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Stage 1 – Starting Up a Company? Embrace the Chaos!

Start Up is Stage 1 in The Stages of Growth methodology and companies are in this stage as they grow from 1 – 10 employees.

Starting a business has never been easy, especially at the beginning, when it feels like there is a whirlwind of uncertainty and chaos. The founder needs to have grit and determination to get through this phase of the business. It is essential for any entrepreneur to understand the stages of business growth and how businesses transition through the those stages, if they hope to survive and thrive in the chaos in those early phases of the business.

To spot a gap in the market, envision a company and bring it into existence, is no simple task. So as a Stage 1 company – passion and guts are the fuel.

The key objectives at the Start Up stage include:

  • Embrace the chaotic environment.
  • Creating a cohesive, cooperative team.
  • Generate and preserve as much cash (revenue) as possible.
  • Focus first on Profit, then your People, and finally Process.

Discover, Explore, Experiment – Innovate Quickly

At the beginning, the company must not be locked into one specific focus, it must be structured and designed to innovate quickly. A Start Up company must quickly discover, explore and experiment in order to find the right product / service to launch and take to market.

The beauty of a Stage 1 company, is that it has 10 or less people to manage and lead, which makes it agile enough to take quick business decisions, while embracing the inherent chaos that comes with that.

It is all about survival at this stage, so the focus must be on getting the right product / service to the target market. Because the team is small, it is better to hire people that fit in well, rather than purely on their the skillset. There should be a few generalists, that can wear multiple hats, instead of too many specialists.

The Rules

It is easy to lose one’s mind or stagnate in Stage 1, so in order to grow into Stage 2, the company must implement and abide by some of the following Non-Negotiable Rules:

  • Command the team and inspire the employees.
  • Focus 80% of the resources on selling 2 – 3 of the highest margin offerings.
  • Set in place a basic Customer Relationship Management (CRM) system.
  • Generate, track, and preserve cash.
  • Create a basic monthly KPI Flash Sheet.
  • Embrace the chaos inherent to a new organization; develop processes only where necessary.

The success or failure of a Stage 1 company will depend on whether these rules are properly implemented, or not.

As the Company Changes, The Leader Must Change

The leader must change as the company grows. Each Stage of Growth requires the leader to lead with a different blend of leadership styles. If a leader understands what blend is required as the company grows, there is a better chance of them propelling the company forward. If not, the chance of the company becoming ‘stuck’ is high, which means they end up having to deal with poor sales, low or no profits and high employee turnover.

In Stage 1, the business needs a leader who can guide the team with a strong vision, focus on people’s potential, and to take charge of leading the company through the chaos.

The leader of a Stage 1 company, should spend at least 40% of their time in Visionary mode – they need to provide their team with a vision of where the company is going and how they are going to get there. At this Stage, the company is owner-centric – meaning the owner is likely the ‘specialist’ who came up with the idea and created a product / service. Therefore, 50% of their time should be spent as the Specialist (or technician), while only 10% of their time will be spent as a Manager.

What’s next?

Where survival is the name of the game in a Stage 1 company, that’s not the case going into Stage 2. Now it’s all about growth.