Okay, let's be honest, I made this mistake. I sent out my work to "beta readers" who should have been considered alpha readers. While I had done a few initial edits, mostly rewording, or fixing grammatical errors, that was it. I needed an alpha reader! Someone who's reading that raw, essentially first draft. That initial feedback from alphas is just as important as your feedback from your betas, so let's talk about when you should send what.
Alpha readers: You want one or two trusted people who are going to provide your unpolished draft the feedback you need to get before you go into that first round of edits. They should tell you about characters they loved or those that felt flat, any plot holes they noticed, grammatical errors you may have missed (it happens!), and anything else they enjoyed or didn't understand. You want them to give you constructive criticism, honest without being cruel. I, personally, would choose an avid reader within your genre, or a fellow writer. If there's anything specific you want them to focus on, make sure they know ahead of time! It helps you get critiques on the parts you may be concerned about, but make sure they know they can leave any thoughts they have while reading.
Beta readers: You'll want a variety of readers for this step! Start with your goal audience. Who do you want to read your book? Pick a few from that pool, but also choose someone from a different age range, and/or someone who typically doesn't read within your genre often. Different types of readers notice different things, so variety is best. These people should read your book as if they've purchased it off the shelf, and give you a review. They can absolutely still give you honest comments, the parts they skimmed over, the parts they couldn't put down, and any other thoughts along the way. Depending on that feedback, you'll probably still want another draft, amping up any parts they may have found weak.
If you feel like you've gotten to the beta reader stage and still need to do an entire rewrite, you sent that out too soon. No harm, no foul, but be honest with your readers who have that book, especially if you're rewriting while some of them are still reading. Tell them you would love to send them a new version once you believe it's actually ready for their eyes. There is no harm (except to our pride) in saying, I'm sorry, but it just wasn't ready.
Editing is hard, and recognizing that your book is ready for certain steps can be difficult. Everyone's process takes a different route, at a different pace, so don't let yourself be rushed into something you're not ready for. Just because your writer friend was ready for beta readers after only five months from starting their WIP doesn't mean you need to be. Your time is your own, and there's nothing wrong with that!