At the startup stage, customer demand is limited due to unfamiliarity with the new product’s features and performance. Distribution channels are still underdeveloped, so there are very few product supply and promotional activities. There are also lack of complementary products which add value to the customers, limiting the profitability of the new product.
Companies at the startup stage are likely to generate zero or very low revenue and experience negative cash flows and profits due to large amount of capital initially invested in technology, equipment and other fixed costs.
