All businesses experience cycles and stages of everything from success to frustration at some point or another. In their Harvard Business Review whitepaper, Neil C. Churchill and Virginia L Lewis state the 5 Stages of Small Business Growth as; Existence, Survival, Success, Take Off (Growth), and Resource Maturity.
Existence is the hardest stage of a business as the primary owner is responsible for almost all the work. The hardest and most time consuming part being obtaining and satisfying customers. Customers are the only way to keep a business alive, making them the most important, especially earlier on in the business life cycle.
Survival is the step after Existence when the business is a working entity bringing in some level of profit. In order to remain surviving, the business needs to start focusing on retaining customers and evaluating their ROI. It isn’t good enough to just stay open, they have to establish systems and processes to ensure they keep bringing in profit.
Success hits a business as systems are in place and profits are finally consistent giving companies the option to stay successful or push into the growth stage. However, this can really only happen with systems in place. The owner cannot be the only one doing everything on their own in order to better focus their time on growth tasks versus everyday tasks.
4. Take Off (Growth)
Take off is the stage of growth and movement, but also capital management. Companies have to spend more to acquire and satisfy more customers by hiring more staff, buying more equipment, materials, etc. This is the big potential stage where done right can push a small business into a big company so long as they are able to avoid the pitfalls of poor cost management allowing expenses to ultimately overtake revenues.
5. Resource Maturity
A business hits maturity as its ready for diversification. As the company is now bigger and running at a slower pace, it will be harder to react to market changes like it used to, consequently, they must learn to diversify and tap into other related products and markets to expand beyond their primary customer base and go beyond their original business model. This keeps the company in constant motion, as different aspects for the company are able to move through different stages of growth at the same time.
Overall, growing your business is an exciting time and while certain stages can prove to be challenging there is always hope and work for the next stage of growth.