Small Business Growth Stages

Small business owners and managers face substantial problems during the early years of growth. While more experienced organizations may lend advice to younger companies, this advice is often hard to apply due to significant differences. While it may seem absurd to say that small business owners pass through the same phases of growth, there are similar stages that are common. Researchers have devised a framework for evaluating small businesses. This framework helps small business owners understand their business growth.

1. Existence

The initial stage in a growing business is existence. The owner handles everything and supervises employees. The owner doesn’t have time for formal planning, they are merely trying to survive. During this stage, the goal of the business is to obtain customers by providing them with the products or services they desire.

2. Survival

Those companies that survive the existence stage have proven that they have enough products or services to establish a workable entity. The main goal at this stage is cash flow and ensuring that there is enough money to break even. The owner is still the business and handles all employees and transactions.

3. Success

When a company is able to make enough money to cover their expenses, they move on to the success stage of business growth. The company continues to grow in size while earning profits. The question for a business owner at this stage is whether to keep the company at the current status quo or continue on to the next few stages of growth. Since the company is stable and making money, some owners may leave the company at this stage and pursue other interests. If there is a desire to continue growing the company, operational and strategic planning is necessary.

4. Take-Off

The main challenges during the fourth stage, called take-off, are delegation and cash. A company at this stage has grown large enough that duties need to be delegated to hired managers. The owner also needs to ensure adequate cash flow. The higher expenses that come with a fast-growing company necessitate considerable financial control.

5. Maturity

A company at the maturity stage of growth has the personnel and financial means to be successful. The company is able to engage in strategic and operational planning. Sufficient size, talent, and financial resources are the characteristics of this stage. Innovative decision making is key in continuing the success of the company.

The stages of business growth are fluid and financial, personnel, systems, and business resources play a huge role in how and when a company achieves each stage.

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