Three pits on your way to setting up your business

I see lots of startups showing off their thoughts and sentiment, different style in quite significant way. some are heroic, some are coziness, some mooching, some solemn and stirring, and some are desperate. starting up a business is like marriage, looks great by stranger, but only the startups know what they have been through.

It’s been three years since my second startup, and I would like to talk about the starting up from my point of view. I divided the startup to three phases: the first phase is the first three month, and the second phase is the first year, and the third phase is the first three years. Normally if startup is still alive after three years, and have some reputation in the market, then this business has pass it’s critical stage, and start its next stage: growing stage. At this stage the business is not easy to die, but whether it can grow big, all depends on the industry and this business’ characteristic.

This first phase, i.e. the first three months, at this phase the startup only have an idea, no products have been formed yet, not even going though the market test out. The startup is just like a new solider, all day excited and vigorous. The startup either focus on products, contacting potential customer, or writing business plan, contacting investors. but all in all, the startup is very active and efficiency.

If thing goes well, after three months, the product should beginning to take shape, and got some investment if lucky. Now it’s time to start testing the product, and normally come with two outcomes: one is the product is very popular, although the probability is very small; another one is common situation, which it’s realized that it’s not as good as expected. the startup will experience their first strike, and part of startup will chose to quit, the others will chose to uphold their faith, and continuing to improve their products, or pick another direction to try again.

After the first three months, very few startup begin their fast growing phase, and these startup feel coziness and start feel it’s easy like piece of cake! but unfortunately most startup not that lucky, they start facing difficulty, and start realize that starting up a business is not as easy as they imagined. They must keeping amend and revise their products or business model, before they can survive in the market.

Keeping doing that for one year, few luckier become the rising star. They start the first round investment, and joining all sort of presentation, doing marketing through all different channels. However a majority of startups start fall in to mooching. It seems they are always one step behind after they have tried a few products and business models, and they don’t have too much room for any further improvement after the cash flow is tighter and team is under higher pressure. At this time, another wave of startups choose to quit, and the rest choose to keep fighting and searching for new direction.

From the first year to the third year, there is no big changes for these two years compared with the first year. If the business is still alive, it means the business has found it’s direction. They have successfully pull through infancy stage, and begin their preschool period. The products is in an early form, and have some reputation in the market, but the team begin to having problems. Because the rapid growth didn’t come together with management prompt, most startups don’t have management experience, or even despise the important of management and think management is equal to bureaucracy, the business start growing pain.

Statistically speaking, the average life of a business is 2.5 years, which means at least 50% of business can’t survive more than 2 years. It is hard to believe but it’s brutal truth. Before these business die, they will experience the most difficult phase –  solemn and stirring, and then becoming desperate. Some co-founders choose to quit and go back to big companies, or choose to pick next project. Only these startups insist can survive and growing, with lower profile.

I would like to say congratulation after three years, but don’t get excited too early, another three big challenges is awaiting: startups feel powerless in management, the co-founders are falling behind. Even through the business strategy is clear, but it’s always hard to carry out because lots of details issues start emerging. the organisation start facing problems from different facet, and always short on skilled resources, recruitment and keeping people is getting harder and harder. Organisation regulation become falling behind the business growth. Now the business face another transition.

If you think your business having lots of issues, don’t be depression, because lots of business having the same amount of issues. Keep in mind identifying and focusing on the few fatal issues, which can make your business survive. and then you can resolve other issues slowly during your development. The process of business growing is the process of solving problem, and it’s also the process of startups self-improvement and self-growth.

If you always have growth pain, it’s not a bad thing, because only live people can having the pain.

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