Whether striving to expand market share, increase profitability, or add staff, each business is attempting to grow. Unfortunately, every business also experiences pain and face challenges throughout the growth process.
Categorizing the growth patterns and obstacles of small businesses in an orderly way that is beneficial to entrepreneurs seems like a hopeless task at first. Start-ups vary in size or capacity for growth. They are famous for their actions, varied organizational structures, and diverse management styles.
Here are the four stages of growth that every business advances through start-up, growth, maturity, and decline or renewal. Every company faces these stages at various times and under different circumstances.
Identifying which stage of business growth your company is in will help you determine your next steps better.
The Start-up Phase
Each business starts as just an idea from the time it has is created. The first stage of the company growth cycle is one that some businesses find themselves remaining for years.
Throughout this stage, your priority is to search and obtain customers, develop a product, and build your brand identity.
If you’re trying to understand whether your business is in the startup stage of growth, follow the questions mentioned below:
- Do you have sufficient consumers to be viable?
- Do you have adequate resources to deliver your products or services on time?
- Can your products or services compete with your competitors?
- Are you earning profits?
If you answer “no” to a few or all of the questions, you’re likely still in the startup phase.
As you may anticipate, this stage usually is chaotic, characterized by self-doubt and turbulence. Nevertheless, of all the stages of business development, the startup stage demands a headstrong and confident owner to drive the business towards growth and develop successful start-ups.
The solution to succeed in this stage is to explore new ideas, take risks, tweak your business model, and practice processes that have already proven to work. These moments are a crucial time in many entrepreneurs’ careers as the startup phase is where most businesses collapse.
The Growth Phase
The growth phase starts once you are aware of what exactly your business model is, and so do your consumers.
By the time you reach this stage, you must have a refined marketing budget as compared to other similarly sized businesses in your niche or industry.
Here are a few significant indicators for the growth phase of a business’s life cycle:
- You need not worry about making payroll or turnover
- You’ve managed multi-year client relationships
- You’ve hired multiple crucial high-level team members
- You’re continually reinvesting earnings into the company
- Long-term business financing is acquired
Throughout this stage, profits are usually more, and competition is intense. The critical challenge linked with the growth stage is maintaining efficient management in the face of continuous expansion and growth.
To succeed in this stage, you are required to expand your managerial skills as you grow your team by understanding how to empower your employees and delegate authority.
It is an excellent time to decide whether you must rely on equity or debt financing to finance your operations in the years to come. Both include a wide array of advantages and drawbacks.
To make it through the growth phase successfully, you must formalize all of your operating and workflow systems. As your team grows and you make crucial hires, one of the keys to business growth is to have a standard process that all team members can conveniently follow.
The Maturity Phase
The maturity phase comprises of a solid core of employees and a speedy year-by-year growth with a decade or more of service.
The maturity phase includes anticipated revenue, the acquisition of other business entities, and several product line spinouts.
Mature businesses are also prime investors to purchase as they are steady performers that can undoubtedly generate revenue in the future.
If you are successful enough to grow your business up to the maturity phase, then firstly you need to analyze to grow along with the company or stick to be an external visitor.
While business growth is about continually expanding, developing a business at the maturity phase is all about alertness and looking out for the signs of decline.
The Decline or Renewal Phase
The conventional four stages of the growth life cycle involve a decline or renewal phase. The business can branch out into gradual decline or renew itself to modify with the changing times.
Usually, this stage is not the direct effect of a business strategy. In several cases, modern technology, evolving consumer preferences, or market conditions can drive a company towards failure.
At this point in the business growth life cycle, business leaders must embrace new policies, conventional operating procedures, and formal methods to readjust with the changing environment.
Every successful business needs to undergo optimal behavioral modifications, and need to reduce competition by continually enhancing their service models, product lines, and functionalities.
No matter where your company stands in its growth life cycle, focus on strategies to ensure long-term business sustainability.
The answer to prolonged success is to manage the growth mindset entrepreneurs, or small businesses usually have in their business life cycle. This way, positivity, innovation, and experimentation can help you adapt to and capitalize on emerging conditions so that you can move towards a level of business maturity. Join Us to explore the world of smart business solutions by ONPASSIVE to guide you through the business growth lifecycle successfully.