One of the most fulfilling journeys anyone can undertake is starting a startup. There are many stories about how a startup makes it big in the market and reading them will inspire yourself to take a similar journey. However, starting a startup and scaling it up is a difficult task as there are multiple steps involved in running a startup. Identifying a problem and finding a solution is not only important when setting up a startup, but there are many other parameters to consider along the way. By looking at multiple successful startups and the bigger picture, a startup's journey can be considered in stages. Skipping any of these steps and moving on to the next step will surely lead to failure.

Different stages in the journey of a startup

1) Problem detection

Anyone can come up with an idea, but the most important thing is to come up with an idea that solves a specific problem. This step is to find out the obstacles and problems faced by the customers in the market. The stage where the startup should focus on what the customer wants rather than what a startup needs to do. This is where startups need to interview customers and find out the problems they are facing and find solutions. For example, Uber discovered that customers needed a simple way to hail a cab and came up with their platform that connects cabs with customers.

2) Concept

The next step is to find a value proposition for customers. It starts with ideas to spot opportunities and create good solutions. Customer interviews have a higher chance of good ideas emerging during the discovery phase, as they may provide their own insights and ideas. By the end of this phase, a startup should be able to invent a solution that solves a problem by providing a solution that an existing competitor does not.

3) Problem/solution fit

There is a high probability that the first solution is not the correct solution. Initial plans may not succeed, so plan A should never be considered the right solution. Sometimes an immediate solution doesn't motivate a customer to buy. This step can be used to perform multiple iterations and pivot to different product models if possible. At this stage, a startup needs to present a product design, clickable prototypes or product features that customers can physically interact with. The initial problem is solved if customers show interest and pay for the product upfront or take a certain set of steps that you can define based on your product, target, and market.

4) Product/market fit

To get to a product/market fit, a startup needs data like customer acquisition cost (CAC) and customer lifetime value. This can only be done with a launch product in use. One of the best indicators of a good product/market fit is acquiring customers with low acquisition costs. A CAC can be calculated by dividing all costs incurred to acquire more customers (marketing costs) by the number of customers acquired during the period in which the money was spent. For example, if a company spends INR 100 on marketing in a year and acquires 100 customers in the same year, their CAC is INR 1. Net Promoter Score (NPS) is the easiest way to measure product/market fit. The Net Promoter Score is the percentage of consumers who rate their likelihood of recommending a company, product or service to a friend or colleague, with 10 being highly likely and 1 being very unlikely.

5) Scaling

This is the stage where a startup should focus on diversifying their product offerings. This is where a startup needs to iterate on what works and incorporate these workflows into processes that speed it up. This is the stage where a company can consider hiring more resources, opening a bigger office space and expanding into different areas. For example, hyperlocal delivery startup Dunzo was limited to Bengaluru when it launched. However, Dunso soon began to expand and increase their operations to other metropolitan cities.

Many startups and entrepreneurs focus on scaling quickly without going through the proper startup lifecycle and often end up in losses. Building a startup can be fun, but it's important to take care of each of these steps throughout its journey.