Small businesses have a life cycle that progresses over time and consists of several primary stages. Although businesses do not grow at the same rate, they all have similar trends that often mirror each other depending on the growth stage.
Business experts from Growth Workshop have outlined the five stages of small business growth and the vital things you should focus on each growth stage.
In this phase, your business is at its start-up stage, and your biggest worry is about acquiring customers. Typically, the business is small with few systems in place.
At this stage, every business owner’s goal is to determine if people are interested in your product or services before injecting more capital into your enterprise. Small businesses that manage to do that effortlessly move to the survival stage.
Businesses that reach this second stage are still small. However, as an entrepreneur, you have managed to acquire a small and consistent customer base willing to buy your products, and you can satisfy their needs. Despite reaching this stage, it’s the point where most businesses fail due to unsustainable cash flow.
The best move to make at this stage is to create a robust business model that will help you break even in the long run. As the name suggests, business owners survive this stage on meagre returns. Therefore, it is advisable to minimise the amount of cash moving out of your business so you can have enough cash flow to run your daily operations.
Once your business starts generating consistent profits, you should decide what to do with the proceeds. Most business owners either reinvest it in the business or use it for personal use. The individuals who use their returns for personal use often get stuck at this stage or crawl back to the survival phase.
On the other hand, those who plough back their profits have a great chance of sustaining their business growth and transforming their small businesses into huge enterprises. As an entrepreneur, it’s always prudent to choose sustainability. You should plough back your profits to ensure your business sustains its organic growth.
- Take off
When your business reaches this phase, it becomes more decentralised and does not face the everyday challenges of small businesses. You have started opening new outlets and distribution centres, and the profits are sustainable. However, all businesses in this phase are ticking time bombs. They experience exponential growth, which is often a challenge for many entrepreneurs to manage.
As the owner, you should pay undivided attention to the growth patterns of your business to sustain its expansion. It is also recommended that you seek the services of business advisors to ensure that your appetite for business expansion remains at manageable levels.
- Resource maturity
Businesses entering this stage start experiencing slower growth. At this point, the business is generating enough cash, and the management concentrates on stabilising it. Most enterprises have well-developed organisational structures, sufficient financial resources, and the best human resources.
The only reason why your business can fail while at this stage is complacence. You have already acquired a considerable customer base, which is a daunting task. Your primary focus should then shift to improving your business systems to ensure you retain your market share.
Get Advice from Business Professionals Today
Although there are no standard strategies or processes for business growth, some phases have proved to be common to many small enterprises. At Growth Workshop, we will provide you with professional business coaching and strategies to successfully start and run your small business. Please get in touch with us today for a consultation and let us uplift your business.
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