Powering Through the 5 Stages of Small Business Growth
Running a small business isn’t for the faint of heart
You’re ready for your small business to grow, but getting to that point is going to take some time. Several business experts over the years have identified five key stages to growing your small business, and generally speaking, you will have to go through all of them - and some can appear daunting. Keep in mind, there’s no set timeline for each of these stages, some you may breeze through, while others you may stay in for a few years. It all depends on your business, your market, and your approach to running a business.
The good news is that there are tips, tricks, and technologies that can make each of these stages easier to pass through. At the end of the day, a successful business venture will go through each stage, but you don’t have to do it all alone. There’s no wrong way to progress through each stage, as long as your business keeps progressing through them.
Stage 1: Existence
Congratulations! You’ve developed a business idea, now how can you make it a reality? New businesses can have a variety of origin stories, ranging from favored hobbies to past work experiences, to daily frustrations in your current routine. Whatever sparked your idea, now you’re excited to begin your journey of being a business owner!
While this can potentially be the most exciting stage of owning a business, it’s also the stage where many companies fail if they don’t prepare appropriately. The Bureau of Labor Statistics has noted that on average 20% of small businesses fail within their first year, and 70% fail within the first decade. While these aren’t overly optimistic odds, one way to prevent failure is to ensure your business stays on a path of growth, following a detailed business plan. Before sourcing any funding, investing in equipment or materials, or even scouting locations, build out a solid business plan.
There are plenty of resources available online to help you work through your business plan, but you may have additional resources in your area. The Small Business Association has a variety of programs, such as the Small Business Development Center, that can help guide you through these initial stages without the cost of a private consultant. Find your local office here.
Stage 2: Survival
Now that your business is running, and your products or services satisfy your customers, you’re officially in the survival stage. This is where you’ll be taking a look at total profits versus expenses, and making sure that you can not only cover the costs of running your business but also the costs of handling something that goes wrong. Additionally, you’ll be looking at forecasting the future: at your current rate, are you profitable enough to expand and grow your business later on?
At this point, you may also see the structure of your business begin to change. As the business owner, you may not be the sole individual responsible for delegating work and tasks to others. You may now be supervising people who manage or supervise others or other aspects of your business. This is a great place to be - not just because it means your business is growing, but because you can start to take weekends off again! That may be a bit of a joke, but, small business owners are notorious for overworking themselves and risking burnout, so make sure you surround yourself with other leadership members you trust to handle things so you can stay passionate and excited about your business.
“42% of small business owners said they have experienced burnout in the past month; 24% reported they are currently experiencing burnout.”
This is the point where you can start analyzing your business processes and finding out what’s really working, and where you have room to improve. It’s also the point where you can take your business data to the rest of your management team and work collaboratively on solutions that you trust to work, even when you’re taking some time away. Finding ways to streamline your business processes, such as moving transactions online through electronic signatures, automating your invoicing and expenses through accounting software, and even digitizing your inventory for better insight into orders and patterns can all be useful technologies to investigate.
Stage 3: Success
While success is a fantastic place to be in running your business, it’s also a time when you’re faced with a significant question: what’s next? Now is when you have to decide if you want to see the business continue to grow and expand, or if you’d prefer to maintain your current rate of business until you retire or sell off the business. There are no wrong choices in this stage because it all comes down to your end goal, and even why you started the company in the first place.
If you decide to continue your business exactly as it is, there are some unique challenges you’ll need to face, like maintaining your customer base, how much room for expansion you have, and how long the business can comfortably sustain itself. This is a good time to look back on your business plan and re-evaluate where you’re at. Some good questions to ask yourself can range from finding ways to make your operations leaner in case of customer scarcity, or ways that you can encourage steady, slow customer expansion through localized marketing efforts.
On the other hand, if you’re looking to expand and grow your business further, there are quite a few other questions you should be asking yourself and your management team. It never hurts to take a look back at your original business plan, even if it may have shifted over the years, or if you’d like to change the trajectory of where you’re headed. This is where you’ll need to find ways to streamline your business processes and ensure that every task and activity is scalable. This should cover everything, from your internal HR processes like training and development to attracting and retaining your customer base.
“The decision facing owners at this stage is whether to exploit the company’s accomplishments and expand or keep the company stable and profitable, providing a base for alternative owner activities.”
Automation and data capture can be your best friends if you’re opting to expand and grow your business. It’s important to keep in mind your current cash flow and the bandwidth of every team member, but in many cases, better data capture and automating processes within your business can be beneficial at this stage. Consider technologies like digital timesheet templates that can streamline your HR processes, while simultaneously giving you insight into how many hours each of your employees are working. This data not only facilitates a smooth payroll process but also gives you advanced warning of potential hiring trends.
Stage 4: Take-Off
Assuming you’ve opted to grow your business, you’ll advance to the Take-Off stage, where your biggest challenges will be around delegation and cash flow. This covers everything from making sure your business has the financial and physical resources to expand and grow, as well as a competent and trustworthy workforce to facilitate that growth. Cash flow and expansion tend to go hand in hand, as expansion will require the funds necessary to hire the team that will inevitably bring in the additional funding to continue expanding. It’s all about finding a balance of assets backing your business in leaner times with re-investing your profits back into the company.
You’ll have some decisions to make in these processes too, depending on how you’re running your business and what workforce needs you have, you may want to consider hiring a recruiting firm to assist you. At the very least, ensure that your applications are modern, clean, and easy to fill out to make it as easy as possible for potential candidates to submit their information. Online job applications make this process much easier, and top-tier platforms can also support form routing to get your applications directly into the hands of the hiring manager. It’s time-saving technologies like these that will help automate your internal processes and streamline every aspect of your business.
Other than incorporating automation where you can, another key part of this phase is to ensure collaborative communication with your team. Always remember that you’ve hired them for a reason, and when everyone feels like they’re a part of the solution and the company, they’re more likely to stick around. One thing your business doesn’t need at this stage is a high turnover rate, and not only will it make work more enjoyable when everyone feels confident in their position, but it can also save your business money at a time when it’s most crucial.
Stage 5: Resource Maturity
You made it! Your business can thrive despite economic or temporary changes, growth is no longer a feared term, and your customers are referring your products and services to everyone they know. At this point, your business has the resources and stability to be a lasting success, even long after its founders have moved on to other projects or passions. Now you’ll face the challenge of complacency within your business.
If your business has made it this far, congratulations are in order, but don’t let the victories dampen the innovative thoughts and ideas that got you this far. The best businesses keep one eye on their existing operations, and the other looking ahead to the future. Continue capturing your business data for analysis and try to stay ahead of trends from your competitors and partners. If your business becomes stale, not only do you risk losing the team members that helped make this successful endeavor a reality, but you risk regressing backward in the business and seeing it fail.
Yes, these stages are a great blueprint for where you can expect your business to go, but much like any relationship, a business requires consistent attention, nurturing, and listening. Your path through these stages may not be linear, or you may prefer to stop at stage three and enjoy a comfortably running business without great expansion. In the end, it comes down to how you want to run your business, and as every small business owner knows: one size really doesn’t fit all.
About GoFormz
GoFormz is a digital forms solution that helps bring your data into a single, actionable place. We believe that everyone should be able to fill out their forms online, and proudly support small businesses by redefining how they collect and process information. Whether you need HIPAA forms for your private practice, or invoices for your online storefront, GoFormz can bring your processes to the digital realm. Complete with an open API and multiple native integrations, you can rest assured that your data is always ready, whenever you need it.
