Categorising growth patterns of various small businesses may seem like a pointless task at first. However assessing where your business is in the business life cycle can help you focus on what you need to do to grow your business.
Read the different stages of business development and identify where your business currently sits and what you can do to take it to the next level.
The 5 stages of business growth:
1. Existence Stage
Businesses in the existence stage are those moving from the idea phase into an actual business. At this stage, as the business owner, it’s likely that you are doing everything. You may even still be working your full time job to ensure you have an income until you get your own business off the ground. You produce the capital and the energy to get things running. Even if you acquire a team or (get rid of a) staff, you’re still the one directly supervising them.
Systems and formal planning range from minimal to nonexistent at this point. The only goal of the business is to exist and survive. Gaining customers is the main focus of businesses at this stage, so make sure you consider every potential opportunity to attract and win more business. Differentiating your product and/or service in some way will help you attract and win more customers.
2. Survival Stage
Businesses that reach this stage have successfully demonstrated that it’s an actual workable business entity. You have won some customers and successfully delivered your product or services, and should have a better understanding of what they want and how to attract more customers.
At this point your primary concern is still attracting and winning more customers. To be able to finance growth, your business has to make enough money to cover its costs and save some for future opportunities.
Formal planning is more on cash forecasting as the enterprise grows in size and profitability. Because the relationship between revenues and expenses become a little trickier at this stage, it’ll be wise to seek help from professional business advisers and accountants.
3. Success Stage
Once your business is economically healthy and is generating competitive profit to ensure success, it joins the ranks of other businesses in the success stage. Business owners, at this point, have to decide whether they intend to expand the business operations and market or simply keep it stable and profitable.
Business owners who intend to carry on with the growth of the business may have to look at hiring staff to help them manage the business. You may also need to look at investing in systems to assist you in running the business more effectively to free up time to allow you to continue to focus on growth, and improve efficiencies within the business.
Businesses at this stage need to ensure that they continue to offer a good service for their existing clients and don’t focus too much on attracting new customers at the expense of the existing ones.
4. Takeoff Stage
As the business grows and takes off, you will need to consider taking on additional staff to help you meet the demands of the business. This, in itself, opens up a whole new can of worms.
When is the right time to take on staff? What kind of staff do you need to employ? What skill set do they need? Where will you find them? How much do you pay them? What do you need them to deliver in return?
The only way to substantially grow your business is to take on more staff. However, there are lots of elements that you need to consider at this stage. Getting it wrong can be costly to your business, but trying to do it all by yourself will limit growth. This is also likely to adversely affect your service or product standards, which will then affect repeat business and future growth plans.
As a business owner you will now face the challenge of delegation and financing. You’ll need a competent team to handle growth, a complex business and the ever-evolving business industry. Because the business climate is always in danger of changing, being unprepared for this can be devastating for your business.
5. Maturity Stage
The final stage of the growth pattern requires business owners to consolidate and control the financial gains brought on by rapid growth. They should also be able to facilitate the expansion of the management force fast enough to remove the inefficiencies that can come with growth. Through budgeting, strategic planning, objective management and standard cost systems, businesses should be professionalised without stifling its entrepreneurial qualities.
Use the competitive team and financial resources your business has acquired to get to this stage to engage in detailed operational and strategic planning.
At this point, the owner and the business are separate entities, both financially and operationally. The business has the advantage of size, financial resources and managerial talent. As long as it can retain its entrepreneurial spirit and stick to its objectives, the business can become a formidable force in the market.