiently as it can. Processes should therefore be in place.
7. You no longer have to rely on anyone else to function
As a startup you would have been extremely reliant on others, for instance, for funding in order to buy whatever you needed to function; for the technology which you needed to test out your ideas; for focus group research so you could glean insight. The next stage, however, involves a lot more independence. You don’t need to rely on anyone else in order for your business to function; you are able to produce the Minimum Viable Product that your company needs in order to grow.
8. Your company is attracting investment
Startups spend most of their time seeking out funding from investors, however, when you find yourself moving out of the startup phase, investors will track you down instead. This is a great place to be, especially if you have the sales figures on hand to show potential investors.
9. The level of risk is now lower
All companies have risk; however, startup companies will always have more. When you’re first starting out, you simply have to manage this risk as best you can because you don’t have the revenue, funding or proven business model to back you up. But as you move forward your sales figures and business plan will come to the fore and as a result, your risk will fall, which is a definitive sign that your company is ready for the next stage.
10. You company now has scalability
If your startup is functioning well with a business model that is working and with a proven product in your target marketplace, then it is a sure sign that you are ready to scale. This will require seed money, which you’ll use to scale up production, staff and your customer base and will result in your profits being scaled up too, which is obviously the most important factor.