5 stages of business growth

The 5 Stages Of Small Business Growth

Latest posts by Jennifer Watson (see all)

Small businesses vary widely from brand to brand. Starting an online lead generation agency is wildly different than opening a brick-and-mortar hair salon. However, all small businesses follow the same five stages of growth. 

Knowing these stages can help you anticipate challenges and plan for success no matter what vertical your business specializes in. 

Stage 1: Existence 

The first step in starting a business is bringing your idea into existence. In this phase, the owner is often the sole proprietor or has a few employees. Systems and planning are minimal or don’t exist at all. 

Main challenges: Obtaining customers, delivering the product and keeping adequate cash flow. 

Takeaway: In planning for the challenges of stage one, make plans for who your customers are, how your product will help them, how your product will be delivered and how you will get initial capital to start the business. 

Stage 2: Survival 

In the survival stage, the business proves viable. A workable product is drawing in enough customers to allow the business to survive. Systems and operations remain small and simple. 

Main challenge: Revenue vs. expenses – can the business do more than break even? 

Takeaway: In planning for the challenges of stage two, continue to focus on revenue. See where you can cut operating costs, improve profit margins and plan for scalability. 

Stage 3: Success

At this stage, the business grows to a level that can support itself indefinitely. Profit margins are average or above average. The owner can now decide between two options: 1. Scaling the business for larger growth and success or 2. Stepping back to reclaim time and allow the business to function independently. 

Main challenges: Creating systems and processes that allow the business owner to step back or scaling to bigger and bigger proportions.

Takeaway: In planning for stage three, have an idea of your larger goals for the business. This is the stage where major pivotal decisions can be made.  

Stage 4: Takeoff 

If you choose to grow your small business rather than take a step back in Stage 3, it can grow into the takeoff stage. This stage involves rapid growth and expansion which, if successful, will take your business from small to big. 

Main challenges: Rapid growth requires more complicated business structures. Delegating, managing large teams, maintaining vision and cash are common challenges.  

Takeaway: If you plan to grow your business from small to large, it may be helpful to find a business partner with skillsets for large companies if you do not have them already yourself. 

Stage 5: Resource maturity 

If a business succeeds past the takeoff phase, it becomes mature. In this phase, leadership is spread across several stakeholders, processes and planning are excellent and the business holds a sizable market share. 

Main challenges: A larger size can make pivoting to shifting market demands slower and more difficult. 

Takeaway: As a mature business, stay on top of market trends and be willing to make needed changes. Be a lifelong learner.   

Marketing your small business

As you grow your small business, marketing is essential. Check out this helpful infographic, courtesy of Quicken Loans, to learn more tips for growing as a small business.

marketing your small business


Sign Up: Receive the StartupNation newsletter!

Total
1
Shares
Previous Article
digital ads

5 Reasons Your Digital Ads Aren't Performing

Next Article
newsletter

StartupNation Growth Hacks #1: Create a Newsletter to Engage Customers, Drive Sales

Related Posts
startup team
Read More

5 Strategies for Building a Great Startup Team

The way you treat your employees, their time, skills and abilities in the early phases of your union as a team influences the rest of your company's course of action. Mark Zuckerberg once said, "The most important thing for you as an entrepreneur trying to build something is, you need to build a really good...
recruiter
Read More

The Role of a Recruiter and HR in Small Business

You’ve launched your business and it’s humming along. Like most entrepreneurs, you wear plenty of hats, including chief human resources (HR) and recruitment officer. Here’s the problem, though: You can’t handle all your employee-related responsibilities forever. If you do, you could find yourself in trouble. The issue isn’t just that you’re going to spread yourself...
sales pitches
Read More

12 Unique Ideas For Memorable Sales Pitches

What is one unique idea for an entrepreneur to create an effective and memorable sales pitch?  To help you make your sales pitches effective and memorable, we asked marketing professionals and experienced entrepreneurs this question for their best ideas. From focusing on benefits to offering irresistible bargains, there are many ways to create effective sales...
monitors
Read More

How Monitors Deepen Your Employee Experience And Boost Results

In this ever-changing world, and through the rise of remote working, a good employee experience (EX) can come from many places. But Forrester’s research shows that the hallmark of a good employee experience is always the same — it empowers, enables, and inspires employees. Organizational awareness on the importance of EX in driving business results...