You’ve developed a business idea and have started to put pen to paper to get the ball rolling. Friends and family keep referring to it as your little side hobby. But it isn’t that; it’s so much more. You’re conducting research development, marketing research, and product business development. You also have a steady revenue stream flowing in. You, my friend, own an early-stage startup.
While the early stage of a startup may get your heart pumping, it probably gets your anxiety going too. Believe us, we get it, bootstrapping in the early stages is hard. It’s even harder on your own; this is why Ramen Club was born.
We wanted to take isolation out of the equation, and see what growth could take place when early stage startup founders were part of a community. Ramen Club members are part of an active Slack, participate in remote co-working, and have access to in-house mentors, expert AMAs, and so much more.
Read on to see if you fall under the umbrella of an early stage startup, and if so? You should pull up a chair. You can totally sit with us.
The Four Stages of a Business
Every business goes through the same four stages in its lifecycle:
- Renewal or Decline
The startup phase is exciting. It’s exhilarating.
The Hartford breaks it down with some somber numbers: 42% of startups fail because there is no demand or market for their product or service. Take this not as a warning, but as a reminder to dial in your product, your place in the market, and the pain points that your product or service addresses.
What Exactly is an Early-Stage Startup?
You’re familiar with the term “startup.” It’s been thrown around for years, and often generates images of an office in a loft with foosball tables and beer on tap. But we’re not talking about this once revolutionary, now somewhat cliched idea. We’re talking about an early stage startup.
Startup.Info outlines it: “[Early stage] startups are growing and working towards the day when they will become successful.” This is the stage where the possibilities are endless, where rapid growth is (hopefully) on the horizon.
“Cool, cool, cool,” you’re thinking, “but how do I know if MY company is an early stage startup?” Read on, friend, we’re going to break it down.
Your Product is Brand New
You’re the new kid on the block. People go, “Sorry, who?” when your company is mentioned. Don’t panic at that thought: this is just the jumping-off point. This is the time to hustle, and market the heck out of your product or service. Customers are checking you out, and seeing if they like what they see, and if they’re ready to part with their cold, hard cash.
Big Heart, Small Size
Not all businesses start out needing buildings full of employees, and early stage startups are no exception. At this stage, your startup is made up of less than 10 employees. There’s no shame in your game if your startup is made up of only you. Or if you work out of your spare bedroom. Or garage. Hey, if it was good enough for Bezos, it’s good enough for you, right?
It’s Not Always Smooth Sailing
Theodore Roosevelt said, “Nothing worth having comes easy.” And he ain’t wrong, particularly when it comes to business. A brand new business will have more than its fair share of ups and downs, and unforeseen problems that need to be addressed. Are these problems challenging? Yes. But can they also be used as an opportunity for improvement? Oh heck yes.
Not to toot our own horns or anything, but Ramen Club is also an opportunity for improvement (and far less painful). Our co-working sessions even have challenge-solving sessions halfway through.
Show Us the Benjamins… Please?
Ah profit, why must you be so elusive? In early stage startups, the books aren’t in the black quite yet. Frequently funded by investors, early-stage startups are not profitable. Once they make money they are on their way to exiting the early stage of their growth.
Money speaks, and in the case of a startup, it also keeps it in the early stages if it hasn’t progressed to series A funding.
Growing Beyond the Early Stage
“Great,” you’re thinking, “I am now officially on board as an early stage startup… now what?” First, give yourself credit where credit is due! Starting a business is no small feat, and you, my friend, have taken those first few steps. Now is the time to keep your momentum going, and turn that early stage startup into a full-fledged business.
Define Your Core Offering
When you’re in the early stages of a startup, and the ideas are flying, it’s tempting to create ALL THE THINGS. And we get it, you totally can, and you totally should… In time. Now is the time to define your core offering, and perfect it. You can add the bells and whistles later.
As Nike likes to say, Just Do It.
We’re not saying go to market when your product isn’t ready, or your scope of services isn’t defined, but once they are? Launch.
Fine-tuning a product is good, but obsessing over minutiae is not. As the founders of Ownnit note, delaying a launch can take away valuable growth time.
You created this startup because you know the product that you are supplying. There will be hiccups and learning opportunities with a launch of any kind, no matter how long you wait, and this way you’ll be able to see the cracks that are only visible after launch, and start dealing with them ASAP.
Create a Quality Corporate Culture
By this, we obviously don’t mean painful icebreakers at meetings, or a slab cake left in the break room for birthdays. It’s about the environment that you’re building from day one. It’s about what kind of people you want to have around you, and what kind of people you want to work with.
Startup culture has come so far from its cliched frat-bro-with-a-ping-pong-table origins. Working in an early-stage startup creates camaraderie and connection that isn’t always possible in large corporate settings. A former employee of a startup that had just landed Series A funding explains they “miss the culture tenfold and would gladly go back regardless of the work.”
Culture is a huge driver for employees, particularly in wake of the Great Resignation. Make sure you are deliberate about the tone that you set.
Get Knocked Down Nine Times, Get Back Up Ten
Young grasshopper, as a founder of a new business you will have to get ready to fall flat on your face, get right back up, and keep going.
The old cliche of “It’s not if you’ll fail but when” is annoyingly true in this stage of business. But the other side of the cliche, that this is when you’ll learn the most, is also true.
Would we all like five-star reviews all the time? Yes. Would that help you grow? Not so much.
We all like praise. Who doesn’t? But only seeking out feedback from past clients, or those without complaints, won’t necessarily identify areas of opportunity like prospects who never quite made it the transition to leads.
Napala Pratini, cofounder of Habitual, explains that by talking to people who are interested in what you do, but not so much as to actually buy your product, you can identify opportunity gaps that you wouldn’t see otherwise.
Find a Sounding Board or Mentor
Being the founder of a startup can be a lonely place, particularly if you’re a solo founder. Serial entrepreneur Courtland Allen’s first piece of advice when bootstrapping as a single founder? Harness the power of a good sounding board. Ya know, like Ramen Club.
Now that we’ve tooted our own horn, there are a few other ways to get that back-and-forth that isn’t possible as a single founder (without talking to yourself in a mirror, and that’s a whole other can of worms):
- Find a mentor: Mentors are invaluable as they are a source of experience and advice, and you can create long-term, meaningful relationships with them. Make sure to find a mentor that is a right fit for you, and your company, and then: Get. That. Knowledge.
- Engage with local entrepreneur networking groups: You might not think that you would get much from people in different lines of work, but at the end of the day, a startup is a startup. Talk about funding woes, learn about your local business scene and create connections.
- Join Ramen Club: a-ha, we’re back! We’re the best of both worlds above; with Ramen Club, you get in-house mentors, and remote co-working sessions that drive connection and community.
Let's Talk Dollars and Cents
We’ve talked about early-stage startups from an operational point of view. Now it’s time to talk about how startup stages are designated from a financial, or investor, point of view. And we know, we know, so many stages! But stay with us here, we promise it’s worth it. Silicon Valley Bank shows how levels of funding can categorize startups into three stages:
Early Stage Startup
Ah, our old friend, the early-stage startup. We know a lot about how they work, but SVG talks about how they can source the capital required to stay afloat and some of its monikers in the financial world.
- Seed, pre-seed, seed extension: Lots of words to say the same thing about an early-stage startup: they haven’t secured Series A funding.
- An Accelerator: This mentor-based intensive program strives to create a lot of growth in a short amount of time (usually three months), that culminates in pitching your product, though it can sometimes involve giving up some equity in your company. Side note: Ramen Club also offers quality mentor-based services, and we won’t ask for a piece of the pie!
- Angel Investor: Whether you have a wealthy aunt who believes that you’re the next hot ticket, or a friend of a friend of a friend looking for a startup to invest in, angel investors use their own net worth to invest in a company in exchange for equity.
- Venture Capitalists: Often poised to aid in accelerated growth, VC funding is about developing a relationship as much as a business. Some control will be ceded when accepting funding from a VC so ensure that your long-term goals, visions, and ways of doing business are in sync.
Venture-Funded or Growth Stage
We’ve come full circle back to our business growth stage! This stage kicks off once the first Series A round has been received. This is your time to shine, and where growth is not only anticipated, but expected. Think of it as moving from the bullpen to the pitcher’s mound. What exactly is expected at this stage?
- Establish your sales function: How exactly are you going to run this company? Do you need more staff? Are you operating at full capacity? Do you need to expand your technology?
- Scale: Growth brings different priorities, and you will have to adapt to delegating smaller items of lesser importance so that you can focus on moving your company forward, and upward.
- Keep hustling: While first Series A funding is the most difficult to attain, continue to work on attracting further investors as you grow.
At this point, things are moving along like a well-oiled machine. You’ve got dependable financing, and are meeting operational and sales targets. Your investors are happy, you’re happy. And yet, there is still that element of “Now what?”
- Perform, perform, perform: No longer is your startup trying to attract investors with what it “could” do; they want to see what it does.
- Wanted: CEO: At this stage, you might consider bringing in a CEO to run the day-to-day operation while you focus on growth and potential expansion.
- Do I stay or do I go: The ultimate founder dilemma, debating the sale of your startup is not something that can be decided in a day. Whether you decide to sell, or offer an IPO, there are significant financial gains at stake at this stage.
So by this point, we’re pretty confident that you see yourself in one of the (many) stages of a startup. And if it’s the early-stage? There really is no better community to be a part of than Ramen Club.
We aren’t just about AMAs and giving you access to $50K worth of discounts on products like Stripe and Hubspot (though we are totally into both of those things), we’re about creating connections and community for entrepreneurs like you.
Join us and discover the best of the best that Ramen Club has to offer. Get matched with founders at a similar stage for masterminds that drive you and your business forward. Twice-weekly co-working sessions to connect with other entrepreneurs. In-house marketing, validation, and financial mentors that help to keep you on track.
We can’t wait to meet you and support you to be ramen profitable, and beyond.