Are You Focusing On The Right Thing At The Right Time?

5 stages of business


The great struggle you face as an entrepreneur, growing a business – is being constantly confronted with these questions:

“What do I do now?
Am I even focusing on the right thing, right now?
What should I be doing next?”

I’ve asked myself these questions hundreds of times through the past 20 years of running businesses…

If I truly counted the times—I’m sure it would be in the tens of thousands, because it’s the kind of thing that creeps into your head every single day.

The challenge of running a business, is that you feel like ‘your situation is different’: you fall into a trap of thinking the answer to your problems lies on the other side of some complex solution.



The Reality…

It’s not. Every business lives inside a handful of business models. Once you unshackle your thinking from the chains of seeing your business as so unique, you become free to start applying the right strategies to get to the next level without the strain others seem to experience.

And believe me, knowing WHAT to focus on and WHEN to focus on is a huge competitive advantage for any entrepreneur.

In this lesson, I’ll help you understand the 5 core stages of business, what it feels like at each stage of business, and what your core focus should be at each stage – so you can graduate to the next level far more quickly and with much less stress.


The Trap Of Doing The Right Things…
In The Wrong Order

Does this sound familiar?

The other day, one of my clients was talking to a friend, explaining how they were spending a bunch of time creating a system for their marketing efforts.

Her know-it-all friend said:

“Look around you! Your office is a mess. You need to build out some systems for your back-office. You’re already doing great with your marketing, but you better fix this or you’re just going to get bogged down.”

That little interaction is the perfect example of the nuances of business-building.

Yes, it would be great to have an organized office; however, when you’re in the start up stage of a business, there are some core areas to focus on. This focus allows you to graduate to the next level in business and prevent yourself from sliding back into previous stages.


The 5 Stages of Business

About 8 years ago, I was sitting at my desk sketching out a model to use with clients on the stages of business. I had just started working with business owners a lot more, helping them implement my high performance and execution system. I quickly realized there was a real need to give them a “30,000 foot view of their business” so they could get clear on what they should be focusing on.

So, my sketch session was the first form of the ‘The 5 Stages of Business’.

Let me jump into this with you so you can see all the stages and what you should be focusing on right now.


‘Dream Up’ Stage

Dream Up Stage


Key Activity:

Validate & Take Action

The initial stage of the 5 Stages of Business is the world of ‘Dream Up’.

The ‘Dream Up’ stage is exactly what it sounds like. There is no business yet – only a dream, idea, or desire for one. If you’re at this stage, you’re typically working in a job or career you want to get out of.

This is the stage riddled with the most fear, worry, and self-doubt. In fact, here are a few highlights from a recent survey we conducted with 40,000+ business owners:

“The fear of facing my family if I fail at this, is the biggest reason I haven’t started…”

“I know if I just got started, I’d be able to figure it out, but I’m overwhelmed with where to start…”

“I don’t know if I can do my job AND the business at the same time…”

“I lack the money to get my idea launched…”

The most fascinating aspect about the majority of responses, is the descriptions are heavily weighted towards the ’emotional experience’ of starting a business.

Fear, lack, overwhelm, frustration, etc. are the terms people use to explain what’s holding them back. This ‘feeling of stuckness’ causes people to ignore or be blind to the resources they actually do have in front of them or inside of themselves.

Being led by a nagging feeling of self-doubt causes too much time in the ‘idea stage’ to be spent on research, inspiration, or watching others already doing it. This only causes most people to feel even less motivated to take action.

Now, it’s not ALL doom and gloom. There are many people, who feel inspired and motivated in this stage. Heck, if we didn’t have those people, nothing would be launched or started. It’s just that the great majority of people don’t get out of this stage.

If you’re an entrepreneur, you’re always bombarded with friends and former co-workers telling you about their ‘idea for an app, website, product, business etc.’. But we know that very few will do anything.


The Prescription…

Getting out into the market and validating the idea with the target group you want to serve is a necessity. If more people would take the approach of the mad scientist in the laboratory, attempt different combinations, and then go out and introduce the idea, product, or service to target people—then we’d have a lot more great things created – and probably a helluva a lot happier people.

Hiding behind a computer and trying to validate an idea isn’t enough. You can definitely get some wins doing it that way, but nothing compares to talking to people on the phone or in person. The insights you get from those conversations are incredible.

One of the key activities we do in our business: Try to call every person who buys from us immediately after the order.

Think about it…

They finally overcame whatever resistance they felt in the buying process and ACTUALLY pulled out their credit card and bought something on the internet…from someone they’ve never met.

I want to try and capture that moment of raw emotion and find out what caused them to invest in themselves or their business. Why did they buy? What problem are they trying to solve?

The conversations are layered with golden nuggets of information – things I would’ve never been able to find out if I just sent out a survey, browsed the web, or studied competitors to see what they did.

At the end of the day, curiosity is a key pillar in the foundation of being a great entrepreneur.

“Hmmmm… I wonder if this will work…”

“Hmmmm… I wonder if they’ll buy this widget…”

“Hmmmm… I wonder if there are people just as excited as I am about this idea and would want to partner…”

“Hmmmm… I wonder if this little tweak will make a difference…”

“Hmmmm… I wonder what my new customer is going to say about why they bought The 90 Day Year program…”

Be curious.

Each of these stages of business has a key system that, when you implement it, drives you into the next stage of business and helps to keep you there. (Which I’ll talk more about in the later stages.)

In the ‘Dream Up’ Stage, the system to implement is a Validation System. Without the proper validation system, businesses or products get launched with an extremely low chance of success. Which is a key reason why 81% of all businesses fail in the first 2 years. (Department of Labor & Statistics)

Blindly stepping into the market without a good idea of the REAL wants, frustrations, and feedback of the market is a recipe for a lot of wasted time, money, and energy.





‘Start Up Stage’

Stage 2


Key Activity:

Market, Market, Market. Offer, Offer, Offer.

The ’Start Up’ stage in business is that place where sales have started to come in, you found a pocket of customers or clients, and the excitement of having your business has begun.

Although, if I were being honest, the excitement can quickly be overtaken by overwhelm. The harsh reality of having a business causes most people to wash out. They see the romantic lure of ‘being their own boss’ and then discover they don’t like him/her – or, they get buried under the weight of all the ‘responsibility hats’ they need to wear.

I love the people at this stage because ignorance is at its peak, and they have an unwavering belief they can make it happen. The ignorance is key to mental survival, because if you knew the size of the mountain you were choosing to climb, you probably never would’ve started.

I love this crowd of people because they crossed the HUGE chasm, separating the Dream Up group and the Start Up group. They did the very rare thing—they bet on themselves.


The Common Experience…

The common experience at this stage is:

Money is coming in, but not enough to be profitable.

Sales are sporadic and lack any consistency.

Most entrepreneurs at this stage are doing a lot of tasks they know they’re not good at, but it’s a necessity, because they don’t have the money to hire or pay freelancers.

Time is often wasted trying to learn how to do things because, again, there’s not enough money to hire other people to do them.

There can often be a sense of worry and stress, because you start questioning whether things will change:

“Am I cut out for this?”

“How can I possibly get ahead when I’m buried under so many menial to do’s?”

“When is my wife or husband going to ask me to go ‘back to work’?”

The loneliness and feeling of isolation is at it’s peak in the Start Up category.

I’ve spoken with and worked with thousands of business owners around the world, and I can promise you, this is the hardest place for an entrepreneur.

Despite all of this intense pressure, there’s a constant sense of optimism, which is what makes entrepreneurs so special. When you ‘should’ be giving up…you don’t.



Every stage of business has a core system which needs to be implemented. This core system is the 80/20 of where your main focus needs to be directed. In the Start Up stage, you need to be focused on the Marketing, Sales, and Product systems in your business.

Any mental, creative, and physical energy directed anywhere else is misdirected – and will keep you stuck in this stage for far too long.

If you’re someone that lacks marketing and sales experience, in 2017 you can get completely overrun by people who are savvier at the game of demand and persuasion.

Seth Godin even said, “Just like the radio was built for recording artists. The internet was built for entrepreneurs.”

While the internet has created a level playing field for ANYONE to start a business, it has created an uneven playing field – tilted steeply in the direction of the best marketers.

So unless you’ve built a phenomenal product that markets itself (which has happened almost never), you still need to know how to ‘activate’ that product in the market. You need to get it in front of people, to get them sharing, talking, and most importantly—buying!

If you’re in the ‘Start Up’ stage right now, take a look at your list of activities in your planner, fancy task app, or whiteboard – and ask yourself:

“What percentage of these tasks are focused towards building out my marketing, sales, or product systems?”

If it’s below 80%… start prioritizing your day so you can get into the next stage, ‘Ramp Up’.



Market, Sell, Create.


‘Ramp Up’ Stage

Stage 3


Key Activity:

Build Your Operations

The ‘Ramp Up’ stage is that point along the path to scaling up your business, where the sales and profits are giving you the opportunity to breathe a lot easier.

This is the place that most entrepreneurs have the capabilities to build their businesses to, with the grit and hustle they personally possess; however, it’s also the ceiling for most businesses.

Not because the business lacks a broad appeal, but because most entrepreneurs lack the skills to build out operational systems in their business. Most business owners have a knack for marketing, sales, or the product/service they deliver.

Few have the abilities to truly systemize the business operations, however, which is why this stage becomes the ceiling for most entrepreneurial ventures.


Common Experience:

The most common experiences at this stage are:

Sales are great, and profitability is at an all-time high.

Marketing is doing its job and bringing in quality leads, prospects, students, customers, clients etc.

The business has finally started to support the type of life you want financially, however, it can be hard to enjoy the fruits of your labor, because you’re constantly ‘laboring’.

Spare ‘mental time’ is almost non-existent, because you’re always thinking about your business.

Overwhelm and stress can be major experiences at this stage. Overwhelm, because you’re doing so much and you may feel like there’s no way out. This is natural, because you don’t yet have the ‘operational’ mind to see the path to freedom. You feel stress because you’re concerned about ‘trusting other people’ to do the work you’ve been doing.

A major issue to be aware of, is that the profitability is in direct correlation with the fact, you, the business owner, are doing a lot of the work. This is misleading and dangerous, because you end up feeling like the profits should always be that way: but that’s only if you plan on always being the hamster on the wheel, running the business off of your own frenetic pace and hustle.

[Note: If you find yourself with boom and bust leads/sales, it’s a direct result of not building solid marketing or sales systems in your business. You’re caught in a cycle of: do a whole bunch of marketing because sales are dropping, then fulfilling all the orders, but not doing the marketing activities to keep a sustained growth plan in place… you’ll always be stuck in this yo-yo cycle. Do yourself a favor and ‘burn the midnight oil’ for a short time to get this fixed, otherwise you’ll always be teetering on the edge of burnout. Which is far worse than a couple months of extreme hustle.]


A Quick Note:

It’s not all doom & gloom here… there are some great businesses, producing phenomenal lives for people in the stage of ‘Ramp Up’. They’re typically service-based professionals that love what they do and aren’t looking to offload the work they do to someone else. Which is fine. There’s no ‘one-way’ to build a business, but just ensure you’re not overlooking some great wins in your business, by systemizing your operations.



Focus your time on systemizing the operations side of your business: the management, fulfillment, customer service, administration, billing, and logistics of your business operations.

The fastest way to systemize your operations, is to bring someone onboard that knows how to do this. Don’t fall into the trap of continuously flexing your ‘hustle muscle’. Just because you’ve proven in the past that you can learn how to bootstrap and do things yourself – does not mean that should be your modus operandi going forward.

Remember, what got you here, won’t get you to where you’re going.

So, whether you hire a Business Manager, Operations Manager, Project Manager, Consultant or COO, this person will be responsible for taking care of the parts of the business that always slowed you down and exhausted you.

The great thing—there are a lot of quality people out there capable of doing this job. So find them…



Your personal skills have taken the business as far as it will go on your own horsepower. Now it’s time to tap into the horsepower of operational systems and a quality operations person.


‘Scale Up Stage’

Stage 4


Key Activity:

Focus on Team, Culture, and Leadership

If you find yourself at the stage where you’ve unshackled yourself from a lot of the ‘daily activities’ of the business – congratulations! This is a place where few entrepreneurs get to, because the ’skill ceiling’ in the Ramp Up Stage stops most people.

In today’s fast growth, constant innovation and global marketplace, if you’re not building a great culture with strong leadership, you’ll have a hard time attracting and keeping the talent you bring into your business.

And, at the end of the day, your ‘human resources’ are the most valuable thing you’ll have in your business. Including you.


Common Experience:

The most common experiences for the business owner at this stage of business are:

Free time! No, seriously. Because you just came out of the Ramp Up stage where operations have been systematized and you’re no longer the hamster on the wheel. You’ve just bought back free time.

Percentage of profits can dip at this stage, because you’ve invested more into the people of your business or operations. However, sales and revenues can increase because of the increased working capacity of the team. So the overall profits may increase.

For example,

Ramp Up Stage:

$2,000,000 in sales x 50% in profitability = $1,000,000 in profit.

Scale Up Stage:

$3,000,000 in sales x 38% in profitability = $1,140,000 in profit.

(That’s a very basic example, and my CFO consultant wife would hate to see those basic numbers but it gets the point across.)

Another common experience and pitfall at this stage is, something I call ‘owner tinkering’ or the most common phrase: micro-managing.

As a result of having more free time on your hands at this stage, the restlessness of ‘what should I do’ sets in and you can end up ‘tinkering’ on all the great systems and processes your team has built out. It’s a hard thing to do for most owners, but you have to allow your team to take care of their responsibilities. Otherwise, that team you’ve worked hard to build will get frustrated, and you run the risk of driving people out of the business.

I had a client who did that exact thing a couple of years ago. He managed to build up a phenomenal business in a short amount of time, and he hired a group of talented people to get it to the next level. Ultimately, he ended up driving them all out of the business because he failed to trust anyone to do their job – even though some of the management team had tremendous experience and proven track records.



Invest time, resources, and money on attracting talented people into your business. Then work at building up your personal leadership skills to continue to drive the business forward, OR, give up the helm of the ship to your COO and let them run the operations while you work on strategic vision or start a new venture.

Often times, starting the new venture and letting someone else run the show are the best options for many entrepreneurs. Mark Zuckerberg, is a rare exception where the co-founder, became the best person to lead the company forward.

The reality is, the DNA of most entrepreneurs is ‘starting something’ not ‘running something’. So, having tremendous self-awareness and knowing who you are, can either free you to do what you’re most suited for, or frustrate you to become a round peg and jamming it into the square hole.



Know yourself, know your limitations, but make sure the business focuses on building great teams and a strong culture.


‘Leader Up Stage’

Stage 5


Key Activity:

Acquisition and Responsible Leadership.

If you’ve climbed to the top of the mountain and managed to plant yourself firmly into the position of being a leader in your market:

Congratulations. You’re in some rarified air up here.

If you’re the founder that ‘sherpa’d’ the business to the top: you’re even more rare. This is a fundamentally challenging task to undertake, with pitfalls, vultures, and market landslides along the way.

Staying in this position is incredibly difficult. Think about Kodak. At one point they were the dominant player in the photography category. Now, they are a dinosaur – simply because they didn’t focus on a core activity all ‘Leader Up’ company’s need to  focus on—acquisition.


Common Experience:

The common experiences for an owner or a business at this stage are:

Market Affinity. Everyone wants to work with you, partner with you, or be like you. The hard work has paid off and opportunities constantly flow your way.

Negotiating Power. Because of your market position, it’s a lot easier to get favorable terms and deals done. Everyone wants to be around a winner, plus the risk of your business going out of business is far less likely than someone much smaller.

Publicity and press is easy to get. This becomes a classic case of ‘the rich get richer’. While you have the money to spend on marketing, the media ends up doing a lot of the heavy lifting for you. (A little company called Apple never struggles to get multiple millions of dollars in press coverage for their newest product release.)

Leadership failure can bring down entire companies. Greed, Power and Vanity, three of the more challenging human vices, plague many corporate leadership failures. Think Enron, Tyco, Worldcom, and even Apple was on the brink of total collapse until they brought back the prodigal son to save it.

Vulnerable to Innovators. Because there are heavier investments in operations and cost of goods, the business can be slow to move. Which is the nature of a bigger company. You can be vulnerable to the more nimble, fast-adopting start-ups. In 2017, there aren’t many industries that couldn’t be made obsolete by a cruel twist of market innovation.

The Flip Camera was made obsolete by new smartphones.

Taxis lost major revenue because of ride-sharing apps like Uber and Lyft.

Hotel chains have seen profits shrink because of Airbnb, HomeAway, and SpareRoom.

No industry is safe from the digital keystroke of innovation.



Anyone in this stage will need to keep their eye keenly peeled towards upstart companies perfect for acquisition. There are always going to be pockets of the market a bigger player won’t be able to go and develop products and services within. It is critical to pay attention to those markets and their growth potentials, so you can protect your position, and bring in new offerings for clients, customers etc.

A good friend, who is the CEO of a major corporation, tells me his only job is to watch trends, see what’s happening in the market, and go hunting for great companies (it sounds more lethal than it is, he’s one of the nicest people to do business with).

Also, ensure you know who your leaders are, and constantly invest time in their development. All it takes is one very bad decision to bring down an entire business. Or in the case of the financial markets, a culture of greed to bring down an entire global economy (sadly, we never learned that lesson).

It’s surprising how many people don’t really know ‘who’s minding the store’. Leadership is a never-ending focus. Leadership is never a goal; it’s a mindset.



Pay attention to the market. Don’t rest on your laurels, and only keep the absolute best at the head of the pack.


Final Thoughts:

At the end of the day, every single stage of business has a lot of balls in the air that we’re all trying to juggle. But when you look at the color, shape and size of each ball, for each stage, they could mostly be categorized into one bucket.

  • When you’re in Dream Up, you need to validate the idea and find your pocket of people to serve.
  • When you’re in Start Up, you need to focus your juggling time on marketing, sales and product.
  • When you’re in Ramp Up, you need to get your operational house in order.
  • When you’re in Scale Up, you need to develop your team, culture and leadership.
  • And, when you’re in Leader Up, you need to protect your position through acquisition and innovation.

Climbing the proverbial business mountain isn’t easy, but when you know where the base camps are along the way and the pitfalls, you can pack your backpack with the right equipment to get you there.


About the Author:

Todd Herman is the Creator of The 90 Day Year, a High Performance, Achievement System for Business Owners. Host of the Grit ’n’ Hustle Show. Investor and Root Beer Aficionado.