5 stages of Small business growth

5 Stages of growth

1. Inception/Existence 2. Survival 3. Success/Growth 4. Expansion/Take-Off 5. Resource Maturity

Resource management

Controlling your substantial financial resources will be one your biggest challenges if you manage to create a mature company—you'll probably have a whole division trying to do just that. But the biggest challenge of all will be cultural. In a rapidly changing world, flexibility and agility are crucial. Improvisation is something jazz bands are good at. Orchestras, not so much. Knowing what challenges you're likely to face in the years ahead can help you mitigate their impact. In the words of serial entrepreneur Ben Franklin, "If you fail to plan, you're planning to fail"

Inception stage

During the start-up phase, to move from an idea to a business takes customers, cash and stamina. You do everything. You're the primary source of capital and energy, and if you have help, you supervise them directly. Your only goal is to exist and survive. Formal planning is seldom a part of the process. A company with a clear marketing plan and a vague product plan is more likely to succeed than the reverse At the start-up phase, getting more customers is priority number one. Sadly a lot of business owners fail at this stage since they invest in all the wrong things such as business cars, corporate refuge houses and fancy clothing. Even owners with engineering backgrounds adhere too strictly to their delicately detailed product plans and forget to scrutinize the simple act of identifying, attracting and selling to costumers (Scott & Bruce, 1987)

Survival stage

If you make it through the start-up and have proven you have a product that people can and will buy, then survival becomes your primary concern. You have to be able to make enough money to cover your costs. And you need to be able to finance growth Mom and Pop businesses rarely grow past this stage. Founders often think of the business as an extension of themselves, and can't imagine not being at the helm. Owners are satisfied with marginal returns for their effort and investment, and are unable or unwilling to delegate responsibility. It's not uncommon for companies to grow broke at this stage. They don't have enough money to cover the costs of building new products or hiring more people to provide more services. Cash forecasting is job one. Now is the time to start thinking of replacing yourself with someone who knows how to manage a business, not just start one

Take-off stage

If you opt to grow, delegation and financing will become your key problems. You'll need competent management to handle growth, a complex business, and an evolving business environment. There's always a danger that the business climate will change, but dramatic change just as you start an aggressive climb can be devastating. This is a pivotal time. You need to decide if you want to become a big business or sell the company at a significant profit. Recognizing your own limitations is crucial. Just because you managed, literally and figuratively, to build a successful company doesn't mean you have what it takes to go forward.

Success stage

profit earned at this stage has to be spent back in organization for providing it with bigger financial and capital resources. At this stage the role of financial manager becomes more demanding. The financial resources find its major flow towards research and development unit of organization Few founders have the temperament to successfully continue to lead an organization beyond this stage. At this stage, you have to decide if you're going to disengage or go for growth. Entrepreneurs often have new business ideas they want to try, newly-prominent business leaders think about running for political office, and others simply want to enjoy the benefits of success and pursue hobbies or other outside interests. If you don't disengage and decide to grow your company you need to focus on using cash and borrowing power to finance the expansion.