Where are you now? The five stages of business growth
Your business concept might be unique, or your technology cutting edge but according to a study by Harvard Business Review regardless of whether you’re a not-for-profit or a bank, all paths to business success are the same.
They argue no matter what field you’re in or what business model you use, each enterprise will face similar challenges and stages in the quest for growth.
These are the five stages of business growth that every business will face along their personal path to maturity.
This is the point where ideas have translated into action for the enthusiastic entrepreneur. It’s a make or break moment where reality sets in for any start-up venture as they move beyond a single customer or concept and offer their services or products to a wider field.
The key focus areas are obtaining customers, expanding to a broader sales base and covering the cash demands of the start-up phase.
Chances are the business structure is simple with the entrepreneur filling all roles. Essentially the entrepreneur is the business, supplying the energy, expertise, direction and drive to make it to the next milestone.
Once a business has proven its existence it enters survival stage. Although still simple in structure, the business has demonstrated its potential with enough revenue to get by.
This stage is a critical one for business, and it’s one where many remain. The deciding factor will be whether it can generate real revenue or languish at the just above break-even point using the owner’s energy and direction for a minimal return.
The important questions at this time are: In the short term can we generate enough return to break even and cover the costs of equipment repair? Can we generate enough revenue to fund growth into something bigger?
Stable, profitable and with systems and procedures in place, the success stage offers business owners the welcome opportunity to enjoy a solid income, having proven their position in the field.
It also offers a choice: the company can stay at this size indefinitely, owners can utilise their structure and staff to step away from the day to day running of the business, they can sell at a decent profit, or use their revenue as a platform for further growth.
Should the business have made the choice to grow after enjoying success, the next desired milestone is take-off. Here the structure, investment and staff that were put in place during the success phase begin to really pay off.
At this point delegation and cash are the key focus areas. The business will be evolving at a rapid rate and chances are debt will have been incurred to take it to the next phase.
There will also be significant changes to how an owner operates amid an altered business structure. The owner may still be involved in the company but will be separate from day-to-day operations, and may have opted to employ a company head to lead the growing enterprise.
Businesses which reach maturity have attained a solid market position, profitability and recognition. The challenge now becomes avoiding stagnation and handling competition.
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