Stages of Business Growth
For business owners, approaching the growth of their business is challenging, exciting, and potentially very rewarding. Making a plan to grow your business starts with understanding the stages of business growth. No matter where you are in the business life cycle, knowledge of the phases can help you identify what phase your business is in and plan for potential upcoming challenges. With the help of business coaches and advisors who know and understand business stages of growth extensively, your business can reach the levels of success you desire.
Stages of Business Growth
There are multiple approaches to understanding the stages of business growth. However, no matter the method or number of phases identified, there are commonalities. All companies experience a start-up stage, a probable growth phase, and either reach maturity or eventual decline. Of course, it is worth noting that not all businesses will follow the same trajectory on the same timeline, and many fail soon after they start.
Understanding the Business Life Cycle
Understanding the business life cycle allows business owners to identify where they are in the process. Knowing the stage of business growth a business is currently in helps entrepreneurs make strategic planning decisions, set expectations for operations, and allocate resources most effectively. Each phase has a unique set of challenges along with areas of opportunity.
Developing a business growth strategy is essential to running a successful business. A growth strategy developed without an understanding of the stages of growth may miss its mark, leading to failure. Business growth strategies evolve depending on the growth phase and the demands of the business.
Business Growth Stages
For this discussion, we will cover the five stages of business growth developed by Neil C. Churchill and Virginia L. Lewis in 1983. These stages are existence, survival, success, take-off, and resource maturity. Other methods may refer to the same or comparable phases using different names, but generally, all businesses follow similar trajectories.
Stage 1: Existence
At the existence stage, an actual business has begun to shape from an idea. The early existence stage of a business lifecycle is often considered the riskiest phase. The main focuses of the business owner lie in drawing in customers, ensuring efficient delivery of products and services, and managing capital to hold up to the financial demands of a start-up.
During the existence stage, the owner takes on the bulk of responsibility in daily operations. Systems are minimal and uncomplicated, and any employees take on basic tasks delegated to them by the owner. Business plans are centered around keeping the business running and identifying requirements for future expansion. Should resources run out, a business owner may be forced to call it quits at this stage and either sell the business for the worth of the assets or take the loss. The best way to avoid this mistake is to work with an experienced business coach who can help plan for capital demands.
Stage 2: Survival
If a business owner has succeeded in moving past the existence stage, the business has reached the survival stage. The survival stage indicates that the business idea has become viable, and the focus shifts from staying afloat to generating enough revenue to cover expenses and finance growth.
At this point, the business owner is still in control of all major decisions related to the business. However, hiring some managers may have helped assist with daily operations as directed by the owner. Business planning expands to include revenue forecasting, but all systems remain simple. Many companies find themselves stuck in the survival stage. To move past this stage, work with experts to strategize efforts to become more profitable.
Stage 3: Success
During the success stage, the business moves beyond viability to become stable and profitable. Business owners at this phase face a decision to either expand or remain in a state of comfort and stable profitability. If expansion is the route chosen, profits get reinvested into the company. More strategic planning is necessary for resource allocation and steps to take for increased growth. A business owner may also choose at this stage to begin to disengage from the company to focus on other endeavors. If this is the case, management will take on active roles involving business operations. Planning takes the form of budgeting and maintaining a market presence.
Whether an owner disengages or seeks growth, there are challenges to overcome at this stage. Disengagement could lead to failure through a lack of innovation or responsiveness to changes in the target market. Growth efforts can go awry if the business is not prepared to scale. A successful business continues to be a balancing act that requires the help of professional coaches to maintain equilibrium.
Stage 4: Take-off
Once a business has reached the take-off stage, the ability to scale becomes the owner's focus. Take-off is a phase characterized by rapid growth. Adequate management and employees, infrastructure, capital, and overall planning are necessities to ensure successful evolution.
A benefit of reaching this stage is that a business can usually survive inevitable mistakes due to the consistent cash flow and operational systems in place by this point in the business life cycle. However, business owners must take care not to scale too quickly or grow beyond their capabilities. If a business can maintain viability throughout this rapid growth stage, it can become large and very profitable. Depending on the business owner's goals, this may be a time to consider selling the business for a profit. Consulting with successful business brokers and coaches can help entrepreneurs navigate their options.
Stage 5: Resource Maturity
Reaching the resource maturity stage reveals a business with ample financial and operational resources. With the help of experienced management, efforts redirect to more detailed strategic planning, eliminating inefficiencies, and consolidating financial gains achieved in the take-off stage. Business owners must be wise not to fall into a complacency trap once they have reached resource maturity.
Responding to changes in the market, expanding product and service offerings into new territories, and using creativity to maintain the customer base and relatability in the industry preserve success at this stage. These efforts will help businesses avoid a sixth potential stage referred to as ossification. Ossification occurs when companies shy away from innovation and avoid taking risks. Competitors who respond to changes quickly inevitably take over the industry, making it difficult to recover. Working with experienced business coaches during the resource maturity stage offers outside perspectives that keep the entrepreneurial spirit alive.
Move Through the Stages of Business Growth Effortlessly with Coachwell
Coachwell has experience helping businesses grow at every stage of their development. Whatever the company goals, Coachwell's proven methods guide business owners through the business life cycle effortlessly. Increase profits, implement strategies to reduce owner dependence, and create more work-life balance with a holistic, individualized approach to coaching offered by Coachwell. We know the challenges of running a business and are ready to help you anticipate and navigate through your unique challenges. Reach for success and schedule a meeting with us today!
