Trying to Build a Company from the Ground Up?

The Three Phases from Startup to Profit Making

Inside this article, you will learn about the three phases of company growth, from the first phase, which is the set-up phase to the last phase, which is where you start to see revenues and profits.

I have gone through this process two times over the last decade, and I also ran a multi-million dollar corporation through an economic downturn and bounced back to recovery.

This article will mainly focus on building a new company from scratch, but you can apply these three phases to any existing company as well.

Phase One : The Startup Phase

This might be one of the most exciting parts of building a business, but also the most challenging and often times frustrating phases. The main reason for the excitement is that it’s a brand new idea.

For some of you, you may be trying to solve a local community problem and your business idea would help thousands of people. For others, maybe you are working on a more national problem, and your product or service will help millions of people.

To give you an example, the latest startup venture that I built is called Leaf Academy. It’s an online school to learn 21st century skills. It solves a major skills gap among American citizens who were forced to graduate from a K12 system that refused to teach them 21st century skills. Hence the reason why most Americans don’t make enough money, are overly burdened by inflation and have very little individual power.

When you learn 21st century skills, you turn the tables around.

In the first phase, building this company was very challenging. The biggest challenge is getting people to listen. Everyone has a high school diploma and they firmly believe that diploma is “as good as it gets,” when the reality is that diploma taught them 19th century skills, not 21st century skills. The reality is, that diploma could be worth more.

That’s not an easy argument to make.

Does your company idea try and refute conventional wisdom as well? If so, you need to be aware that you must first show people why their “beliefs” are not accurate, if you have any hope of showing them a better way.

These are the four keys to making the Startup Phase work well for you:

  1. Know your idea really well
  2. Develop your communication strategy
  3. Build your company foundation
  4. Develop your business model

The Four Keys

Knowing your idea takes time and practice. For me, I like to talk to people and get feedback as I’m trying to formulate what the best idea will be. I ask a ton of questions, when formulating that idea. For the Leaf Academy example, I needed to understand what people’s true pain point was. Through interaction, research and engagement, it became clear to me the pain point for my target audience was “not making enough money.”

Once you know that, you have to start developing your communication strategy, as well as the foundation for your company. For the Leaf Academy example, that meant I needed to build out a website that would offer information and resources for people to use, to help them out of the financial hole. From a communications standpoint, I needed to start addressing the false beliefs they had about their educational background.

Not an easy task. Try convincing someone that they wasted four years of high school — FOR REAL?? I mean, we all know that high school was a big waste of time, but we were under the false impression that it was because we were all teenagers and everything is a waste of time to us. As it turns out, that’s not true. High School in America was purposefully a waste of your time.

Lastly, you need to develop your business model. I will say that this doesn’t need to be set in stone. As you move through the phases, your business model will become more clear to you as you go. I decided that I was going to write out a list of potential revenue streams and work on the ones that I could do without outside assistance.

If you have a team working with you, you could do the same thing, but divide up each revenue stream to each founding member.

Phase Two : The Establishment Phase

All three phases are important for company strength and growth, but when a company contacts me to do a business stress test, I usually uncover that they skipped over this phase and went straight to revenue generation. It makes sense, who wants to work in a company that makes no money?

If you have a product to sell, and you physically have the product — you can go to market and sell your goods while working on this phase. As long as you have a clear communication strategy, the market won’t get confused when you officially launch later on. But if you forget this stage altogether, what can happen can be disastrous.

Here’s what I mean. Say you are building a tech startup to solve the housing crisis we are facing. If you jump from Phase One to Phase Three, you might encounter some real issues in the marketplace, like customer service, resources, legal compliance, etc.

Phase Two is really important to the infrastructure of your company. This is the least sexy phase of building a profit generating business, but it’s protecting your “blind side.”

In the Leaf Academy example, phase two included building out the website, writing the blogs, creating the offers, and positioning the company for growth.

Phase Three : Revenue Generation

Phase three may not be the most exciting phase, but it’s probably the most satisfying. When you start to see your bank account grow from something you built from scratch — is deeply satisfying.

It’s even more fulfilling when you know what you built is helping your core customer. Isn’t that why you built the company in the first place?

People who have never built a company will give you advice and tell you all the things they “think” they know about business and the marketplace. I hate to say it, “but they are just repeating false beliefs they heard from someone else who never started a company.”

Here’s the reality. Customers will pay you a lot of money if you solve their problems in an easy and simple way. That’s the bottom line, and it will help or hurt your company’s bottom line if you forget that premise.

Apple, Inc doesn’t make billions of dollars because people are giving money for charity. They make products that everyone in the world wants. My company is very small, but growing. The roadblocks to my success have to do with overcoming false beliefs. That will happen over time.

I do not recommend trying to build a company that runs in the face of an entire nation’s belief system. If you do, just be aware that it will be a very long road ahead.

But if you choose to go into a less intellectually challenging space, then the key is to make your offer “too good to pass up,” and your customers will not only buy from you, but tell their friends to buy from you too!

Business Resource:

It’s important for anyone starting a new business or running an established business to have excellent leadership skills. You may believe a dozen things about leadership, but if you want to learn real leadership skills, there are only 6 Objectives of Leadership you need to master.

If you want to learn the 6 Objectives of Leadership, right now you can take the Beginner Leadership Course on Leaf Academy 100% FREE, follow this link:

About the Author:

D.Scott Schwartz, M.Ed. is the CEO and Founder of Leaf Academy and an education think tank. He provides consulting to businesses who are looking to unlock growth, or put their business under a stress test. For more information, visit the bio and follow the link to the Leaf Academy website. Click on the Programs page for consulting services.



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Professor Schwartz

Professor Schwartz

Former Superintendent | Ed Consultant | Speaker/Author — Go to my homepage at