By Fernando Berrocal
As an aspiring startup entrepreneur, you must be aware that there are four major stages that your journey will go through as you create your business:
Each of these has its origins, structure, prospects, limits, and challenges. It's also necessary to proceed prudently and follow them in the correct order. To assist you in understanding what you should and shouldn't do, we'll go over the stages that every successful business goes through– and explain each one.
The discovery stage begins on the first day of your startup. You likely have the main concept for a business, and are advancing towards the launch of your product. Perhaps you have attracted your first customer. There are a few possible outcomes at this stage, and making the proper decision will be crucial for the future of your startup. A lot of prospective business entrepreneurs have a product concept and want to see it out onto the market. For them, finding an issue to solve comes first; then, they look for a solution. The other strategy, which is gaining popularity and significantly raising the likelihood of success, is to identify a market need and provide a solution in the form of a product.
Consider the following scenario. Which seems more clever: making a key to unlock the door in front of you, or making a key to seek a door it can open? The second option can be relied upon, whereas the first option can only be hoped to succeed. Therefore, instead of concentrating on the different issues, you believe the market needs to address, consider what issues are important to a certain set of people and try to find solutions for them. It's crucial to thoroughly analyze and familiarize yourself with your business sector before beginning to expand your customer base. You may greatly reduce the number of potential customers you want to contact by developing an Ideal Customer Profile (ICP). This is defined as the type of business that would benefit the most from your products. After that, it's critical to concentrate on the issues your customers are having.
Don't look for clients who would be a good fit for your product. You can offer people hope and create a strong community by actively engaging individuals to learn what they need. Your success will be based on this community, and they will advise you on what your product should be to appeal to that market. You may create a product that flawlessly meets a market demand if you are aware of what it needs. Before you can say “product-market fit”, you'll be on the way there. However, keep it basic while you're creating that product. Create a minimum viable product (MVP) so you can distribute a product to your community rapidly. They may now assist you with market research to see whether the product meets the market demands and assist you in determining what works (and what doesn't). They will also see if you fully comprehend their requirements. After that, you are prepared to advance your startup now that you have your problem to solve, the consumers that need it answered, and an MVP that addresses part of it.
The product-market fit stage is crucial if you're innovating and trying to change the market. You need to concentrate on your product and make sure that it benefits your customers. You will be spending more resources than you can create if you skip this phase and try to increase the number of consumers before you have product-market fit. Instead, do things accordingly and identify what works and what doesn't, fix the problems, and then continue. Of course, to optimize your product so that it performs well you’ve to understand the user’s path with your product. The journey consists of:
The referral occurs when consumers turn into devoted clients; awareness begins when people first learn about your product.
You should be constructing and rebuilding your offering throughout the adaptation/acquisition stage to increase the number of conversions across all phases. As you approach this stage, your primary concerns should be activation and retention to ensure that your product keeps its user base. You may also begin weighing in on your data and metrics. Key elements for assessing the health and performance of your startup include tracking user data, examining conversion and retention, surveying, and testing. With this, you'll be able to rapidly modify your product to match the changing demands of the market. Always remember that it is the market that should determine the course your product takes. That can entail modifying or adding features, and testing the results to see what works.
- Transition: You prepare to scale your business at this point, and it’s mostly the growth you have been waiting for. However, don't rush things as you're getting everything prepared and "getting ready for take-off." The moment has come to fully realize the potential of data and metrics. Data must be the basis for decisions, not assumptions or sentiments of intuition. When considering increasing your staff, this is crucial. It's not too difficult to provide instructions when there are 10 people on your squad. However, you need to start directing differently if you want to expand to a team of 50 individuals. The metrics operate in this manner.
The ability to follow people from the start and accurately determine what works and what doesn't is crucial when collecting data. This degree of tracking detail won't be achieved right away, but now is the time to invest to get there. This is the time to work with a data analyst or data scientist to get the most out of your data. You also need to build up your "Objectives and Key Results" (OKR) so that you can see what success for your business would entail. You won't know whether you're making progress if you don't have any goals to work toward. The user journey will then be optimized to increase the result of the division between Lifetime Value (LTV) and Customer Acquisition Cost (CAC). In other words, to have positive unit economics on your side this equation is crucial: LTV / CAC. Ensuring that the money spent on acquiring leads is repaid when those leads become customers is the crucial objective here. You’ll know it’s time to take action when your LTV/CAC is over 3 or 4.
- Accelerate: Finally, this is the time when you succeed and advance your business. A Chief Marketing Officer (CMO) or head of sales should be hired at this point. This hire must be someone with the right experience, who can devote their entire attention to marketing or sales. They'll be able to control the rise in consumer spending and assist you in adding additional salesmen. Making a predictable growth engine and figuring out precisely what you need to say to increase market share are the keys to success in this stage.
Expansion–during which you start entering new markets–establishing business divisions, and pursuing new prospects, will be your true ultimate stage. Save these for when you're very established and able to commit an entire staff to the success of your new endeavor. It's simple to become overly enthusiastic and tempted to skip steps, but by making sure you complete each of the four primary phases and you will strengthen your startup with each one.
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