Businesses, large or small, undergo 4 distinct phases of growth. Understanding each of these phases of growth is imperative to ensure that your business grows optimally. It makes a world of difference in its operations and strategic planning. Even businesses that seem to be scaling up and recording higher sales may be actually declining as they keep losing customers over time. This happens because entrepreneurs fail to implement changes needed in their existing systems to give it a fresh lease of life. Many enterprise owners fail to allocate resources properly to give their business the boost it needs.
Stages of business growth that every entrepreneur must know:
- Startup: During this stage, a business owner must spend time to reach out to new people and come up with exciting ways to showcase his products and services. This stage requires you to tweak and upgrade your existing model to assure higher profits after gaining market insights. The prospect may be thrilling but most businesses fail to achieve this. If you end up underpaying your employees, they are likely to quit. Your job is to identify a business model which guarantees steady cash-flow, continuous growth, and an ability to hire and retain quality employees.
- Growth: In the growth phase, as the name suggests, your customers must be in a position to justify your business model before others. To get new clients, it is important to keep the prices modest. Existing customer relationships are likely to become stabilized by now and turnover should ideally be decreasing. This means you should not have to worry about not being able to retain good workers. During this stage, the business gains a stronger standing in the market. Entrepreneurs must use this time to consolidate customer ties and incentivize good employees.
- Maturity: BY this stage, you should be in a secure and comfortable place. Unlike the risk-laden startup phase and the challenges of managing business operations to achieve set targets this stage is more relaxed. Mature businesses will enjoy greater brand awareness amongst customers; chances of startups eating into your profits are low. You have enough cash-flow and the means to resolve issues promptly; the only issue with this stage is the stagnancy. You cannot afford to stand still; since your business has the ability to scale up, you need to dive deeper into the market. You can either seek to expand your customer-base or introduce new products.
- Renewal/Decline: This stage is the most dreaded, of course, but every business will face it at some point of time or the other. This usually happens when you fail to chase opportunities during the maturity stage. It can be because of emerging industry changes, superior products from competitors, or even failure to respond to technology advancements. Understanding when the business enters this stage is hard. At this stage, you can either re-invest or sell it off. Reinvesting helps to renew the business and you need to get to this before the onset of decline. But, if are interested in cashing out, you should contact accountants, investment bankers, and experts on mergers and acquisition.
Every business will be going through these stages, and if owners do not know what these are about, they cannot take appropriate action to save the day.
Whichever stage of business growth you’re in, knowing where you are can help with your company’s strategic planning and long-term success. Whether you’re a new or mature business, don’t get too comfortable. Find opportunities to change and make your business more valuable.