Editor’s note: This post is adapted from my new book The Small Business Life Cycle: A Guide for Taking the Right Steps at the Right Time to Grow Your Small Business. To find out more about the 5 stages of business and what you can do to grow your business from one stage to the next, check out the book. This is Part 2 of the Business Lifecycle series. Check out the Aspirational Stage of the Business Lifecycle if you haven’t yet.
Stage 1 and 2 are “yes” stages. They’re yes stages because you say yes to a lot. You take on too much, you work with the wrong people; you say yes to anybody who shows interest in you or anything that seems somewhat relevant. That’s a natural part of the process.
Challenges of Stage 1
One challenge is one match does not make a forest fire. That little success you had in Stage 0 isn’t something that’s sustainable long-term – it’s not like you put that little match out there and it takes off. It does happen for some people, but it’s not common. It’s more likely that you started and you have a little success, and then you have to start the match all over again. The entry stage is one of the really awkward stages because you do a lot of small things in the hope they have bigger affects.
The second challenge of Stage 1 is talking about what you do – also known as marketing. When I’m talking to entrepreneurs and small business owners, I can normally tell how long they’ve been in business by how long it takes them to tell me what it is they do. Normally, it involves a bunch of unclear statements about what they do and who they do it with, and it’s apparent that they haven’t quite nailed down what it is they do and for who. Because it’s a “yes” stage, you try to be inclusive of all possibilities, which means your marketing messages tend to be opaque and general enough to catch as many different people as possible.
Another challenge in is undervaluing what you do. Because what you do is generally so innate, and how you’re thinking about it so innate to you, your first thought is that it doesn’t have much value. Almost all small businesses start by undervaluing and underpricing their services or products. Undervaluing what you do is a challenge because it’s hard to make enough money for you to do the business long-term. Additionally, undervaluing what you do ties into the marketing piece because you can’t stand upon the value you provide. It makes it harder for you to advance a compelling reason to work with or to buy from you.
Strengths of Stage 1
Let’s think about the strengths of Stage 1, though. The first strength is you still have energy. You’re just starting the road, you’re still learning a lot, and there’s still a lot of energy to go around. You can build a business at this stage mostly on effort. To parrot Gary Vaynerchuk, you can crush it in stage one because you have the internal resources and the financial cash flow to back it as well.
The second strength is the success high. Every small win gives you a little high because it’s still new. The more experience you get at this stage, the happier you are, the more fun it is, and the more it fuels your growth. Small wins count as huge wins to you. For instance, if you have a blog as a business, the first major link from any site that you considered one of your idol sites for a while is a huge deal for you. Later on, it’s run of the mill; you lose that joy.
Another strength is you’re not too big to fail. You don’t have enough people watching you that it becomes awkward to fail on stage. You’re not pitching to an audience of thirty thousand people, you’re not on national tv having people examine and scrutinize every word you’re saying. You’re small enough that you can fail, and eight people plus your cat know about it. This is a pretty big deal, and this is one of the reasons why you’ll hear other business advocates like Seth Godin saying you should fail fast and fail often. (Click to tweet – thanks!)
The more you fail fast and fail often in Stage 1 and 2, the easier it is for you to learn what you need to learn, because in later stages of business it becomes much harder to fail. You have many more people looking at you, and our egos and everything else get involved. I know it sounds odd to say that you’re not too big to fail and that you should fail, but that’s really one of the blessings of Stage 1.
The Inconvenient Truth
Let’s talk about the inconvenient truth of Stage 1: you have no idea what you’re doing. You don’t have the experience, you don’t have the market validation, and you don’t understand the business under it. Even if you’ve learned about business, learning about business and running your own business are two dramatically different things. And in Stage 1, you don’t know what you’re doing. That’s okay.
The Way Ahead
Experiment, fail fast, and fail often. During this stage, the best thing you can do is imitate a four-year-old and always be learning. When children are young, they’re sponges of information. They pick up languages quickly, they learn new things about the world all the time, and in a similar way, you should be the same way as a business person.
You’ll over-buy, you’ll over-invest, and any bright and shiny object that comes your way will be fascinating, and that’s just part of the journey. The catalytic moment that moves you from Stage 1 to Stage 2 is you have your first major home-run. Of all the different things you’re trying, all the different seeds you’re planting, one of them takes off. You’ve got a home-run. You’ve managed to match a solution with a market and a compelling way in which you should be a solution provider. This is where a lot of the fun starts. You’ve reached Stage 2 while you’re running the bases of that home-run.
Editor’s Note: This is part two in a 5-part series on The Business Lifecycle. Continue with the series by reading about the Growth Stage of the Business Lifecycle.