The stages of startup development are short and clearly structured. Each new project goes through all stages of development at different times.
Studies show that 22% of startups fail in the first year, 30% - in the second year, 50% - in the fifth year, and 70% - in the tenth year. And in order not to avoid falling into this category, you need to understand the stages of a startup from day one. Passing through the steps of a startup between coming up with a fantastic business idea and running a successful business is like giving levels in a video game. When you successfully pass the previous stages of startup development, you can only move on to the next one.
The stages of startup development are short and clearly structured. Each new project goes through all stages of development at different times. Some of the steps can take place simultaneously, and others may need help, but if your idea is worthy of attention, it will captivate enthusiasts, attract investors and find customers. In this article, we have prepared a detailed guide to the stages of startup development that you should follow. So, let's get started.
Of course, a business does not come into existence the moment you have an idea - there are many practical and financial considerations involved in making your vision a reality. But having a clear and effective plan is the first important step. And in order to form it, you need to conduct market research, which includes exploring market dynamics to learn about your competitors and potential customers. Here are the key points to pay attention to during the study:
- Identify the territorial scope of your future market;
- Market segmentation and data analysis;
- Determine your target audience;
- Expand the range of pain points of your audience to collect more data;
- Research market trends;
- Define rival products in your future industry.
Research what your competitors have to offer and focus on what they don't have. No matter how successful a business is, there are always gaps - something that could be useful to your target audience. Consumer demand has long been formed, your task is to find the most promising way to develop your startup.
Without business analytics, creating a product that is necessary for customers and attractive to investors will not be possible. A visual concept and project prospects, with figures and graphs, is the key to confidence and success. Creating a startup at this stage consists of the following tasks:
- Set goals. The concept is something with which the life cycle of a startup is possible. This is a more detailed idea of the idea. A startup should have a goal - why and for whom you are creating it;
- Analyze the market. The profitability of a startup depends on the number of potential consumers. At this stage, it is crucial to understand how many competitors you have, as well as what are their advantages and disadvantages, in order to create a unique selling proposition - something that will be an incentive for customers to choose your product. If you offer something completely new, related market segments are suitable for analytics;
- Identify the target audience. A detailed portrait of the user will show his needs and help you find the best ways to turn a potential customer into a regular one. The more specific the primary target audience is, the more accurately you will predict its behavior and the expected result with acceptable deviations, but it is equally important to consider the presence of a secondary one. Potentially, your project can interest many more people, and their behavioral factors are also important. In addition, not all of those who are interested in the startup will be ready to pay for it, and this point is analyzed separately;
- Predict expenses and income. As for the forms of financing, the dynamics of bootstrapping come to the fore when the business starts and expands only at the expense of the personal resources of entrepreneurs, as well as the income generated by the company. In addition, state aid, business angels, or incubators' participation appear as support agencies for nascent projects, which is a ubiquitous term in this ecosystem: FFF (Family, Friends, Fools).
This is one of the essential stages of new product development, marking the transition from idea to implementation. Any product they buy has to be a solution to specific problems. Identifying how your product can help solve customer pain points and articulating those pain points is crucial at this stage. The user experience and interface should be customer-centric. Most of the answers to your questions about where to place a button and what features to add will come from the potential customer. Therefore, when defining the concept of UX/UI, ensure you keep a set of cool things that will not bring any results when the customer interacts with the product.
In any case, follow the classic UX process because it will save you from obvious mistakes when creating a web design for a start-up business. The prototype is needed in order to show your product to potential customers and users as soon as possible without wasting time on endless improvements. A common misconception about this stage is that investing a lot of money in a beautiful picture can pay off. The functionality, smooth operation, and efficiency your technology stack brings are of more excellent value to the user.
You and your software development partner should understand the major requirements at this stage. Product design offers a holistic understanding of how the final product will look, what challenges it will solve, and what tools it will use. Without understatement, design identifies the significance, in the sense of accomplishing some tasks or reaching some aims, the usability, and profitability of the product itself.
Product design is more than just good looks, impressive features, or an easy-to-use interface. It is a comprehensive approach that should put the user at the center of the process of creating a product that meets their needs and expectations. But no company creates a solution to satisfy only a group of people - its goal is simply to make money by selling the product. Therefore, let's consider some of the primary responsibilities of a product designer when working with a startup:
- Identify user needs and use this information to make a product that is useful and effective, not just;
- Understand the company's need to create a product that matches the brand, its values, and desired functionality;
- Explore all ideas and approaches to product design and development, working side by side with the product manager or CEO;
- Create a prototype that reflects the design envisioned by the startup company that can be tested and improved before launch;
- Analyze the use and overall performance of the product and suggest improvements, changes, and new functionality.
Product designers have a whole arsenal of tools, including software, hardware, coding skills, and research skills. Using these tools, they can build a development path that both the company and the end user can appreciate.
Some startup owners tend to skip the MVP stage, considering it unnecessary testing of their product before the final launch. In fact, it is one of the most important steps in the startup development chain. Running an MVP allows you to learn about customer behavior and collect feedback on your product. You can improve your product by adding or removing certain features based on this information.
MVP is a minimum viable product that can be quickly released to the market and, therefore, get a platform for market research and minimize risks. Once you have a strategy, a startup needs an analyst and a development team. Specialists, in turn, require a technical task for developing a prototype and then the entire program. The TOR should consist of diagrams describing the functions and illustrations of the future interface. Designers can create the appearance of the application later. Now, the task is to describe the startup for programmers. Such a prototype, along with a payback forecast, are two elements that are needed to start attracting investments.
The main advantages of MVP:
- Helps minimize development costs as you focus only on core features;
- Requires less time and gives you the opportunity to test the functionality of the product on real users;
- Provides insights into user behavior and market demand;
- Helps you test your ideas for future features and functionality;
- Facilitates the process of finding investors as you have a real product to show, with proven demand, practical experience, and relevance to market needs.
At the same stage, a proposal is formed, and a patent search is carried out in order to identify similar products and ideas. Suppose the patent search shows no similar products. During the analysis of the attitude to the outcome of future consumers based on the product based on their initial feedback, the assumptions about the market are corrected, such as the target audience and its needs, demand, and promotion channels. Full-fledged presentations are prepared, with which you can start selling the product to investors, customers, and potential partners if there is a need for such. In the end, the decision is made on the optimal and most promising direction of startup development. In parallel, in the cooperation process, the following skills and coherence of the startup team are tested.
The final phase of startup development is continuous improvement and scaling. Once you release your product, keep the process going as it is. However, after passing this stage, you should regularly analyze your progress, check your market position, and decide where to focus your efforts to strengthen your product.
Customer feedback helps to understand whether the product you have developed meets the need you intended to satisfy. At this stage, you need to think about deleting useless features which will not improve the product.
Top tips for a successful startup
The analysis of the practice of small innovative entrepreneurship shows that the bankruptcy and liquidation of small creative projects and enterprises in almost 80% are caused by mistakes in their management. Therefore, we have identified the main aspects that will help your business:
The idea is the basis of project viability. It should be new for the segment of consumers it is focused on. But no matter what it is - absolutely innovative and unique, modernized or adapted from foreign practice - the main thing is that it should be aimed at implementing a product that meets the needs of consumers and is valuable for them. The idea can result from a purposeful search, a scientific discovery, or new knowledge, but often ideas for successful startups arise by chance. Practice shows that successful start-ups always have entrepreneurial talent, they are able to see the big picture in the market, notice and identify the slightest changes in the trends of technological development of industries, and they are creative enough, so any non-standard situation can give them an idea for a new start-up.
All successful startup entrepreneurs emphasize the importance of forming a well-coordinated team, each of whose members will positively contribute to the product's creation and the establishment of a project management system. Among the qualities that are most important for the successful cooperation of startup team members are the following: communication receptivity, flexibility, persuasiveness and a clear understanding of their role in the project, the ability to build trusting relationships with each other, procedural thinking, professional skills, positive thinking, etc.
It is estimated that up to 90% of the total time required to implement a project is spent on finding investments. It should be noted that at each stage of the startup project development, the investment structure and investment policy may change. Therefore, experts advise immediately identifying a person in the project team who will be responsible for its investment support.