Like in a PlayStation game, we can visualize the typical lifecycle of startups and scaleups as a number of stages or game levels. Let’s have a look at the levels of the Shiftup Business Lifecycle:

1. The 10 Stages of the Business Lifecycle
By Jurgen Appelo - © 2019 Happy Melly BV

2. Most business models go through a number of lifecycle
stages. These stages determine how people should go
about running the business.
Young, immature business models should mainly focus
on experimentation and exploration of customer
needs.
Older, mature business models will usually focus more
on execution and the optimization of proven value
streams.
You can use this overview to evaluate the maturity of
your business model.

4. There is a founder or a co-founding team of the
business, but the business is still just an idea, concept,
or vision.
The customer’s need for a solution (Problem/Solution
Fit) is not yet validated.
The available time and resources are mostly self-
funded by the founder or budgeted by external
managers.
1. Initiation

6. The business is now more than just an idea, concept,
or founder’s vision. But it is not clear what is the core
business or the value proposition.
There are defined business model hypotheses that
must be validated.
The business has a startup culture. Repeatability and
scalability of the business model are not confirmed.
The business model is being tested with prototypes or
MVPs.
2. Expedition

8. The customer’s need for a solution (Problem/Solution
Fit) is now validated. People are willing to pay to get
their problems solved.
There is a high-level strategy for the future of the
business, but Product/Market Fit (customers loving the
product or service) is not yet validated.
3. Formation

10. The business is focused on validating Product-Market
fit.
The startup works autonomously, and the available
time and resources are not self-funded or externally
budgeted anymore. Instead, the business is externally
funded by angels, VCs, or a larger corporation.
There are formal agreements for business owners and
team members. The founder or the founding team is
100% committed to the business.
4. Validation

12. Product/Market Fit (customers loving the product or
service) is now validated.
There is evidence of traction, retention, growth, or
revenue. It is now clear what is the core business and
the value proposition. The market appears to be large
enough for a sustainable business.
The product or service is focused (without having many
flavors, colors, or variants), and the growth of sales is
rising (or it is even exponential).
5. Stabilization

14. The business does not need to focus anymore on Product-Market fit.
Repeatability and scalability of the business model are validated.
There are no business model hypotheses anymore that need to be validated,
and the business model needs no more testing with prototypes or MVPs.
There are competitors with similar products and known market shares.
The business stops having a startup culture, and it starts investing in new
ideas, products, and services. The business has processes for sales,
recruitment, and product quality, and there is a management team (which is
different from the founding team).
6. Acceleration

16. The business is one of the market leaders. The business
is profitable and financially self-supporting, and it
needs no more external funding by angels, VCs, or a
larger corporation.
The growth of the business drops to linear growth.
The business can create (somewhat reliable) revenue
forecasts, and it has a focus on efficiency and cost-
cutting.
7. Crystallization

18. The product or service becomes unfocused with the
introduction of many flavors, colors, or variants, and it
becomes bloated with (too) many features.
There is no founder or co-founding team of the
business anymore, or they are not 100% committed to
the business.
Parts of the business are being sold off to other
companies.
8. Expansion

20. The business model stops being validated, repeatable,
or scalable. Revenues and profits of the business are
declining.
The business stops having a high-level strategy for the
future. It also stops investing in new ideas, products,
and services.
Many customers move to a newer or competing
product or service.
9. Conservation

22. The end-of-lifetime of the product or service is
scheduled and near.
The closure of the business is imminent.
10. Finish

23. So, which stage is your business
in? Try the Online Lifecycle
Business Test to find out!
These 10 stages are described in
more detail in chapter 2 of the
book Startup, Scaleup, Screwup.
Do you want to receive a free PDF
of that chapter? Sign up here.