Small businesses are the heart of our economy. But there’s no denying it takes work to get them off the ground. It’s not just about having a bright idea and some business cards to make a small business work and succeed.
You’ll need the right resources to ensure your small business is growing in the right direction. One way to do that is by understanding what stage your small business is currently in to improve it to become more efficient.
There are five stages of small business growth, each with its challenges that entrepreneurs need to manage. Here’s a look at what you need to know about starting up, surviving, succeeding, growing, and resource maturity.
The first stage for entrepreneurs is the startup. It is where you’ll need to decide if your idea or business can even work and what the next steps are for you to take.
During this stage, some of the key challenges include an unidentified target market and being unclear about your forecasts.
Entrepreneurs may find themselves asking these questions – Is it worth doing? Who is willing to pay for what we’re creating? Is anybody interested in what we’re making? Who is going to buy what we’re building? Is it possible to build it properly enough to sell it? Can we create cash flow with this?
In the first year, 20% of firms in the startup stage fail, and 50% do so in the first five years. According to research, this is usually because there isn’t a market need for their items or services.
The main objective for firms in stage one is to see whether the market wants what they have to offer (and make money) before cash runs out. Businesses that accomplish this can move straight into stage two without any difficulty.
If it’s not already clear, do some research about market demand, competition, cash flow projections, and more. Then try to secure enough startup capital to compensate for your lack of funds. If you don’t have the right connections, read up on where to get money to help your small business get up and running.
The survival stage is when things can become more complicated quickly. On the one hand, you want to use what you learned in the start-up phase while also getting feedback from customers about their opinions of you and your items or services.
However, it’s not as easy as just putting your head down and pushing forward with business as usual. It’s a delicate balance between trying to please customers while also surviving daily operations. Many entrepreneurs mistake spending too much time on one factor. It causes them to neglect other important areas of their business.
During this stage, entrepreneurs need to focus more on the internal aspect of running a small business than during the start-up phase. Focus on tactics like building an effective team, establishing clear goals, and improving your operational procedures. It makes you more efficient with time management.
The bottom line for this stage is to try your best not to go under. Proper planning is critical so you can avoid any significant problems with cash flow. It can be due to bad debt, overdue invoices, or anything else that could risk leaving you in severe financial trouble.
A successful small business is one where the owner has found their identity and is moving towards becoming profitable. It means investing in the right resources to ensure your business grows at an expected rate. Thus, you’re not pushing yourself too hard or taking it too easy.
During this stage, entrepreneurs focus on making sure they have all their sales processes streamlined. It may be through human resource management or by using technology tools like CRMs. The growth stage is also about looking at options to diversify your product or service offerings. It is the stage for you to maximize revenue opportunities for the future.
To reach this stage, entrepreneurs must have made an impact within their industry. It doesn’t mean being number one in sales, but having a good reputation among customers and the people you deal with regularly. You must have made a name for yourself to have success, so continue building your brand and promoting it as best you can to reach this stage and beyond.
During the growth stage, small business owners should take their business to the next level — literally and figuratively. It means expanding operations into new territories, expanding your product or service offerings to increase revenue opportunities, and making sure you’re continuing to improve your operational systems.
Each business is different when it comes to growing their small business forward because everyone has a unique set of circumstances that could affect what needs to happen to take things to the next level. Growth can come in many different forms, including:
• Expanding operations into new territories or markets
• Changing your business model to increase revenue opportunities
• Adapting your company culture as you hire more people to accommodate growth expectations
The growth stage is not about increasing sales as much as it is about improving the effectiveness of those sales. It would be best if you scale your business. But you also need to make sure every customer has the right experience.
5) Resource Maturity
At this point, small businesses are running more smoothly than ever before. There are no significant problems on the horizon, and owners ensure they have all their processes streamlined. Thus, you reach operational excellence consistently. The development of human capital is also a significant focus at this stage. You have to encourage employees to continue to grow their skillset by learning from other team members.
Businesses at this stage should have well-developed plans for the next five years. The key to successfully scaling your small business forward is planning. It allows you to make better risk management decisions. Based on accurate data, you can see what challenges you’ll likely face. Thus, you develop strategies to overcome those obstacles.
Planning can help entrepreneurs determine when it’s time for them to leap into the next stage, such as selling their business or transitioning into a retirement phase. Resource maturity is not about slowing down; it’s actually about continuing to grow your business in a sustainable way to ensure your business remains profitable well into the future.
Small businesses are human enterprises that must grow in various ways just like their owners do, physically, emotionally, and mentally. These stages are not linear but can happen simultaneously at any given point.