As a small business owner, you should expect to experience growth as your company evolves. There are basically five stages of small business growth, each with its own purpose. If you’re wondering where you are, here are the five stages to help you decide the best marketing approach.
Stage I: Existence
At this stage, companies have to face the possibility that they might not become viable. Customer retention is challenging as is breaking into a market where competition is tough. There are other factors that might make a business fail from a lack of commitment to reduced interest in meeting the demand placed on you personally, financially and time-wise. At this stage, your very existence is at risk. Since it’s just you and maybe a small team, your goal right now is to survive.
Stage II: Survival
In the Survival Stage, you’ve developed a viable business with a growing customer base that helps you make ends meet. Your product or service is catching on allowing you to enjoy revenues that meet your expenses. However, you still have issues to face including maintaining momentum so you can go beyond breaking even and generate funds to cover major expenses. You also need your cash flow to allow you to stay in business AND finance growth to scale your business.
You’re still small and have limited resources both financially and team-wise. You are still the main worker and decision-maker. Now you need to grow enough to reach profitability.
Stage III: Success
The big decisions come now: Do you remain stable and profitable or take a risk to expand? You can sustain the business to provide a living for yourself or use it for small business growth. In the Success-Disengagement substage of success, you have economic health, good size and market penetration.
You can carry on as is and hope you are not affected by market changes that could ruin your abilities. Because cash is available, you have to avoid cash drain that would mean if you want to offset your responsibilities you won’t realistically be able to afford high performers. You’ll set an operational budget and have a strategy in place to keep things viable. You can stay in this stage endlessly if your niche doesn’t allow for growth. You have options such as selling or merging. Without the right decisions, you could face folding or regressing to just marginally surviving.
You can also choose the Success-Growth substage. You take the risk to use your cash and establish borrowing power in favor of financing growth.
Stage IV: Take-off
If you choose growth, you’ll have to find a way to do so wisely. At this stage, you can hire experts who can improve the company’s effectiveness. Cash, as usual, is still important as it will be needed to invest in growth. This stage is where financial smarts are important such as deciding on how much debt you are willing to carry. Again, decisions can be made to become a big business, sell or even revert to Stage III. In the worst-case scenario, you might regress all the way back to the Survival Stage depending on the financial decisions you or your management make.
Stage V: Resource Maturity
At this stage, you have “arrived.” You have the staff and financial resources required to move forward including a well-balanced, experienced management team. Your systems, strategies and plans are well developed. Your niche is safe because your entrepreneurial spirit continues to breed new ideas.
Concerns at this stage are consolidation and controlling financial gains from rapid small business growth. You also have to retain the advantages of small size to hold onto your niche. To maintain the demands of growth you’ll need strong management and professionalism for all aspects of the business from budgets to setting objectives.
Be Proactive to Avoid Struggles
Don’t wait until it’s too late to reach Stage III. The Rebel Unicorn can provide valuable insight, provoke meaningful change and develop growth-focused brand strategies to keep you afloat!
Contact us today.