Making It to Your Business’ Growth Stage and Beyond

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We’ve all heard of the growth stages for products, but what about the growth of your small business? Similar to a product, there are five main stages in a business’ lifecycle, but luckily for you, decline does not necessarily follow the growth stage. If you continue to look ahead and know what to expect, your business may outlive you and surpass your goals.

Existence

The first step of owning a business is pretty obvious: existing. When a business first starts, the owner manages everything. This is important so that there is consistency and so that everyone is trained in the same way. Lead generation is key during this period. Who are your customers? Where are they? What are they like? You need someone to provide products and services to. Be creative during this period because the business is like a baby and needs to constantly be absorbing information and learning from experiences. Continuously reevaluate the resources you have and make sure they match up with the resources you need because your needs will change. Be sure that your assets do too.

Survival

You’ve made it over the first hump, so clearly your business plan has potential but don’t get sloppy! This simply means that you’ve arrived to the competition and now you’ll have other people jockeying and maneuvering to crowd your business out. Revenues and expenses matter during this stage more than ever. Are you generating enough cash? Are you breaking even? Can you cover repairs and maintenance?  Focus on cash flow during this period and pass along some of your responsibilities to supervisors to help your business grow.

Success

Once your business is economically healthy (AKA you don’t spend every waking moment worrying about whether you have enough in the bank to open the doors tomorrow), you have reached the success stage. Once you have reached this phase, you have the option to prepare for a merger or stand on your own. Typically, managers take over the owner’s operational duties while the owner oversees all the departments.

Growth

This should be a time for prosperity since it is the growth stage, but be careful not to grow too quickly.  It is easy to run out of cash or become disorganized when a business starts to take off, so don’t hesitate to pull back the reins if things start getting out of hand. Having ambition is certainly nothing to be ashamed, but make sure it’s always tempered with the understanding that your business needs money to operate its core activities. Managers are in charge of a lot during this phase, but it is the owner’s job to notice when managers are overextended. Owners should focus on structural issues within the organization so that the company becomes increasingly more efficient and can meet demand.

Resource Maturity

At this point, owners have separated from the business financially and operationally. The business has a senior staff to maintain it, and it is up to this staff to keep the ball rolling. Innovation and adaptation are crucial during this phase but is frequently forgotten. If you don’t keep an eye on trends and environmental changes, your business will fall behind.

Knowing what to expect is crucial so that you don’t try to sell or merge too early, grow and expand too quickly, or settle and stagnate. Watch competitors and listen to your customers in order to constantly evolve to make it to the next stage. Understand cash flow and know what resources you have. If you can get a handle on cash flow and innovation, your business will reach the growth phase and survive long after.