Congratulations on your startup. You’ve passed a lot of hurdles in your product conceptualization stage. Perfecting your prototype is a tedious process, with bugs and all. And pitching your product and getting funding from angel investors and venture capitalists is an even harder feat.
Well done. Pat yourself in the back, hug your team, and look forward to bigger troubles in the future.
Surprise! (Photo Credit: ucumari)
No. Really.
You are now entering the growth stage of a product life cycle, arguably the most crucial stage for your startup company. At this stage, your product has penetrated the market and the majority continually gains awareness. You’re finally getting some profit. Now, you have to decide whether to increase your market share or your profitability. (Check some pricing strategies here.)
Startup entrepreneurs may find the sudden change of pace surprising or even intimidating. The growth stage happens at different rates between industries and it requires a different approach from your conceptualization stage.
But fear not. Here are some of the most critical aspects of your business that you need to watch as your business grows.
1. The Money Stream
Cash is a very crucial factor in the growth stage. It is a period of expansion–your production scales up to meet the increase in demand, you need to hire more employees and spend on property (or web property for ecommerce), and your advertising costs pile up to create awareness. Aside from cash outflows, venture capitalists might be interested to invest you. And also, there’s profit inflow (hopefully).
Make sure you monitor your cash flow properly. If possible, hire an accountant. Ideally, you want to stay in the growth stage as long as possible, and the lifeblood of that aim is cash. Forecast your cash flow every month for better decision-making on when to hire employees, increase production, or acquire company assets.
(Photo credit: Darwin Bell)
2. Changing Marketing Landscape
Your product or service may have benefited from the hype during your introduction to your early growth stage marketing, but the bulk of the growth stage requires an advanced, sophisticated strategy.
For one, you would have increased competition (more on that later), and you would want to retain your early adopters while also catering to the early majority of your market.
Depending on your industry, you should most likely invest in marketing channels with higher reach, such as social media. Your top priority now after gaining awareness is to build and nurture your community.
3. Your Emerging Competitors
As awareness of your product builds up, competitors, especially with established brand names and greater branding, might attempt to buy you out or create a competing product to yours.
If you decide to be acquired by a bigger company, congratulations. However, if you decide to stick around and take them on, you would need to define what makes you different from them, your unique selling proposition.
(Photo credit: Tambako the Jaguar)
4. Staff Needs And Turnover
As your business grows, you may be hesitant to hire more people. You and your small team did do all of your tasks effectively in the introductory stage, and nobody can do those tasks the way you can. And of course, the added cost is a factor. But this can cause missed opportunities and even higher costs for you in the long run.
In relation to the increased competition, some of your competitors might try to offer some of your team members and employees to work for them.
To address these concerns, first, you should concentrate on your core responsibilities and hire employees to do other tasks. Instill in your employees the passion that you have for your work. The key is to not only create consumer relationships, but also earn your employees’ loyalty.
(Photo credit: Behzad No)
5. Early Majority Interaction
After tapping early adopters, you’re now engaging the first half of the bulk of your market. More often than not, interacting with them is radically different compared to your early adopters.
For one, early adopters are usually informed about your product or service. They may have been with you in your beta stages. They know that you’re a new product and allows for greater allowances on bugs and errors. The early adopters however, may not have technical knowledge and thus, needs education.
While this may be exhausting on your part, this is a great opportunity to improve your customer interaction by getting feedback and incorporating it in your business.
CHECK OUT: Brace Yourselves. Internet Ubiquity is coming.
How are you planning for your startup’s growth stage? Comment some of your tips below.