You’ve successfully launched your company and now you want to take it to the next level. Or maybe you’ve made that transition and demonstrated the value of your product to the broader market. So your next challenge is to quickly scale up and dominate your segment before your competitors do. Or perhaps you’ve even scaled the business but are now faced with continuing the rate of growth you achieved in your core business.
As the CEO of your company, each of these situations presents you with a new set of challenges that dictates where you should focus your energy and the changes you need to make. The good news is that many people have made these transitions before. From start-up to about $200 million in revenue, the stages companies go through are fairly predictable. Based on our own experiences in running companies as well as our work with and observation of others, these transitions seem to occur at somewhat consistent points in terms of the size of the company. And while revenue is not a precise indicator of timing, the stages and their implications are much more consistent across developing companies.
Having successfully negotiated these transitions, we can help you understand what you should focus on and what you need to do differently. Below are a few insights you should be thinking about. You can also download our white paper which offers more detail.
The Launch - $0 to $5 Million
The primary objective of the launch stage is to develop, refine and validate the product with very early adopters. This stage is very much a learning process, and the company must complete two essential tasks. The first task is to create and refine the product or service that addresses a specific need, targeted at a specific market. The other task is to identify and develop the value proposition -- that is, the ability of the product to satisfy the targeted need and to provide identifiable value to the target customer.
Market Validation - $5 to $20 Million
The primary objective in this stage is to validate the market acceptance of the product by going after additional early adopters and broadening the customer base. The company should remain sharply focused on the existing product > target market > value proposition, and demonstrate its appeal to a larger base of customers. This stage requires a significant mental shift, from a pure start-up, entrepreneurial mindset to a more comprehensive view of the business. The shortcuts that may have been acceptable in the launch stage must be replaced with more deliberate business processes and decision making. The challenges of this phase will test the capabilities and the decision making of the entrepreneur/CEO and his management team, and makes this stage perhaps the riskiest of the four stages.
Solidifying Position - $20 to $75 Million
The primary objective in this stage is the creation of a defensible market position, one that can withstand setbacks from a variety of internal and external events, without risking failure of the company. Attaining this goal is all about execution, particularly in sales and operations. The company should be solidifying its position as one of the top providers for new decisions in its targeted niche. The company should now have enough actual experience in the market to build a sales and marketing "machine", making the investment in a large-scale sales and marketing effort pay off. With a differentiated product and improving scale sufficient to minimize the concerns of most prospective customers, the company should be effective enough in sales and marketing to be a dominate factor in its target market.
Target Market Expansion - $75 to $200 Million
The primary objective in this stage is to lay the groundwork for expanding the addressable market, thereby permitting continued growth. The prerequisite for moving to this stage is having a solid core business to fall back on. Should the market expansion efforts cost more than expected, take longer, or not be as successful as anticipated – all of which occur with great frequency – the company will not be critically compromised. The failure may be painful, but at this stage it should not be fatal – as it very well could have been had the company began diversifying too early.
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