Hi, How are you doing?
The 5 Stages of Business
You’re in a new, shiny business network meeting, drink in hand and someone walks up to you, looks at your name badge and addresses you by name, “Hi, I’m Joe, how are you doing?” After a few quick exchanges, Joe asks “How is your business going?”
You could then launch into a monologue about the success and challenges you’re facing with sales, staff and the current environment, but you know that at least some of it, if not all, would prompt Joe to make a lame excuse and head off to the next group. Instead, you answer something like “fine, thanks,” which both he and you know is probably not the case.
Many small business owners don’t have a reference point to which they could refer, that would so much better than “fine, thanks.” Well, there has been such a guide around since 1983, devised by Neil C Churchill and Virginia L Lewis in a Harvard Business Review article.
https://hbr.org/1983/05/the-five-stages-of-small-business-growth.
So What Are The 5 Stages Of Business?
Briefly, the 5 stages are:
Stage 1: Existence
Stage 2: Survival
Stage 3: Success
Stage 4: Take-off
Stage 5: Resource maturity
Stage 1: Existence
This can also be called the start-up phase, where the company’s business structure is simple. The business owner is the CEO, The Board of Directors, the Personal Assistant, the Receptionist, Head of Marketing, Sales, Operations and Finance. It’s unlikely that much formal forecasting is in place and in some case, cash is quite a sketchy resource.
Getting customers is key as the business may be existing on borrowed cash and not yet operationally viable. The brand is almost totally unknown the owner is very busy talking to anyone with a pulse.
Stage 2: Survival
The business has proven that it has a viable product or service and managed to break into a market. The business is beginning to acquire customers and is even thinking about how best to start building a team. The business systems are still simple, and the owner is involved with every major decision.
The business needs to make money more consistently and profits are still small. There is still very little planning, and the feast and famine cycle is still prevalent.
The owner, who is a competent technician in their chosen market, now faces a steep learning curve of best business practices they need to understand, so they can start implementing those proven methodologies in the areas of their business that they never realised they didn’t know. Not only are there skills to be learnt, but their thinking need to change, especially around the concept of team building to create business growth. They need to step even further out of their comfort zone.
Stage 3: Success
Now the company is cooking. A team is in place, and more recruitment is planned. The business has a strong presence in the industry and profits reasonably consistent. Formal planning is now in place is sales, marketing, fulfilment and finances and the company is financially healthy, with cash contingencies in place to help weather the storms.
The business owner is now able to spend more time working on the business and may even have a manager in place, to whom certain decision making can be delegated. The owner can now start to enjoy the success and even sleep soundly at night.
Stage 4: Take-off
The company is naturally growing its presence in the market and new markets are opening up. More teams have been recruited, more managers to lead those teams and stronger, more streamlined process and automations are in place. The brand is well known, has a good reputation and its presence is creating more sales.
The main concern for the business owner is how to grow sustainably and find that growth. That could be through developing more products and services that are relevant to the new markets they are operating in.
Expansion could also be fuelled through tactical business acquisitions, creating new opportunities for growth.
Stage 5: Resource Maturity
With the rapid growth experienced in Stage 4, its likely that inefficiency issues may have been inadvertently introduced. These inefficiencies and the financial gains need to be properly managed and the company is now looking for longevity but mustn’t lose sight of innovation as the business environment will inevitably change.
There is far more to the 5 Stages model than is covered in this blog but at least this gives you an outline. However now, instead of giving Joe the answer of “fine thanks,” you can now give him a much better picture by explaining the Business Growth stage you are sitting in.
So, how are you doing?
Want to know more about how to get your business to the next stage ?
Get in touch. We can help you plan the evolution of your business to where you want it to be.