Firm Life Stages
The Billiken Angels fund firms at any stage of its existence. It is important to know (and tell us) what stage your firm is at, because the standards for evaluating firms change as the firm gets further along in its life cycle.
For example with a seed stage firm, there are probably no customers, since there is nothing to sell them yet, so we are looking at how you have done in identifying potential customers and making sure they like your concept. For firms in their expansion stage, we look at their track record in prior markets and the prospects in the projected future markets. So it is important to describe your firm accurately in your online application and in your business plan. The stages are shown graphically in the accompanying figure, and explained in detail below.
For example with a seed stage firm, there are probably no customers, since there is nothing to sell them yet, so we are looking at how you have done in identifying potential customers and making sure they like your concept. For firms in their expansion stage, we look at their track record in prior markets and the prospects in the projected future markets. So it is important to describe your firm accurately in your online application and in your business plan. The stages are shown graphically in the accompanying figure, and explained in detail below.
Seed – this is when the firm has not yet officially started (no sales, no taxes, probably no patents or employees yet – although you might have a partner on board). You have an idea, you’ve been exploring it (e.g. making a prototype, getting designs, etc.) as well as your market (e.g. talking to prospective customers), and it may be a business plan, but it is not yet a business.
Start-Up – the business has started to make sales, or you are in the final stages of getting ready to open the business up for sales (e.g. you have a location and are preparing it, you have placed the order to manufacture your product, you have hired and are training employees, you are taking advance orders, etc.). The business probably has its licenses, phone, website and a physical address. It’s business plan is complete and matches the business that is running or about to open up. Patents and brands should be in legal process or already approved. You may be hiring or have hired your first employees.
Early Growth – the business has passed its “birthing pains” and is establishing itself in its market and industry. Sales grow from month to month, procedures are becoming more consistent and efficient. You're hiring your first specialists (e.g. sales people, operations experts, accountant, etc.).
Expansion – This is marked by the opening of new elements – a second shift or a second location, a move to larger facilities, the introduction of a second major product or service line. Procedures are well established, and are beginning to become highly professionalized (e.g. CPA firms, ISO or other certifications, etc.). Competition is more of an issue at this stage, as are the problems of maintaining key elements of the culture and operations as people and locations are added.
Most small businesses reach a point where they stop expanding – some by choice, sometimes because of natural or
business limitations. From this point on they enter the Maturity phase, which is marked by its steady-state approach (e.g.
relatively flat or slowly growing sales, a consistent pool of employees and customers, etc.).
Take-Off – For some businesses, the expansion phase leads into a period of exceptionally rapid growth because of exceptional levels of market acceptance. This is the case when a niche product becomes widely popular (like noise-cancelling earbuds in the 2000’s or cell phones in the 1990’s), or when a regional product suddenly gets national attention (this happened to Snapple for example). For high-tech products, passing a major milestone (like adoption by a major supplier or gaining FDA approval) can make this kind of difference. This is reflected by the kind of growth where a business is doubling (or more) in the space of a year.
Start-Up – the business has started to make sales, or you are in the final stages of getting ready to open the business up for sales (e.g. you have a location and are preparing it, you have placed the order to manufacture your product, you have hired and are training employees, you are taking advance orders, etc.). The business probably has its licenses, phone, website and a physical address. It’s business plan is complete and matches the business that is running or about to open up. Patents and brands should be in legal process or already approved. You may be hiring or have hired your first employees.
Early Growth – the business has passed its “birthing pains” and is establishing itself in its market and industry. Sales grow from month to month, procedures are becoming more consistent and efficient. You're hiring your first specialists (e.g. sales people, operations experts, accountant, etc.).
Expansion – This is marked by the opening of new elements – a second shift or a second location, a move to larger facilities, the introduction of a second major product or service line. Procedures are well established, and are beginning to become highly professionalized (e.g. CPA firms, ISO or other certifications, etc.). Competition is more of an issue at this stage, as are the problems of maintaining key elements of the culture and operations as people and locations are added.
Most small businesses reach a point where they stop expanding – some by choice, sometimes because of natural or
business limitations. From this point on they enter the Maturity phase, which is marked by its steady-state approach (e.g.
relatively flat or slowly growing sales, a consistent pool of employees and customers, etc.).
Take-Off – For some businesses, the expansion phase leads into a period of exceptionally rapid growth because of exceptional levels of market acceptance. This is the case when a niche product becomes widely popular (like noise-cancelling earbuds in the 2000’s or cell phones in the 1990’s), or when a regional product suddenly gets national attention (this happened to Snapple for example). For high-tech products, passing a major milestone (like adoption by a major supplier or gaining FDA approval) can make this kind of difference. This is reflected by the kind of growth where a business is doubling (or more) in the space of a year.
