The Five Stages of a Company
Through our time working with over 100 companies across multiple industries, we’ve identified five distinct stages of a company — each complete with their own inflection points, demands of the team, technology, HR issues, Founder/CEO skill sets, etc.
Importantly, as a company moves through the respective stages, the leadership team at your organization needs to think differently and the role of the CEO will evolve.
It’s critical to be able to identify which stage your company is in so you can better understand how to adjust appropriately and better prepare for the next stage as your company evolves. With that, here are the five stages of a company:
Stage 1: Ideation and Research
In Stage 1, you know you want to do something and you’re exploring how you might make it work.
You’re tinkering with an idea, doing the necessary research, defining the problem that you want to solve, and developing ideas for a possible solution.
In this stage, you’ve likely begun talking to other people about your idea, mapping out how you’d like your business to look, and potentially looking for a co-founder(s) as needed. Incubators serve Stage 1 companies well.
Stage 2: Launch and Commit
In Stage 2, you’ve moved from tinkering to actually launching the thing with a minimum viable product.
As the Founder/CEO, this has now become the most important thing in your life and you’re wearing most if not all of the hats for the business. You’re setting the vision, generating sales, establishing the culture, doing the hiring, working on product design, etc.
You likely have quit your day job or have eyes on quitting your day job at this point. A team is starting to galvanize or may be somewhat established, but the Founder is still carrying most of the company's weight. Without the Founder, the startup will fail. In this stage, you’re bootstrapping and/or accepting family and friend money to get the company off the ground. Accelerators serve Stage 2 companies well.
Stage 3: Scale and Stabilize, aka "Good Luck Wasteland"
In Stage 3, you’re trying to stabilize any systems and processes you just built in Stage 2 while also scaling those systems.
As CEO, you start to taper off on wearing all of the hats, focusing more on what is next for the company, not just living in the day-to-day. If you’ve done an Accelerator, your access to “free” resources dries up as mentorship is harder to find because those accelerator mentors have their own companies and are asked to mentor the next batch of startups going through the program.
In Stage 3, you’ve likely completed a seed round if it was needed and you’re hiring employees with cash, not just friends for equity. Stage 3 companies typically have a single point of failure in the business model, supply chain, culture, or team, and the CEO needs to spend time figuring out how to strategize around those.
Stage 4: Young, Real Business
In Stage 4, you’re stable enough that you’re not going anywhere that easily.
This might look like a team of around six employees, a $30,000 burn rate, and a feeling like you might actually be able to make money doing this. You have HR manuals and budgets. You’ve fired your first employee. You’re paying taxes ahead of time.
As CEO, you’re predominantly doing things that only the CEO can do. You’ve got a site on enterprise sales. You’re a real damn company!
Stage 5: Ready for Enterprise Sales
In Stage 5, you have the time, resources, product, team, and sophistication to close sales at the enterprise level, i.e., complex transactions.
You’re stable enough and prepared for the due diligence and long sales cycles that enterprise companies innately have.
What stage are you in?
Is it impacting your decision making and planning as a Founder/CEO?
Are you ready for what’s next?
Email us at hello@deltaawesome.com.