Things to Know About Your Early Stage Startup or Small Business

Things to Know About Your Early Stage Startup or Small Business

Establishing your own business is incredibly exciting. You can finally achieve the dream of being your own boss while earning a living doing something you are truly passionate about. If you’ve taken the first step toward founding a business and making your entrepreneurial dream a reality, you’ve achieved a major milestone.

That said, the early stages of a business’s foundation can be just as nerve-wracking as they are exciting. Unfortunately, many startup owners fall into common traps that cost them time and money. New business owners are especially prone to errors in the early days of entrepreneurship. Educating yourself about these costly mistakes is the first step to helping you avoid them.

Whether you are starting your own plumbing business, trying to make it on your own as a consultant, or getting your start as a freelance makeup artist, the info below will show what’s advantageous and disadvantageous for early-stage startups.

What is an early-stage startup?

Most people agree that an early-stage startup is one that has yet to earn money. At this stage, you may still be fine-tuning your business concept and thinking about how to fund that concept (for example, by borrowing money from family, taking out a business loan, or dipping into your savings). The goal of a startup’s early stages is to create a concept with a good chance of succeeding on the market and crafting a business plan to support that product’s success.

Early-stage startups generally go through four steps of maturation: startup, seed, growth, and maturity. Each of these stages has its own challenges and advantages, discussed in further detail below. Keep these in mind: These life cycle stages apply to all types of businesses, whether you’re running a tech startup or a mom-and-pop-style restaurant.

Here’s an example to help you better understand what each of these phases looks like. Let’s look at Amy, who is starting her own catering business:

3 Things Advantageous to Early-Stage Startups

Being in the early stages of entrepreneurship is exciting and challenging at the same time. Leaning into the advantages of being in this stage of business will help you achieve maximum success.

Here are some benefits enjoyed by early-stage startups and ideas on how to leverage them:

3 Things Disadvantageous to Early-Stage Startups

As mentioned, the early stages of entrepreneurship also come with hurdles. Identifying these challenges and preparing for them will allow you to maintain momentum and growth.

Here are some drawbacks faced by early-stage startups and ideas on how to prepare for them:

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Early-stage companies face unique challenges — but they also have one-of-a-kind opportunities at their fingertips. The startup ecosystem can be intimidating when you’re just getting started. The more you know about what lies ahead, the better prepared you’ll be. There are many resources available to first-time entrepreneurs to help. Trust ZenBusiness for added tips on how to achieve success and help you start, run, and grow your small business.

Early-Stage Startup FAQs

  1. What are the stages of a startup?

    The stages of a startup can generally be classified into four main stages: startup, seed, growth, and maturity. In the startup stage, entrepreneurs still lay the groundwork for their business, for example, coming up with the concept and business plan — and formally establishing their entity as an LLC or similar legally recognized organization. This is followed by the seed and growth stage and, finally, maturation. Once the business reaches maturity, it can plateau — or you can reinvest in it and maintain growth.

  2. What is an early-stage venture?

    An early-stage venture is one that is still refining its business concept and funding model. At this point, entrepreneurs may seek investment from lenders like venture capital (VC) firms, private equity firms, banks, online loan providers, or nonprofit microloan organizations. They may also turn to more alternative sources, like crowdfunding. Other entrepreneurs may have money set aside to fund their early-stage venture themselves.

  3. What does early-stage investment mean?

    Early-stage investment refers to the first financial resources that a business relies on to kick-start operations. Early-stage investments could come from private investors, like angel investors. Alternatively, this funding can be secured via a loan, such as a microloan, bank loan, or online loan.

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