The Stages of a Start-Up
by Ed Frazier
I have always been involved in starting companies or acquiring them. This post however is related to the start-ups. I have been involved in over 20 start-ups in my career, working 20+ years in the media industry but also some in wind power, solar, real estate, and Internet technologies. In all cases, they have had some common patterns.
1. THE CHAMPAGNE STAGE
This is the initial planning stage where the math goes something like this. If we offer a product that everyone in our market loves and we capture 3% of the market we will make a lot of money. The model will also include some underestimated cost and time lines. However, as partners we are all excited about this prospect so we launch. It will include a plan to capitalize the venture, and some division of responsibility. This stage will last until the Champagne is gone.
2. REALITY IS NOT CONSISTENT WITH THE MODEL
This is the period when the venture partners and their investor watch the financial resources begin to deplete. There will be a realization that it’s going to take longer than planned. It is important to look at the end of year one and evaluate if there is a business to be built. The test of the concept can be determined by how much business has been secured related to the idea. If there are no customers it may be time to change direction. My experience has been that if I have some good clients by the end of year one the business has promise. If I don’t have some good clients its not a good sign.
3.THE HELMET AND FLAK JACKET STAGE
This stage of the business runs from year one to year three. It’s the time when the initial capital is close to being consumed and the profit line has not been obtained. The danger of running out of cash or calling on investors to contribute more is a real possibility. It’s the point in time when everyone questions the wisdom of the venture and self esteem can hit a low. It’s time to hunker down put on the flack jacket and persevere. About the end of year three you have been in business long enough that those potential clients you called on in year one are ready to trust you with their business. It comes at a time when one might considering giving up. Then a call from a client you called on two years ago comes in and orders. This is a sign that you have a future in your chosen business. Its also a good time to go back to all your previous prospects and touch base. Let them know you are still going.
4. ALWAYS KNEW YOU WOULD MAKE IT STAGE
This is the stage where all those skeptics that doubted you could ever succeed will start to say. “I always knew you would make it, everything you do turns to gold”. This is the point in time when you can go to family gatherings and instead of them asking when you will get a real job you can proudly say I own my own business and I love it. The most important thing at this stage is to remember the sacrifices that have been made share the wealth with those who helped you and extend a supporting word or resource to the pilgrims that are embarking on their journey. Above all, enjoy your success.
About Ed Frazier
Ed has been involved in media and Internet technologies for over 30 years. He was one of the founding individuals of the Regional Sports Networks that make up Fox Sports. Following Fox sports Frazier was involved in a joint Venture with Coserv Electric in the deployment and creation of advanced fiber networks. Through the CoServ Joint Venture he supplied advanced Internet technologies, for design, development and Internet marketing. Frazier has years of experience in Internet marketing and media, including, pay per click advertising, video streaming, banner advertising, Google adwords, Yahoo, MSN, and other directory and Internet marketing systems including direct e-mail, and user targeting advertising. His interest in Internet technology management for his clients is targeted to insure best practices in Internet marketing and ecommerce. Ed is a graduate of the University of Texas at Arlington. He provides consulting services in the field of Integrated Media. This involves traditional broadcast media and emerging media via satellite and the Internet. He has served on the boards of publicly traded companies, privately held corporation and non-profit organization.