The Small Business Life Cycle: The Entry Stage

The Entry stage

Editor’s note: This is Part 2 of the Small Business Life Cycle series. Check out the Aspirational Stage if you haven’t yet.

Stage 1 is the Entry stage. This is the stage of business in which you have already started the business. It’s already getting a little bit of traction, but you don’t yet have a lot of customers, market share, and/or demand for what you do.

Stages 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 anyone who is willing to work with you, even if they’re the wrong people; you say yes to anybody who shows interest in you or anything that seems somewhat relevant. This is a natural part of the process.

Challenges of Stage 1

The first challenge is that one lit match does not equal a forest fire. That little success you had in Stage 0 may not take off into something that’s sustainable for the long term. It does happen for some people, but it’s not common. It’s more likely that you started and had a little success, and now you have to light the match all over again. The Entry stage is one of the most awkward stages because you do a lot of small things in the hope that they have bigger effects.

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 whom they do it with, and it’s apparent that they haven’t quite nailed down what it is they do and for whom. Because this is a “yes” stage, you try to be inclusive of all possibilities. Your marketing messages tend to be opaque in your quest to be general enough to catch as many different people as possible.

Another challenge is in undervaluing what you do. Because what you do is generally 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 to have a viable business. Additionally, undervaluing what you do affects your marketing 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 buy from you.

Strengths of Stage 1

Let’s think about the strengths of Stage 1, though. The first strength is that 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 1 because you have the internal resources and the cash flow to back it up.

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, the first time one of your idols links to your blog is a huge deal for you. Later on, it’s run of the mill; you lose that joy.

Another strength is that you’re not too big to fail. You don’t have so many people watching you that failing on stage becomes awkward and the fear of doing so in front of large crowds is even more terrifying. You’re not pitching to an audience of 30,000 people; you’re not on national TV having people examine and scrutinize your every word. You’re small enough that you can fail, and only eight people plus your cat will know about it. This is a pretty big deal, and this is one of the reasons why other business advocates like Seth Godin advise you to fail fast and fail often. (Click to tweet – thanks!)

The more you fail fast and fail often in Stages 1 and 2, the easier it is for you to learn what you need to learn, because in later stages of business, there’s more at stake when you fail. You have many more people looking at you, and egos will 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 – just look at how quickly they pick up languages. Children are learning new things about the world all the time, and as a businessperson you should be the same way.

The Catalytic Moment

In Stage 1, you’ll over-buy, you’ll over-invest, and you’ll be distracted by every bright and shiny object that comes your way, and all of that is just part of the journey. The catalytic moment that moves you from Stage 1 to Stage 2 occurs when you have your first home run. Of all the different things you’re trying, all the different seeds you’re planting, one of them takes root and shoots up. You’ve managed to match a solution with a market and have found a compelling way to be a solution provider. This is where a lot of the fun starts. As you run the bases of that home run, you reach Stage 2.

Editor’s Note: This is part two in a 5-part series on The Small Business Life Cycle. Continue with the series by reading about the Growth stage.

I expanded on this post in my best-selling book, The Small Business Life Cycle. In it, I discuss the steps that need to be taken at each stage. To learn more about how to transition and thrive in your small business or microbusiness, check out the book by clicking here.

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  1. CoachSherrill says

    Brilliant.  This (and I’m sure the other components) explains so much of the murkiness!   Looking forward to the rest of the series!

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