What You Should Know About the Five Stages of Business Growth
Starting a business takes time, and becoming self-sustaining and successful can seem like an out-of-reach goal at times. However, you shouldn’t be disappointed if things don’t take off right away because every company goes through five major stages. Whether you have started or want to start a business, you should know a few things about the different stages of business growth.
Existence at Stage One
When you first start your company, you simply exist. You are probably taking on most of the company duties, but you may have a few employees. However, your focus is on reaching potential customers and gaining market share. You probably don’t have much cash, making it difficult to pay your monthly expenses without personal investment or money from loans or other investors.
Survival at Stage Two
If you start making enough to pay your expenses, your company has proven that your product or service is needed in the market. Your new focus is making enough money to pay your monthly expenses and any equipment repairs. You may also work toward increasing your cash flow so that you can begin expanding. However, you are still doing much of the work because your staff may be relatively small.
Success at Stage Three
For most business owners, this is the target stage. You probably want to get to this area as quickly as possible. At this point, your company has the money to pay its monthly expenses, and you start making a profit. You may have found ways to reduce your costs, and you have expanded your workforce so that you aren’t doing all the work.
However, you will have to make some big decisions during this time. For example, do you want to grow further, or do you want to maintain your current status and just make a profit for a while?
Take-Off at Stage Four
During stage four, your company is really growing. Your customer base is expanding rapidly, and you have gained your regular customers’ loyalty. You now have the cash flow to significantly expand your staff, allowing you to delegate the day-to-day responsibilities to others. Your focus is now on strategic planning and managing your growth.
Maturity at Stage Five
At some point, your company may hit stage five, which is maturity. The speed of your growth is significantly reduced, and you have the staff and cash flow to run the company successfully. You also have well-developed processes and loyal customers. Your goal should be to pursue innovation that can move you back into previous stages of business growth and take-off.
Gain a good understanding of the business growth stages so that you can plan effective strategies.