To Grow a Company, Entrepreneurs Must Take the Business Through Several Common Developmental Stages Whether you’re a small business owner who runs a local restaurant or you’re the CEO of a tech startup, your company will go through the same five stages of business growth, according to the Harvard Business Review. Understanding the five basic growth […]
Whether you’re a small business owner who runs a local restaurant or you’re the CEO of a tech startup, your company will go through the same five stages of business growth, according to the Harvard Business Review. Understanding the five basic growth phases—before embarking on a business idea or while in the earliest maturity stage—can help company founders and owners develop an effective business plan that sets the company up for success.
The Harvard Business Review established the five major stages through which you can grow a business:
Each stage is characterized by size, diversity, complexity, managerial style, organizational structure, formal systems, strategic goals and owner involvement.
During the first two stages of business growth and development, your company is just starting out. You’re likely facing challenges, such as obtaining customers and providing existing products or services.
During the “existence” stage, business owners determine target audiences, find new markets, ensure product or service delivery is available on time, and more. It’s also a time to ensure the company has enough funds to cover the demands of this early stage. The main strategy right now is focusing on keeping the business alive.
To meet such cash flow demands, many business owners look to funding. This can include small business loans, commercial real estate loans, business loans or conventional construction loans. AVANA CUSO, its sister company LendThrive and its partner companies provide the aforementioned loans ranging in size from $2 million to $15 million for businesses in all stages.
Once a business has secured the necessary funding and successfully obtained a customer base, it may enter stage two. The second phase, known as “survival,” proves the business can be a prosperous endeavor. The issues the company faces include generating cash to break even, covering repair costs and staying in business.
The third stage, which is labeled “success,” leaves owners with one major decision-making question: Should they expand the company or remain stable?
Companies seeking expansion and growth move into the fourth stage, which is known as “take-off.” In this phase, business owners must create a business development plan outlining how the company will rapidly grow and how they’ll finance that growth. The two major areas of focus include 1. Delegation (Will the owner delegate responsibilities?), and 2. Cash (Is there enough cash flow to meet growing demand?)
Businesses that reach the fifth—and final—growth phase experience rapid growth and typically have optimal management systems in place. The main concerns facing such successful companies include consolidating and controlling financial gains and retaining an entrepreneurial spirit.
There are several management factors that influence business growth strategies. Understanding and planning for these factors will aid in your company’s growth and success.
There are four major benefits of understanding the stages of business growth. They include:
Knowing these five growth stages can help you tailor your business development strategy. The stages can inform all decisions and prepare you for the challenges ahead.
AVANA CUSO is one of the most seasoned credit union service organizations (CUSO) focused on commercial real estate. Established in 1998.
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/in InsightsThe 5 Stages of Business Growth
/in Insights, UncategorizedTo Grow a Company, Entrepreneurs Must Take the Business Through Several Common Developmental Stages Whether you’re a small business owner who runs a local restaurant or you’re the CEO of a tech startup, your company will go through the same five stages of business growth, according to the Harvard Business Review. Understanding the five basic growth […]