Stair Step Method

Stair step method refers to the approach implemented by businesses to scale their company performance in a ladder format. Startups mostly use it in their entrepreneurial journey. This method focuses on initiating business with small products and proceeding toward complexity.

Entrepreneur Rob Walling was the first person to propose the stair-step theory in 2015. It included three stairs in the process. Walling stated how introducing simple products can help scale the business. Thus, more advanced products can be introduced in the later stages for better efficiency. 

The stair step method is an entrepreneurial technique used by startups to scale up their business from scratch by deploying a step-by-step approach from simplified products to complex ones. As a result, potential growth in the business's revenue streams is easy to witness. However, this growth is slow and takes time to manifest results.

The concept of the stair step method was initiated after Rob Walling noticed a similar pattern in business models. Most of the businesses started with a single product and, with time, introduced other product lines. It ensured that the firm developed a good base for the business in the initial stages. Later on, when a company has enough resources for diversification, they bring in other products to their catalog. As a result, the business can achieve its goals effectively in the realm of bootstrapping.

However, there are certain disadvantages associated with this bootstrapping method. One of them is excessive time consumption. Since businesses deploy this method in the seed stage, building quite a few products consumes time. It also required them to slowly develop skills and experience before moving to other product categories. As a result, the business faces a slowdown in the growth graph due to steady advancement.

Walling suggested certain steps (or stairs) in the stair step method that can potentially grow the business. Let us understand them in brief:

Step #1 - First Product

The foremost step in this method starts with the initial product. Most businesses have a tough time in developing a dot that can create a successful line for them. In this process, they may require a lot of advice and consultation on the back-end process, marketing, and launching. However, if the product is way too complex, it might not survive the market. As a result, Walling suggests businesses start with small projects (or products). 

Although they might not be sexy, they are easier to sell to a new audience. In contrast, a complex product may fail to drive comparative sales unlike them. Hence, this product serves as a stepping stone for generating revenue for the business. 

Step #2 - Developing Consistency 

The second step is more about working repeatedly on step one. In other words, businesses need to strategize now and analyze the initial product launched. Some of the questions include whether it can be turned into full income or whether there is a need for a complementary product. At this stage, most businesses try bringing more products to cater to a larger market segment. However, this mistake often abandons what already works. 

Step #3 - Creating Stand-Alone Product 

Now that the business has recurring revenue, the firm can then invest in stand-alone products. It means making the product independent and not relying on others. With the experience and skills gained, introducing new products is also viable. Although some customers might churn, they will alternatively gain leverage to grow the business. 

Let us look at some examples of stair step method to comprehend the concept thoroughly:

Example #1 

Suppose Samuel is thinking of starting a business in the haircare range. Since this market has less competition, he feels his products can acquire a large market share. Therefore, with an extensive research team, Samuel launched his two products in the market. In the initial months, the sales were high, but later on, they dropped significantly. However, at the same time, Samuel also launched another set of shampoos and conditioners to support the sales. But, in the end, the business did not survive the race. 

On analysis of his friend's business, Kevin suggested that Samuel had deployed the wrong approach for his startup. One of the mistakes included introducing too many products at the same time. Also, Samuel's first product was itself a complex one that consumed too many resources. As a result, the business's breakeven point was never met even after a year. 

Example #2

Another example of Rob Walling's stair-step method is visible in SaaS (Software as a service) projects, also. Suppose James is a professional who develops software in his leisure time. He developed a product that can solve the accounting issues for big firms. So, he pitched the SaaS product to an entrepreneur friend and the deal was confirmed. 

Some of the best features of this product included a simple interface, no or least subscription, and quick customer support. Due to this, the software became very popular in the market. Following the stair step approach, he did not bring any complexity to the product. Once the business was able to generate 80% sales from this product, James took the call and introduced another product after a year.

The stair step method is a holy grail for startups and those in the initial stages of business. It serves as a guide or principle that can accelerate the firm's growth. However, there are other benefits, too. Let us look at the importance of this concept to bootstrappers:

• Brings low risk: This method is popular among small businesses due to the minimal risk associated with it. As business starts with fewer products, there is less market exposure gained. Thus, the resources and time spent are also less compared to bringing multiple products into the market. 
• Inculcates high learning experience: With the operations, the business does gain massive experience from the initial product launched. It helps in analyzing the current market trends and customer preferences related to the business. As a result, it further acts as a tool to develop other products for the business. 
• Testing new ideas: Stair step method also allows businesses to trail and test new ideas and niches in the market. Since it is a gradual process, firms tend to experiment with categories to understand the potential growth opportunities in each prior launch.
• Helps in developing a stand-alone product: Furthermore, the experience gained in this process also helps in creating a stand-alone product for the firm. It brings in new customers and leverage to the business.