Whether you are a veteran business owner or just started your business you will agree that starting and succeeding in business is a journey. A journey that transforms you first and then those around you especially if your business growth takes off as you’d hoped.
Starting a business is daunting, but remaining and growing requires more than meet the eye. Just like development in a child’s growth is in stages, a small or conventional business has 5 stages unique to its path from launch to maturity.
We will briefly cover these growth stages, and share what your goals and focus should be in each of these stages, as well as unravel the challenges to expect and how to pivot.
Before we launch into that, it helps to clarify what business growth is. Business growth is the improvement of some aspect of the business e.g. an installation of a new operations software system that boost production, and in turn increases the total of goods sold and revenues while keeping the costs of production minimal. In essence, business growth occurs in raising revenue as well as overhead cutting.
Stage I: Startup / Ideation
At startup you are figuring out how to exist. Here you are exploring the viability of your idea. Testing and iteration are the order of the day as you seek to validate if your ideas is worth turning into a profit making business. Here you may have an MVP, minimum viable product or a subscription based customer enrollment type approach to reach your potential market.
Your focus here is to engage in market research, surveys, competitive analysis as well as SWOT analysis to determine and validate that the market needs or wants. The goal at this stage is to establish that market gap exist, and how your product or service will fill that market need for value creation.
At this stage, passion for the founder is a must. After all passion fuels your stamina, the unending stress and overwhelm inevitable as well as guide your communication with your potential market as you share the who you are, what you sell, why your business exists and how you hope to deliver value with your product or serve.
Although your goal is not making money at this stage, you may make some money or choose to give away your products /services for free in exchange for feedback reviews or subscriptions.
Stage II: Survival
Now that you’ve determine that there is enough market demand for your product or service, it’s time to reach out to your target customers—this is the segment of customers in the market or with the market segmentation that is your #1 target and what you want to go after. You can do these either by word of mouth, deploying digital marketing strategies or traditional marketing strategies i.e. canvasing.
The goal here is to acquire customers, earn some money. In this stage, you want to make sure you manage your costs and stay afloat by breaking even. Breakeven is the equilibrium point where your total costs equal the total costs of goods sold.
Your focus here is to maintain your current trajectory of customer acquisition while ensuring your overhead are minimal but no more than your earnings. This stage is critical because it means depending on how much cash you’ve to manage your expenses; you can either break out and grow, or nose dive and realize your business death/closure.
Your ability to manage your business and life is tested in this stage. Stress may seek to have its best of you, but you must focus and maintain a sober mind to continue with the business development. Why passion, persistent and perseverance is a must for business owners.
Stage III: Success
This state is a difficult stage to navigate for obvious reasons such as:
- The owner /founder have to learn how to adapt to various market and internal complexities resulting from their current growth.
- Profits are beginning to grow, and thus the founder have to decide whether to reinvest those profits back into the business.
- The need for processes and systems in order to sustain growth as well as build efficiencies into the organization so it can continue to grow.
Your decision making is most challenge at this stage. As the founder you must decide if you want to grow your business as a growth platform or ask yourself if you want to remain at the current stage—and how you wish to manage that growth. Additionally, the founder needs to decide how much control they want moving forward to have or maintain in running their daily operations. In many cases, the owner/founder begins to separate and leave the daily operations by delegating to either a manger or a chief operations officer.
Most small business owners often choose to remain in this stage either due to lack of capital to reinvest in the business, or lack of adept business management skills or systems (many of which can be outsourced) or either because they want to remain in small status or due to many other factors. Needless to say, as a business owner, it’s your prerogative to decide how far you want go or build your business. After all, success means different things to different people.
Stage IV: Rapid Growth
The challenge here is to figure out how to finance the current growth while continuing with that growth in an accelerated manner. At this stage, growth is exponential and the organization structure is becoming very decentralized—and the owner/founder is no longer involved in daily operations.
Managing business operations and strategic planning becomes very critical.
Deciding whether to sell the business as an investment e.g. in an Initial Public Offering (IPO), or merger and acquisition, or joint ventures are of great considerations.
In many cases, many founders and owners often loss control of their business at this stage due to business complexities and scale. The loss of control is said to be involuntary and often initiated by either the business creditors or investors.
Stage V: Maturity / Exit
At this stage, the business operations are very complex and requires detailed planning—strategic and tactical. In fact, the business resources are said to be mature.
The goal at this stage is to consolidate the financial gains resulting from the exponential growth, as well as figure out how to encourage innovations—by inspiring the entrepreneurial spirit.
Conclusion
As you can see, business growth has a myriad of challenges that the founder/owner has to overcome. Needless to say, when it comes to success, you as the business owner/founder must determine the extent of growth you want to reach for or realize through goal setting.
Some business owners may consider business success when they exit and cash out on their initial investment—for having built a business as an asset to leverage in building on to other areas of influence i.e. political power or industry power, while others prefer to build businesses as an asset to fund whatever lifestyle or for financial freedom.
Now that you know the five stages of business, here are a few questions for your considerations. Why did you start your business? What growth stage is your business in? If the bank were to assess your business, what data do you think they would consider in their analysis? What does it mean to succeed in business for you?
If you’d like to explore more about this topic or have a question vis-a-vis work, life and business, feel free to schedule a time here. Thank you!
