Let’s start with asking the question what does business growth mean?
A pretty straightforward answer would be a business that is expanding or growing in one or more ways. And growth is fundamental to a business’ survival.
Most businesses that start off do not survive long enough. Roughly 66% of businesses survive their first two years in operation, about half make it to the 5 year mark, and just 33% will celebrate their 10th anniversary.
Importance of business growth
A concrete growth strategy is more than a marketing strategy. It’s important to understand your stages of business growth and when you are transitioning to a new stage. And each stage requires specific actions to be taken. If you don’t take specific actions while in each stage then you will deteriorate.
Five stages of small business growth
Stage 1. Existence
This stage is all about the specific questions you ask yourself such as:
– Can I get customers and deliver a product?
– Do I have the ability to get started with the required capital?
– And do I have the money to sustain my business before break even?
The main goal of this stage is to make sure that your business can exist to survive to the next stage.
Stage 2. Survival
This stage is all about financial survival since you’ve already figured out you can get customers, and you can deliver the product/services. But the most important question is asking yourself, can I do it profitably?
– Can I generate enough cash-flow to break-even?
– Manage repair, maintenance, supplies, and replacement of obsolete equipment?
– Can I generate enough income compared to my costs incurred to stay afloat?
This is the stage where the business provides a salary or pays for the owner’s lifestyle but never goes beyond that. While this may seem satisfactory at a personal level, it’s very vulnerable.
As a business owner you should now aim to grow in profitability to get to stage 3.
Stage 3. Success
Reaching this stage means that you have the financial health. You are profitable meaning you have surplus. This is a stage you can stay in indefinitely.
Your business is making money. The stakeholders or owners are getting paid. You are stable enough to handle fluctuations in the market, including exigencies and financial setbacks.
This is the stage where you have some professional staff coming on board (or capable of outsourcing). You will have employees dedicated to doing certain roles such as accounting, sales, admin etc.
Stage 4. Take-off
If you have chosen ‘business growth’ as a vision then this is the stage to hit. The focus of this stage is to have financial growth including income and profitability. In order to get to this stage and succeed you must master delegation. You will have to continue to add levels of management to watch over each part of the business. Your team will have to manage cash flow and staff with accuracy. If you maintain this stage then you can enter stage 5.
Stage 5. Resource Maturity
Your management is mature and experienced. Your business has the ability to get into detailed operational and strategic planning. You can learn more about this stage in the HBR article.
Two factors that determine success or failure while moving through the stages:
a. Business factors
b. Owner factors
Business factors are:
– Cash and borrowing power
– Quality of hires and the number. Levels of staff and management
– The systems you have in place to keep the business operating at peak.
– Customer relations, market share, supplier relations, and distribution process.
Owner factors are:
– Owners strong vision or goal
– Owners ability to do the important tasks in running the business such as marketing, sales, production and the like.
– Owners managerial ability, competency on delegation.
– Owners strategic ability — Looking beyond daily operation. Recognising where you shift focus and motivation. Identifying strengths and weaknesses and where you want to go.
Tips to boost your business growth:
– Hire the right people
– Reduce your risks
– Be adaptable
– Focus on customer satisfaction
– Create your social profile and interact
