The 4 Stages of Entrepreneurship

Since launching Founders of Color in 2017, we've grappled with understanding how to best support our members. This has been especially challenging because our members span the gamut from early stage tech companies to more established 7-figure businesses, and just about everything in between.

After a couple of years of wrestling with this, we have come to realize that the big distinction that determines the sort of support a small business needs is not about whether its a service-based business v. product a product-based business, or a brick and mortar business v. a home-based business or even a tech company v. a non-tech company. The biggest determining factor is stage of business, as a function of annual revenue.

The Entrepreneur's Journey

Last year, we developed a framework to help us better understand the stages of entrepreneurship. In creating it, we wanted to offer some general guidance on what entrepreneurs at each stage should be thinking about, along with the challenges to be faced along the way.

The framework is guided by certain statistics which function as bookends to the model.

The first is that 80% of all small businesses are sole operators, meaning they have no employees, and of them, 2/3 generate less than $25,000 in annual revenue (source). The second is that only 4% of all businesses hit the million dollar annual revenue mark, which means, there was no need for our framework to extend far beyond the high 6 figures because 96% of all small businesses (and likely 98% of minority owned businesses) fall below the million dollar threshold (source).

What we found in developing this framework is that the entrepreneurial journey is not a straight path, but rather a series of steep climbs and plateaus. Each new level requires a different set of skills, tools, information and knowledge.

The 4 Stages of Entrepreneurship

Stage One is the Dreamer Stage. These are individuals who are just getting started, or haven't figured out how to convert their side hustle into something that can sustain them and their lifestyle. For The Dreamers, the primary goals are to: 1) get started, 2) get customers and 3) get legal.

Stage Two is the Hustler Stage. For the Hustlers, the goals are to: 1) achieve market validation, 2) perfect their craft and 3) sustain themselves and their family. The great thing about arriving at the Hustler stage is your business is making money. The downside is that most have no idea how to escape from it. In order to do so, you've got to start thinking like an owner of your business and not an employee.

Stage Three is the Scaler Stage. These are small business owners who are implementing scaling strategies in their business which allow them to experience increased outputs, while decreasing inputs. In other words, they commit to working smarter and not harder. The primary goals at this stage are to: 1) solidify your brand, 2) build your team and 3) implement key systems.

Stage Four is the Grower Stage. At this stage, the small business owner has cracked the code. They have something the market wants, they've built a team and implemented systems. Now, they just need to find a way to further amplify what's working. Therefore, the primary goals for our "Gs" (sounds way cooler than Growers) are to: 1) develop infrastructure, 2) secure growth capital and 3) focus on management.

It's important to understand that this framework is a guide. It's not an absolute reflection, because there is no one journey. Rather, it's a rendering designed to provide a general sense of the entrepreneur's experience at different stages of growth.

Small business growth is never easy, but it is possible. When intention and focus are paired with the right resources and relationships, everything is possible.

To learn more about FOC's 4 Stages of Entrepreneurship, check out this Linkedin Live where I offer a more extensive overview (the important stuff starts 10 minutes into the video). And you can also download The Entrepreneur's Journey infographic here.

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ABOUT FOC

Founders of Color (FOC) is a national organization dedicated to minority small business growth. We understand the power of entrepreneurship to achieve economic equality and view entrepreneurs of color as untapped resources that, when unleashed, will grow the nation’s economy, strengthen its social fabric, and bring renewed vitality to the American Dream.

With 3,700 members in 42 states, Founders of Color is building a movement for change.

Since 2017, we’ve delivered programming that connects our members to the resources and information they need to scale, all while building a community where they feel challenged, supported, and understood.

To learn more about our work, visit our Impact Page.