The question “What do you want to be when you grow up” is a simple for kids to answer but not so for start-up entrepreneurs. In a recent session I had with some of them, when the question was posed on their start-up milestones, it was only silence in the room.
In a random succession thereafter, they raised three questions: What are startup milestones, what should the entrepreneur consider while forming them and why are they so important?
Milestones, in the context of startups, are effective points in time along the company’s timeline, prior to a future event or goal. Planning for the success of your business not only gives you a map of how to get to your target destination, but also gives you the hope of knowing exactly what you’re aiming for.
From our experience with entrepreneurs, the startup milestones should be broken down in three phases: (i) Formulation of a business plan through a minimum viable product (MVP); (ii) MVP through full production; (iii) Full production through proof of concept.
From there, hopefully, you will be in a position to raise venture capital for further scaling. Here are a few pointers for setting achievable milestones, for each of these three phases include:
(i) Simple business plan through MVP (0 to six months).
Product: Develop a minimum viable product with basic functionality.
Team: You and your co-founder, preferably one of you should be a technical person working on the product. Outsource for additional expertise if needed.
Business: Start laying the ground work to identify and budget for key partnerships you will pursue, and key sales or marketing channels you will test.
Users: None yet, other than the team that is testing the iterations of the product.
(ii) MVP through full production (months 6-12)
Product: Use this time to test with users to see what they like and don’t like about the product, and then build out additional features and functionality of your improved product.
Team: Start to recruit the rest of your senior team or any additional staff required. You don’t necessarily need to hire them yet, but have candidates identified in the wings.
Business: Start to reach out to business partners and start testing key sales and marketing channels identified in phase one. No material revenues yet.
Users: A minimum base of customers that is large enough to test with. Start to establish trends for monthly growth. No material traffic yet.
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(iii) Full production through proof of concept (months 12-18)
Product: You will no longer be in the testing phase but with a full functioning product. Continue to add in additional features and functionality over time.
Team: You should have your full management team hired and be in place, even if working with minimal pay. This will be required to get the full attention of the venture capitalists.
Business: You will have a few partners on board (with a good pipeline in discussions) and proven an affordable cost of customer acquisition. Initial revenue coming in will be spent in marketing to accelerate proven tactics and to generate more revenue. Start identifying and laying the ground work with venture investors, but not yet asking for any money.
Users: A material base of traffic, growing monthly helps venture investors acknowledge there is a real and growing appetite for your product in a sizable market.
By this point, you should be ready for growth and in a good position to begin asking venture investors for capital.
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