The Simple 5 Phase Framework For Growing Your Startup

When trying to figure out how they’ll grow their startup, many entrepreneurs end up looking like this guy above…

Which looks painful and totally unnecessary.

Because the phases of growing a successful startup are simple.

Too many people overcomplicate it and end up going nowhere.

Now, I’m not saying that building a startup is simple, but understanding how to is.

About five years ago I learned a framework for how to build a successful business and decided to apply it to my own.

Now at 28, I’ve been able to create a business and more importantly, a life that I always envisioned myself having.

Here’s the Simple 5 Phase Framework for growing a startup that I followed and you can too.

1) Message to Market

When you begin, your sole focus should be on getting your product to market.

That’s it.

No focusing on building systems, hiring, Facebook ads, etc. All you should be doing is creating your minimum viable product (MVP) and trying to get someone to pay you for it.

You can think of your MVP as the most basic version of your product that someone would pay for. It solves the problem but maybe not as well as you would like or without all the bells and whistles.

How do you know if you’ve completed this phase?

Someone has paid you.

The trap that many entrepreneurs fall into is getting stuck in this phase and trying to make their product better and better before shifting to step 2. So don’t do that and just shift to the next phase. There will be plenty of time for continuous improvement of your product down the line.

2) Marketing & sales engine

Now that someone has paid you for your product, it’s time build a marketing and sales engine. For this phase, you are also shifting your identity from creator to marketer.

To start, you’ll want to make sure you are tracking the most important metrics of your marketing funnel because if you can’t measure it, you can’t manage it. Here are the three basic metrics to track for your funnel:

  • Clicks/calls — this is the “top of your funnel” where people are going to be clicking on your ads/posts or calling your phone number.
  • Leads — a lead is someone who shows interest in your service by giving you their contact information (name, phone, and email).
  • Customers — if you convert a lead into a sale, congrats! You’ve got yourself a customer.

When you track the numbers for each stage above, you are able to see what percentage of people move through each stage. This will allow you to easily project the amount of sales you can expect from your marketing efforts. For example, your funnel may look like this:

  • 100 clicks/calls
  • 10 leads (10% conversion rate)
  • 2 customers (20% conversion rate)

Assuming the conversion rates stay constant, if you wanted 4 customers this month, you would have to bring in twice as many clicks/calls.

Other metrics you will want to track at this stage are:

  • Cost to acquire a customer (CPA) — how much does it cost you to acquire one customer from your marketing efforts.
  • Profit margin — how much profit are you making from each sale. Take the revenue (what they paid you) minus the expenses (what you paid to fulfill the product/service) and you are left with your profit. Make sure you include the CPA in the expenses to get your true profit.

How do you know if you’ve completed this phase?

You’re overwhelmed.

The biggest mistake people make here is that they skip the next phase and decide to hire. When you do that, every flaw of your business will be magnified and multiplied by however many people you hire. Instead, just focus on the next phase.

3) Create systems

Systems are step-by-step guides on how to complete processes in your business. Another name for these are Standard Operating Procedures (SOPs). A lot of business owners hate this part, but it is critical to building a successful business.

You’ll want to write out these SOPs to be clear and detailed so that anyone off the street with the minimum amount of technical knowledge required would be able to complete it.

Quick tip: The best book I’ve read on this subject by far has been Work The System by Sam Carpenter.

Once you’ve completed all of your SOPs, you can then write out the job description of the person you want to hire to complete each SOP. These are the roles you will need to hire for.

How do you know if you’ve completed this phase?

You’ve completed your SOPs and job descriptions.

By this point, you are overwhelmed and probably a little lonely. Luckily, it’s time for you to shift to the next phase.

4) Build a team

With your job descriptions in hand, you can begin the hunt for the perfect people to fill them. This is where your identity shifts to manager.

Hire people based on their ability to match your job description and their fit with your culture and values.

Invest the time necessary to get them properly trained in their role and your SOPs. It will pay off big time especially when you all of a sudden find yourself with less stuff to do. Speaking of less stuff to do…

How do you know if you’ve completed this phase?

You have time.

All the tasks that you’ve been doing for so long are all of a sudden taken off your plate by your new hires. Often, the work gets done faster and better since your team members are focused.

5) Scale

Many entrepreneurs feel uncomfortable with extra time… many feel guilty.

But time is a gift.

Don’t give in to your desire to jump back in to start doing menial tasks. That’s what your team is for. You now have the opportunity to do what you do best: think.

By this stage, you have a great product, a profitable marketing and sales engine, detailed systems, and an amazing team. Use this extra time to begin to strategize how to bring your business to the next level and truly scale.

Here are examples of some questions you may ask:

  • What are your most profitable marketing channels?
  • Can I invest more money here to get a higher return?
  • Are there other channels that I haven’t tested yet?
  • Are there other revenue channels I can add onto my business?
  • Where can I optimize my business?
  • Could my SOPs be simplified?
  • Are there team members that are not needed?
  • Could I outsource work for lower cost and still get the same result?
  • Are there products/services that I can cut?

It’s important at this stage of your business to be protective of your time and always give yourself space to think. This will be a constant battle, but one that you can definitely win.

Quick tip: my favorite book on scaling is aptly named Scaling Up by Verne Harnish

Although these phases are very high level, I’ve found them to be extremely helpful when building my business. If I ever felt lost or overwhelmed, I would check-in with myself about which phase I was in. That would give me insight into what my number one priority should be.

Don’t overcomplicate it and good luck.