There are levels of Business growth that every professional should be aware of. Identifying where a business is currently can help with various activities and processes and ideally contribute to rapid growth and overall success.
Business owners must never forget the high failure rate of small businesses. Studies conclude that only about 50% of small businesses survive past the first 5 years of operation. After a good understanding of the stages of growth, entrepreneurs can ensure that they appropriately devote both the hard work and strategic planning necessary to create and sustain a successful business model. The 5 key stages of business growth that all business owners should be aware of include-
- Development
Every venture begins as a business idea that is either scrapped or carried through. When an entrepreneur decides that a business idea is worth taking on, creating a business plan will likely be the next step. An excellent business plan helps guide an organization through all life cycle stages. A business plan is also a commonly used tool for business financing initiatives, including meeting with outside investors.
A successful business plan is reviewed and updated as a company develops or hired agency like Cultivate Advisors for instance. Maintaining an accurate and realistic business plan helps entrepreneurs better understand their organization and ensures they address pain points before they develop into bigger problems.
- Startup
The starting phase of growing a business is generally highly stressful and challenging. Due to the stress involved, many entrepreneurs give up their new business altogether at this stage.
Other reasons companies fail at this stage range from cash flow problems to business model problems. However, with hard work and enough resources available, some new business owners survive the startup phase and its challenges, including-
- Building the customer base
- Training of employee entries
- cash flow management
- Business Finance Requirements
- Growth
With enough hard work and resources, companies will move beyond the incubation phase and into the growth phase. In the business lifecycle, consistent cash flow and a growing customer base are typically achieved. A significant challenge of the growth phase is problems with market share control, especially in the case of aggressive competitors. Many business owners assume that the solution to competition is expansion, but these efforts can be counterproductive in reality.
Other challenges commonly encountered during the growth phase are-
- Cash Flow Adjustments
- market share competition
- Customer Service Skills
- Fast-growing customer base
Instead, business models and the optimization of existing processes should be developed. All the hard work that a business owner puts into developing existing business components is worth the potential for profit growth. Another common consideration for the growth phase of the business life cycle is greater investment in sales and marketing activities. Ultimately, the goal of the growth phase is to achieve sales growth with a finite amount of business expenses consumed.
- Expansion
The expansion phase of business growth consists of various challenges, from controlling market share to acquiring competitors. A key priority for business owners during the expansion phase is finding new opportunities for revenue and profit. An important consideration for any entrepreneur during the expansion phase is research. For example, business owners must ensure they have adequately researched new markets before expanding to a new geographic location.
