Start-up

The typical startup phases

From the startup idea to an established company: a startup lifecycle comprises various phases, which differ in terms of objectives, tasks, and challenges. The stages and timescales are not the same for every startup. However, we can generally distinguish between the following six phases, with often fluid transitions between them:

#1 Pre-seed (orientation phase)

The focus in the early months is on finding ideas and assessing their feasibility. The right target group can be verified by testing ideas with smaller numbers of people. Early feedback stimulates innovation, and the rough creative concept needed to establish a startup is crystallized.

#2 Seed (planning phase)

The next startup phase is shaped by the business plan, proof of concept, initial prototypes, and market analyses, which are used to determine the market potential and feasibility of the idea. Funding and budgets must be planned in order to avoid financial difficulties right from the outset. Networking is also a key element of this phase.

#3 Startup (setup phase)

After around a year of orientation and planning, the stage is set for the establishment of the company. It is essential to perfect the startup business plan and engage in intensive organizational development. Production planning and preparation and the (possible) creation of a distribution network are prerequisites for a successful product-market fit. It is important not to overlook legal requirements (insurance, articles of association, certificate of incorporation, etc.). Furthermore, the ability to meet financial obligations must always be kept in mind in order to avoid failing at this stage due to going into the red.

#4 1st stage (development phase)

It also takes at least a year before a product can be manufactured or a service can be provided. The company begins operating in this startup phase. The first sales are generated, and consolidating the young company’s position in the market is the priority. Professional structures and processes used to constantly monitor market and consumer behavior can help ensure a flying start. If the workload gets too heavy, it is worth adding reinforcements to the team to cover any gaps in expertise.

#5 2nd stage (growth phase)

An extensive expansion strategy is pursued in years four to six, with the goal of achieving profitability. This is also accompanied by an internal restructuring. Aggressive growth or a change in strategic direction may lead to founding members turning their focus elsewhere or even leaving the startup business. Professional staff management is of utmost importance in times of reorganization and restructuring.

#6 3rd or later stage (maturity phase)

From aggressive to sustainable growth – now it’s important to align with markets of the future. Stabilization by means of acquisitions or mergers improve a startup’s sustainability – a good starting point for considering further startup ideas, new technologies, product ranges, or startup funding.

Customers at the heart of a successful startup company

Many startups focus resolutely on customer centricity. This means always considering what customers need and consistently gearing all actions toward that. The product or service is brought to market quickly in order to test and analyze the response. By surveying customers, they are actively involved in the development of products and services and the offering is continuously optimized.

Small teams, big output: the startup mentality

In contrast to traditional large companies, young startups usually work in small teams that are assigned a certain amount of responsibility and are involved in shaping the business. Employees are encouraged to develop new skills and their long-term retention is promoted. This agile approach not only differs from conventional working methods, but also creates a new hierarchy concept. Support and positive reinforcement from management instead of rules and control are the order of the day. This results in a flat hierarchy, which defines a startup’s modern way of working. The opportunity to play an active role in what is going on at the company and to grow at both a professional and personal level is what makes the startup concept so appealing to young people.

Startup flexibility as an efficient route to success

By constantly monitoring customer feedback and needs, a startup is able to revise or even completely overhaul old concepts very quickly. The trial-and-error method as well as an agile work approach can lead to companies radically modifying their initial business model within a very short time. Thanks to efficient structures, startups are also in a position to quickly tap into new fields of business and position themselves more profitably.

Startups as a versatile role model

Startups are known for taking new paths and acting courageously. That is why they also make interesting partners and role models for conventional companies. The creation of an innovation culture, changes in perspective, and constant engagement with customers are prerequisites for corporate change and are approaches that can also be used by established companies to set standards in tomorrow’s markets.