In the words of Benjamin Franklin, “If you fail to plan, you’re planning to fail.” This quote is one that every business student in most colleges here on the first day they attend. In order for small business owners to plan their successes, they need to know what the five stages of business growth are. Often trying to label the growth patterns of small businesses in a systematic way that is useful to new entrepreneurs seems does seem a bit confusing, but lets try together.
Far too often when planning a business, many entrepreneurs are told to assume that a company must grow and pass through all stages of development or fail in the attempt. There are plenty of businesses that are a success after only passing through 2 or three stages of growth, depending on the goal of the business owner.
A neighborhood printing shop and a video game developer may not seem similar, but many small business consultants will tell you that they both go through many of the same growth struggles. Yes, they may appear very different and have an entirely different organizational structure varying management styles, but every business has to pass through the growing stages.
The first stage of a small business is the existence stage or the start-up stage. This is where a business opens its doors or moves into their first small office rental, after a great deal of planning and acquiring the capital and resources to getting the business up and going. This is the stage where a small business takes its first customer’s dollars and you are looking for that second, third and fourth customer. This is the stage where your marketing plan needs to prove that it will work.
Once a small business has reached the existance stage, the next step is the survival stage. This is where a business is bringing in enough revenue to cover your costs and not have to dip deeper into personal finances or other funding sources to sustain the business and keep the doors open. It is often said that many small business like the local printing shop will end their business growth because they do not want to give up the control and are satisfied with marginal returns for their effort and investment, both financialy and the time they spend running the business.
The success stage of a small business comes when the company is economically healthy and is earning average or above average profits ensuruing it’s success. Many small business owners are content keeping their company at this stage indefinitely. Not wanting to change the dynamics of thier business or the way it is run, they build on the success without giving up their management and organizational styles or even the prestigious business address they have in an office business centre.
More ambitious small business owners that want to take the next leap will go through with the takeoff stage. This may mean bringing in an experience management team, renting more office space and giving up some of the control and business decision making that can make or break a companies growth. There are many companies who try to get to the takeoff stage, but either find them selves going back to the success or survival stages when the takeoff fails.
Very few small businesses make it to the fifth stage of business development without, because the can not control the substantial financial challenges of a mature company. The biggest challenge for a small business to develop into the mature stage of business will be cultural. With a rapidly changing business environment, flexibility and agility are crucial to a small business obtaining maturity.