Understanding Your Company's Growth Stage Will Help You Succeed
DECEMBER 10, 2019
Building and sustaining a successful business can look wildly different from company to company. What's not different, however, are the five main stages of business that every company undergoes: Development, Startup, Growth, Expansion, and Maturity.
Understanding what stage you are in has a significant impact on the planning and operations of your business. Overall, each stage is focused on growth, it just depends on your individual goals and the strategies you can put in place to achieve that growth. This could mean raising funds, increasing market share, hiring a strong leadership team, or improving supply chain operations.
First, let’s identify what stage your business is currently in and then determine the best course of action to optimize your growth.
The development stage is the time when you turn your idea into available business plan.
A good business plan sets the course for how you will establish and build your company. Take the time to review your plan regularly to ensure you are achieving both your short-term and long-term objectives as well as making any necessary adjustments along the way. This plan will also come in handy should you seek outside investment.
Start by asking yourself these questions:
- Will this idea be well received in the market?
- How do I establish a strong business structure?
- How does the product/service compare to the competition?
- Will this idea be profitable?
The startup stage can be one of the most exciting yet challenging times for a business. By now, you should have a plan in place and are out in the world trying to make it happen. You’ve likely hired a few employees, are focusing on making connections, and figuring out the best way to turn your product into a profit.
Keep in mind, this is also the stage when many companies fail. 20% of small businesses don’t survive its first year, and only one in three businesses reaching the 10-year mark.
The good news is that survival rates remain steady after several years of operation, meaning the longer a company can stay in business, the more likely it is to succeed. This also means maintaining that growth is imperative.
Use this time to determine which course of action best aligns with most current needs:
- Raising money/seeking investments
- Hiring a team of employees
- Managing expectations from sales and cash flow
- Establishing a customer base or landing new accounts
- Building a market presence
Congratulations! You have survived the startup stage and built a successful business.
Companies that reach the growth stage are now generating steady revenue and growing their client base. Now is the time to focus on fine-tuning your business model, identify new markets, and prepare to scale your business.
There are several ways to continue your momentum and grow beyond this current stage. Try to incorporate a few of these strategies into your yearly planning.
- Expanding customer base
- Scaling your business
- Streamlining operations
- Surpassing market competition
- Increasing profit volume and revenues
Don’t forget - implementing any of these strategies requires an investment, either by giving back profitability or seeking additional investors or loans. Financial advisors are a tremendous asset in helping you decide which approach is right for you.
Once you’ve reached the expansion stage, you are likely focused on increasing your distribution channels. Businesses in this stage are faced with the need to gain a bigger market share and increase revenue streams.
The most common way companies increase market share is by entering new markets. If that is your goal, start by researching the new markets you want to enter and develop a streamlined go-to-market plan. Using advisors to help you research emerging markets while you keep your current markets profitable will give you a critical advantage over competitors who are trying to go it alone.
Many successful companies have also increased market share through:
- Adding new products or services
- Acquiring complementary businesses
- Strengthening customer relationships
- Smart hiring practices
Once a company reaches the maturity stage, the biggest challenge is maintaining profits at pre-existing levels. Typically, earnings are stable but your growth prospects are growing slower than when they were at the growth phase. And, you may even have investors that are eager to hear more detailed plans for longer-term growth.
Mature companies rely on the prospect of developing new products, acquiring smaller companies for their innovative assets, or partnering with companies to expand their customer base and market presence. If your business is struggling to grow at this stage, you may need to re-prioritize your business goals and revisit your strategies from your earlier years.
Although this is the final growth stage, you don’t want your business to stop there.
- Maintaining profits at pre-existing levels
- Staying ahead of the competition
- Finding new areas for growth
- Managing investor expectations
- Reintroducing innovation
This is likely uncharted territory for you, so calling in advice from an expert may be a smart move. Advisors who have experienced the challenges and opportunities at the maturity stage can provide an expanded perspective for key decision-making. Their knowledge and support can also give you a critical advantage over competitors who are trying to go it alone. Whether you decide to re-enter the expansion stage or plan an exit strategy, advisors will make the process easier with better results.
Take a step back and honestly assess the current position of your company. Are you on the path you want to be on, or do you feel like you’re lagging behind? AdvisoryCloud’s network of advisors have the knowledge and resources to bring you up to speed or help propel you toward the next stage.
Ready to get started on your business growth? Get started with us.