Any company at the initial stage of its life goes through the following stages.
The seed and startup stage is when the product is just being developed and brought to market. This period is also called the valley of death, because according to statistics, 8-9% out of 10 fail here. They never reach the break-even point, and investors partially or completely lose their investment.
The expansion stage occurs when the company has found a successful business model and an effective promotion strategy, sales are growing, and cash flow becomes positive.
Growth and mature growth – when an organization steadily strengthens its position in the market and becomes sustainably profitable.
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Each stage has different risks. At stockholder data package the very beginning of the project development, the chance of failure is much higher than at the third stage. This is due to the fact that the company has not yet formed an effective business model and, perhaps, does not fully understand how to do this. The size of investments and the goals of their attraction also differ. This is clearly visible in the table below.
At the initial stage of project development, the entrepreneur's main tasks are to bring the product to market and assess the audience's reaction to the offer. At the growth and mature growth stage, the company seeks to increase revenue and expand its customer base.
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Alexander Kuleshov
Alexander Kuleshov
General Director of Sales Generator LLC
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Objectives of attracting investments at different stages of business development:
Stage Stage Goals Main signs of the stage Objectives of attracting funding
Seed stage Early stage Development and testing of the idea No product and no profit, expenses for test model Creation of a test product, scientific research, testing of a business model, team building
Startup (startup stage) Early stage Launching a product on the market Testing market reaction to the product, first sales, expenses Purchase or release of a commercial product, sale of a trial batch, customer acquisition
Expansion stage Early stage Formation and strengthening of the market position Increase sales, possible profit Large-scale launch of the product on the market, active advertising campaigns, final formation of the team of employees
Growth (growth stage) Growth stage Active growth of market share Incomes are rapidly increasing, profits are growing Product promotion, entering new markets, improving the offer
Mature growth stage Mature stage Maintaining market share Incomes become stable, the rate of growth of the product's market share decreases Finding new growth points