When it comes to launching your own start-up business, chances are you have dreams of making it thrive in the not-so-distant future. Every great company started off on a small scale and grew over time, and there are five key stages of growing a small business that can help you keep on track with your business growth goals.
Stage One: Genesis
Before you can start selling your product or service to customers, you’ll have to bring your company into existence. This is a scary and exciting process where you’ll have to plan how much you can invest and how to best promote your product to customers. At this stage, you will probably be running at a loss financially, so before you begin the start-up phase, it’s important to raise enough funds to get you through the whole process. Think carefully about stock control at this stage and avoid tying up too much capital on unnecessary inventory.
During this beginning period, you should focus your attention on acquiring new customers and spreading the word about what your business has to offer. Throughout the start-up process, you’ll want to build good relationships with your customers by listening to their feedback and improving customer satisfaction. The goal behind keeping satisfied customers is to have repeat sales to them, and to encourage them to talk to others, bringing in new and interested customers. At this stage of your business, building a good rapport with clients is key to success.
Stage Two: Survival
Once you’ve overcome the first stage, your goals will shift to finding out how to make your business sustainable. You’ll want to start breaking even or generating profit. This may take time, and there will definitely be periods where business is lacking and you lose profit, but ultimately there have to be more thriving periods than not. During these thriving periods, it’s important to build up your funds to help get through the low periods and ensure that your business is stable and sustainable for the future.
After devising a financial business plan, it’s time to think about other resources. Deciding whether to work by yourself full-time or to hire other staff is a key question to dictate where the future of your business will head. You can also use this stage to connect with new customers and build relationships with other business owners in your industry. However, don’t fall into the trap of focusing solely on new customers at the expense of old ones.
In terms of budgeting, you may be tempted to cut costs at this stage to maintain profit. Be careful, as marketing and advertising will be crucial to propel your business to more success, and cutting these budgets may save money in the short term, but could have critical effects in the long run. If cash on hand is tight, look carefully at stock control to make sure you’re not purchasing more inventory than you require. If you are concerned about profit, consider your pricing to make sure the margin on sales is enough to cover your costs. However, it is important not to overprice your products and lose customers. At this stage in your business growth, organisation will be key.
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Stage Three: Success
As your business matures from the start-up phase, you can expect profits to increase and your business will start to thrive. At this stage it is important to not get stuck in the ‘survival’ phase. To create a more rewarding business experience, use the new profits to fund future business growth and update your management. Consider stepping back and appointing managers. As an owner, you can keep benefiting from profits, but stepping back allows you to use your money for other purposes.
At this stage in business development, planning is crucial. Having a business plan for growth will enable the business to continue growing, rather than becoming stuck as a small to medium enterprise. At this stage you will need reliable employees to ensure all aspects of your business are running smoothly, and management of both employees and work processes will help you succeed. As your business continues to thrive, you will have to ask yourself whether to disengage and sell your business to another company or to continue growing on your own.
Stage Four: Expansion
As your company continues to grow at a rapid pace, finding a way to manage this growth is critical. Failing to keep up with growing demands or doing a poor job of stock control could see your business fail. At this stage planning future investments will be a focal point. Deciding what to invest in or avoid, what work habits to abandon or adjust, and whether to hire more employees will be important in keeping up with demand.
Stage Five: Maturity
By this stage, your business will begin to stabilise as it settles into its marketplace. Be sure to continue pushing for business growth, despite the rapid-growth phase being over. Do this by diversifying your product options, buying other businesses, or ‘cashing out’ to a larger company. At this point, business procedure should be systematised and resources carefully managed. Consider splitting your business into several departments with individual budgets and management to easily keep track of your outgoing funds. Be aware of smaller start-up companies that may become your main competitors in your marketplace. Do this by keeping up with business trends and ensuring product delivery standards stay high.
Starting a business is hard – you need funds, an innovative product, time, and a solid business plan to make it into the big leagues. By following the general stages of business growth, you’ll know what to focus on at different stages of development, and how best to deal with the inevitable downfalls that come with each step.