While every business is unique, all must go through the same stages during their lifecycles. By progressing through these stages, you can take your enterprise from initial creation towards the future vision you see for it.
There are four set stages of business growth. Each stage reflects the position of your company at that time, and it is important to be aware of the indicators that determine which stage you are in.
If you plan correctly, you can move your business smoothly from one stage to the next to fulfil your growth ambitions. However, doing so means having the right measures in place.
In this blog, you will learn what the four stages of business growth are and what you need to consider for your business at each to ensure success.
The start-up stage
Every company, no matter how big, begins at the start-up stage. In this stage, you will have a business idea and will have undertaken the development you need to make it a reality. You may have officially established your company and begun trading – but you will likely still be finding your feet in the industry.
This early stage is crucial for the longevity of your enterprise. 60% of businesses fail with the first three years, so you must build the right foundations for long-term success.
During the start-up stage, you should spend time tailoring your business according to the opportunities and challenges you face. This includes tweaking your services and products to maximise results, streamlining your operations and establishing your brand with your target audience. It also includes getting to know the financials behind your business; while you will have planned this before setting up, your businesses projections may look very different in real life compared to on paper. Learn how to understand your accounts and the variety of financial options available to you in your unique operations to assist.
By adapting your enterprise, you can ensure you are running a tight ship that satisfies your customers and meets demand while carving your space in the market. This will then prepare you to scale up your business with a strong base to underpin it all.
The growth stage
While the start-up stage is focused on creating foundations, the likelihood is that you will have already thought about the end goals you want to achieve for your business. The growth stage is about progressing towards those goals.
Once you have nailed your offering and are confident that your company is set up in a way that ensures efficiency, functionality and customer satisfaction, you are in an excellent position to expand it. This is particularly apt if you see growth indicators in your business, such as rising sales, increased demands and better market share.
You need to have a strategy behind your growth which will detail what objectives you want to reach and how you will do so. There are many types of growth you can undertake as part of this stage: hiring more staff, acquiring additional premises, scaling up operations with more supplies and equipment, investing in new technology or expanding your product line. You could undertake one or several of these depending on your objectives.
Finances will take a prominent role during this stage. While your enterprise should have already proved profitable before you even consider expansion, very few firms will have the funds they need to grow in their bank accounts. It is therefore essential to understand the growth finance options available and utilise them in line with your strategy. Potential funding solutions include angel investment, commercial loans and alternative lenders, invoice discounting, stock finance and P2P lending.
By implementing funding and planning effectively, you will grow your business successfully. It is worth noting that growth may be staggered over time, depending on what your ambitions are, so this stage may last for several years.
The maturity stage
At the maturity stage, you will have scaled your company up to the level you want to and will now be able to take stock of your newfound position with your industry. Key indicators that you have reached this stage include predictable revenue and continuing year-over-year growth. In essence, your business is at its peak.
This does not mean your enterprise is stagnant – you should continue to evolve and grow in line with industry trends and innovation to keep at the top of your game.
Similarly to the start-up stage, the focus here should be refining your offering and operations to make sure you are consistently running effectively and serving the market appropriately. You want to maintain stability for your company while fending off competition from emerging enterprises.
Finance options that you may utilise during maturity include cashflow management, which can help you to keep operations moving smoothly and prevent cash blockages. Mature businesses also tend to be attractive to investors, so you may choose to offer equity shares in your enterprise in exchange for additional funds.
It is during the maturity stage that some owners, depending on their personal goals, may choose to exit the business. It is vital to plan ahead if this is your aim so that you can find the right buyer and minimise disruption.
The renewal/decline stage
It is not feasible for any company to maintain its peak forever. After the maturity stage, there will come a time where you witness a decline. Indicators of decline include decreased satisfaction scores, reduced profit, high employee turnover and a general lack of aspiration across the business.
If your enterprise is struggling in the decline stage, you may need the support of turnaround finance and loans, as well as cashflow management and cost-cutting measures. It is worth noting that even the most successful companies undergo periods of decline, and some don’t survive it. But it does not need to spell the end for yours.
When a business enters the decline stage, they can continue to fall, or they can turn it into a period of renewal. In the renewal stage, you will need to identify new ways to bring value and demand to your enterprise, such as finding gaps in the market, utilising innovation and diversifying your customer base. You may also implement new policies, internal processes and even change leadership tact to reinvigorate your operations.
If you renew effectively, you will be able to enjoy new sales and profit, taking you back to the growth stage. From there, the cycle repeats.
Any business that is able to survive the decline stage has indicated its adaptability and durability, which will make weathering future storms much more comfortable.
Get advice
By understanding the different stages of growing and knowing when your business is in each, you can guide the company smoothly on its path. However, most important is utilising available support to you at each stage and optimising your enterprise so that it can reach the next step with ease.
If you need guidance on how to grow your business or in financial planning at the different stages, we can help. Our advisors have expertise in a range of sectors, from start-up companies to large firms, so we understand what is needed on the road to growth.