“Founder” and “Entrepreneur” may seem interchangeable, but they carry distinct meanings. “Founder” is often tied to tech startups and unicorn chasers in Silicon Valley or Bengaluru, while “Entrepreneur” feels broader, encompassing SMEs, MSMEs, and industrial setups that drive economies. Founders focus on creating from scratch, while entrepreneurs identify opportunities, take risks, and grow businesses—whether launching new ventures or transforming existing ones. All founders are entrepreneurs, but not all entrepreneurs are founders, making “Entrepreneur” a more fitting identity for me.
Through my observations in Tier 1 cities, smaller towns, and family businesses, I’ve identified three universal stages in the entrepreneurial journey:
Stage 1: Prove Out (Achieving Product-Market Fit)
The journey begins here—validating an idea through bootstrapping, loans (often against gold or property), or seed funding. The aim is to solve a real problem and establish a viable market. Yet, many businesses, especially in Tier 2/3 cities, falter here, shutting down or surviving a cycle of unscalable, daily hustle.
For example, opening a mobile repair shop or a unique restaurant in a neighborhood. The Entrepreneur observes the gap and attempts to tap it. Sometimes, it works and transitions to stage 2 or feels like working in a gig economy. No significant wealth was generated for the Entrepreneur.
Stage 2: Sustained Scaled Enterprise
With product-market fit achieved, the next step is growth—expanding reach, building teams, and securing additional funding. While tech startups often prioritize aggressive scaling, non-tech businesses focus on regional growth or diversification. Many struggle at this stage due to the lack of scalable systems and over-reliance on the founder, resulting in inefficiencies and stagnation.
A famous saying is: Do you want 100% of smaller or 1% of larger pie? For example, I have seen people trying to open multiple restaurant locations, then quality dips. Trying to add more people to the services business ends up undercut by employees starting their own service business with the same client instead of positive cash flow, marketing, or other incentives driving the top line. It results in the Entrepreneur returning to stage 1 instead of working on the gaps. Many Indian SMEs and MSMEs remain small and founder-reliant, hindered by weak processes and resistance to delegation.
For example, a few years back, I asked my uncle, who is in the services biz, why he wasn’t expanding to a new geography. His response was that he tried, but the employee he employed and the client both tried to undercut him. A few instances like those made him limit his geography to one location. Did he want to grow? Answer yes; did he try? Answer hell yes. But did he build systems, technology, and another moat in his business? Answer No because there was no guidance or skill set, so he had to return to stage 1. It was a tough decision for him but required him to stay in the game as sustenance. This is a classic issue India faces where >95% of companies are stuck in stage 1 without formal financing.
Stage 3: Sustainable Profitable Enterprise
Few can break out successfully and enter into a new orbit. At this stage, the business achieves consistent profitability and long-term sustainability, driven by robust systems rather than dependence on the Entrepreneur’s direct involvement. Free cash flow is driving expansion. Entrepreneurs take on an overseeing and visionary role and rely on systems and professionals for business growth. From D&B research, less than 1% of all enterprises reach this stage in India. This metric must be shocking and a revelation to every Entrepreneur.
Final Thoughts
These three stages—Prove out, Sustained Scale, and Sustainable Profit—are universal for entrepreneurs. Leaders at the helm must continuously improve their skill set and evaluate business objectively to overcome bottlenecks and adapt. Great examples ahead of us, like Infosys and HDFC Bank, and recently Cred, Razorpay, Postman, etc., highlight the impact of strong systems, processes, and vision. The journey is challenging, but understanding these stages offers clarity. Are there more stages? I’d love to hear your perspective!