I love idea-driven businesses. They’re not just solving problems, they’re not just serving people, they’re not just putting cool products out into the world.

Idea-driven businesses are fueled by the pursuit of change.

Their innovation is born from a deep desire to change the way people think about themselves, their businesses, their homes, their careers, their wardrobes, their families, etc…

Idea-driven businesses come in all shapes and sizes. Some create physical products, others offer services, still more offer education or training.

I’ve been working primarily with idea-driven businesses for about the last 5 years. I’ve encountered them at all stages and have created systems for tackling the biggest problems they face. So with this article, I want to shed light on the different stages of idea-driven business and what problems each stage entails so that you have a better idea of where your idea-driven business is and where it’s headed.

I’ve included a description of each stage, the biggest difficulty the business faces in each, what happens during the transition from one stage to the next, and, finally, the inflection point that changes the transition from eventual to intentional.

The 4 Stages of Idea-Driven Business

STAGE 1: STARTUP

A startup is defined as a business that is trying to figure out how it will make money, reach a growing number of customers, and build the systems it needs for continuous optimization.

Yes, this normally comes with the trappings of venture capital, hip offices in an expensive city, and fancy parties. But it absolutely doesn’t have to.

At the heart of whether a business is a startup or not is 1 core activity: learning.

Think about when you started your business: did you know what product or service offers would work? Did you know the best way for you to find customers? Did you know what you even wanted your business to look like at maturity? No.

You were learning. You were learning how you could reliably make money; you were learning how you should connect with the right people; and, you were learning how to do those things more efficiently so you didn’t lose your mind (hopefully).

This is the Startup Stage of idea-driven business. At this stage, the idea may not even be articulated. It could be more of an ethos or personal philosophy in the back of your mind. You don’t know the value of it yet—and how could you?

You’re simply figuring out how you can make money, reach the right people, and do things more efficiently as you go in an effort to create positive change for people. You start doing the work, put up a website, and learn how your work is most useful.

BIGGEST DIFFICULTY: Finding people to offer your product or service to so you can learn.

THE TRANSITION: As your business starts to enter the transition to the next stage, you find yourself reasonably confident about what will sell and what won’t. You have a hazy understanding of where you can find new customers when you need them. You’re paying the bills but it’s not always easy. You’re excited about your business but the reality of how you will make it grow seems incredibly daunting.

INFLECTION POINT: You realize that nothing will change unless your business changes. Your business can’t grow without a significant adjustment to the way it creates, delivers, and exchanges value.

STAGE 2: GROWTH

The Growth Stage begins when you don’t just repeat what’s worked in the past but truly understand why it’s worked. When you know why certain products, tactics, or messages have worked, you can engineer new products, tactics, or messages based on that same principle.

Now, you begin to take control of the growth of your idea-driven business. It’s intentional expansion—not the unintentional explosion that often leads to collapse.

In the Growth Stage, you might need a waiting list or to get some production assistance. Things are still tight but you’re starting to see how they could work out—and you sense wiggle room might be just around the corner.

BIGGEST DIFFICULTY: Finding ways to serve more people without burning out.

TRANSITION: Here is where your idea starts to emerge. You discovered it hiding underneath the unique way you offer your work and you’ve started to talk about it. That idea has helped your business growth gain traction and momentum.

INFLECTION POINT: You realize you’re spinning your wheels on growth. There’s little point in reaching more people because your business doesn’t have a way to serve them. Because there’s little point, you’re not doing what you need to do to reach more people. Revenue growth stalls—even if reach does not.

STAGE 3: LEVERAGE

The Leverage Stage begins when you use your idea as a way to do more with less work. Your idea becomes the heart & soul of your message, offers, brand, and business model. Your business is known for its unique perspective. Your business has stopped trying to be everything to everyone.

Idea-driven businesses don’t always scale as they grow—but to reach a level of ease, they must find leverage.

Focus is the key to leverage. You focus on 1 message. You focus on 1 growth channel. You focus on 1 offer. You focus on 1 customer. It’s counterintuitive to get more specific and add more constraints to your business to create leverage—but it’s key.

BIGGEST DIFFICULTY: Clearly and concisely describing what you offer to appeal to the right people at the right time.

TRANSITION: As your business starts to enter the transition to the next stage, you sense that all that focus will allow your business to expand if only you can create the systems and get the help that will allow that to happen.

INFLECTION POINT: You see a pattern among your customers that point to additional ways you could be serving them. All you need is a way to make it happen—and you could significantly increase your revenue per customer.

STAGE 4: MICROENTERPRISE

The microenterprise is the startup all grown up. It’s lean, mean, and changing the world.

And you, as its owner, are not burnt out. You’re enjoying the freedom, control, independence, and influence that you imagined when you started this whole thing. You’re working your systems, optimizing regularly, and letting your growth machine do most of the work.

You have a team to support you and your ideas. You’re not responsible for every email, decision, or sale. You have time to think, be creative, and enjoy being an executive.

BIGGEST DIFFICULTY: Knowing when to disrupt your own systems or process.

Orienting your business to the stage that you’re in helps you anticipate pitfalls, plan proactively, and discern your next steps. Plus, when you know what stage you’re in, you know you’re not alone. The frustrations you feel and the goals that you have put you in the company of other smart idea people who are making things happen.

Building a business is a journey–enjoy the ride.

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