Did you ever read those “choose your own adventure” books as a kid? Where you got to certain points in the story where you could choose between two outcomes at a point of decision in the story line? There were usually at least two endings to those books. Entrepreneurship is a lot like those books. The decisions you make along the way affect the next step in your journey. Your entrepreneurship journey may look a little different than the entrepreneur next to you, but you are still on the same trajectory through the phases of entrepreneurship.
The phases of entrepreneurship are: Idea, decision, proof, growth, and long-term plan. What each phase looks like depends on the industry, type of company, approach to entrepreneurship (ie. Risk-averse vs. Risk taker), and your decisions along the way. Not every entrepreneur makes it through the 5 phases of entrepreneurship. It’s a tough journey that will test your resiliency many times. But this is an easy trade off for entrepreneurs who like to take risks (whether big or small) because it allows them to take control over their own career. You just have to survive to make it.
Here are the 5 phases of entrepreneurship.
Phase 1: The big idea
In some ways this is the most exciting stage of your business. You haven’t yet run into operating obstacles and you get to build out your idea into a viable business plan. At this stage the key is planning.
On the business side of planning, you need to map out how your business will take shape. You should put together a business plan that outlines your key milestones and objectives, a detailed analysis of who your audience is, how your product/service could evolve over time, risks or setbacks you may encounter and potential solutions, and your financial plan. Your financial plan should include forecasting at least 3 years into the future, your strategy for finding investors (if that’s the route you will take), and how your financing options might change at each milestone in your company’s growth.
While you are taking care of business planning, you need to ask yourself a few important questions. Are you read for the entrepreneurial lifestyle? Long hours, delayed gratification, and a bit of an emotional rollercoaster are a few things you can expect. Make sure you clearly identify your breaking points and your idea of success. That way you can evaluate your journey along the way with open eyes and a clear head.
Of course, unexpected things always come up, but you can take those things day-by-day.
Phase 2: Taking the plunge
Click publish, hang your open sign, and start talking yourself up because you have officially decided to launch your business. This phase is all about making strategic decisions and executing the launch. You’ll either be giving up your day job, working towards your dream, or you might launch your business as a side hustle if you are a bit reluctant to give up a steady paycheck – you won’t be able to dedicate as much time into your growth though. Either way, need to look at the bigger picture of your long-term strategy.
The biggest thing at this phase is that after launching, take a step back and regroup to make sure you are still on track with the goals you set out.
Phase 3: Proof of concept
This phase is bitter sweet. It is really exciting to take on your first customers, but you will likely find it’s not quite enough to sustain you in the long-term. Self-doubt is your enemy at phase 3 because you likely won’t yet see the light at the end of the tunnel. Its there.
You need to make sure you are adaptable as you are working with your first group of customers for two reasons:
- They will give you valuable feedback to help you improve or focus on the right things.
- Word of mouth is one of your biggest assets in getting new customers – treat them like royalty.
Phase 4: Ready for growth
You find yourself morphing into the CEO as your company expands and you delegate tasks and day-to-day operational process management to your expanding team. You can’t go it alone forever.
At this phase, cash flow is fairly steady, but you are still likely juggling your budget waiting for your growth to spike upwards. It’s a cart before the horse situation – you know you need to spend money to help your business grow, but you want to hold on dearly to those pennies. Hire people that complementary skillsets to your own to make sure you that you are investing in the right people in the beginning stages of growth. You will still wear many hats as the owner, but your expanding team will slowly take those off your head. The idea is to focus your investment in essential hiring to off-load tasks where you aren’t as strong, or those that are extremely time consuming.
Phase 5: Growth and long-term footing
Careful planning along the way and scalability of processes are your best friend. If you plan your growth, you can make sure you have the infrastructure and internal processes in place to support more business. While viral growth might seem like it would be amazing, not being able to handle filling orders because of manufacturing, distribution, or lack of staff to process orders can be overly stressful.
Another thing to remember is you should learn to manage the resources you currently have before adding new ones. Resources could be your team, equipment, job materials, etc. This will help you figure out how all the pieces fit together so you don’t allocate your budget in the wrong places.
Not every entrepreneur goes into business to stay in it for the long-term. Sometimes the idea of building the bones of a successful business and then selling it allows you to move on to the next project. Regardless of whether you are staying in it for the long-haul or you want to sell and move on, decide and then do it.
There is no cookie cutter entrepreneur strategy that can be applied to every business so everyone has the same success rate. Your entrepreneurial journey will be as unique as you are. The idea is to embrace it and go through each of the 5 phases of entrepreneurship at your own pace driven by your own definition of success.
If you need help along the way, we’ve been there, done that and we can help to point you in the right direction. Give us a call!