Where Are You in the 5 Stages of Business Growth?
Every company will go through the 5 stages of business growth in their own way. Each business will require a different plan to penetrate each market they wish to enter. While you can look at another business’s plan, you must create your own for your specific company and goals.
Throughout the 5 stages not only does your company grow, but your business as a whole grows with your ideas, objectives, priorities, and goals. Having a deeper understanding of what stage of development your company is in can be helpful in understanding the next steps you need to take to continue growing.
Stage I: Seed/Development
In this phase, your business isn’t in existence just yet. You have the idea of the business you want to start, but you need to do some research before you plunge into developing the idea. Ask yourself how feasible your idea truly is.
Look around you, ask your family, friends, colleagues, and any specialists in the industry for advice and their opinions. Do research on the industry you are hoping to enter, and search within yourself to see if you really have what it takes to make this idea a success.
Stage II: Startup
This stage in the growth cycle is considered to be one of the riskiest of the five. Once you are certain you have done all the research you can, your business is legal, and you are ready to take on the difficulties that will present themselves in the future it’s time to begin.
Many mistakes are made in this stage, and stubbornness keeps companies from making it beyond the 5-year mark. You must be willing to adapt – taking feedback from your first few customers by constantly adjusting your business and its services. This stage often causes confusion, but not to worry, once all these changes are done your company will only grow for the better.
Stage III: Growth/Establishment
Now your company is constantly taking on new clientele and you have a steady income. The profits you are making should be coming in slowly and steadily, with recurring revenues to cover your operating expenses.
You must be directly involved in the recruitment process this early on. Hiring people with proper skillsets is imperative to grow the company and keep it afloat. You must also allow your skilled team to begin taking over large projects. Although you are still very involved, your time will need to be properly split between managing and expanding the company, managing revenue, bringing in new clientele and working with current customers, and understanding your competition. You must be willing to give your employees control of projects in order for the company to grow even further.
Stage IV: Expansion
Now your company is firmly present within the industry, your employees now manage areas you no longer have time to manage, and you are beginning to think of broadening your horizons by entering new markets.
Just because your company now has a steady cash flow does not mean you won’t fall behind if you aren’t on top of the game. However, caution expanding heedlessly. You want to grow your company, but it must involve a careful and well thought out planning process.
Be realistic about your expansions and understand that while broadening your horizons your services may not work in every market, so you will need to make changes. Be smart about expanding your business, but do not take on more than it can handle … or you will fail.
Stage V: Maturity/Exit
So, you have mastered the previous 4 steps and now your business is seeing constant growth and profits. In this stage, you are often faced with two options: exit the business or continue pushing for expansion.
If you choose the latter you will need to revisit the expansion stage, asking yourself the same questions you did to succeed in that phase. You also need to continue self-searching to see if you are able to take on the task of expansion. It comes down to the business expanding with you as the continued CEO, or bring in a new CEO to help dive even further into the markets the company has entered.
If you choose to exit the business this will consist of selling the company. While this may either be a full sale or a partial sale this will involve a completely new journey in the business cycle and your company’s life.
Navigating the Stages of Business Growth
Not every business will experience these specific stages of growth, and those that do may not experience them in the same order or way that another company does. While some companies experience quick growth – and exit quickly – others may go through a few steps multiple times before maturity. This is just to give you an awareness of the possibilities and how to best prepare your company for success. Not everything can be found on Google, so make sure to have business insight as well as following your gut feeling.