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.
The Five Stages of SME Business Growth
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.
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.
How to achieve sustainable business growth
One of the biggest struggles that businesses face when they grow, is how to grow sustainably.
As start-ups leave their start-up phase and go into something more concrete, it’s important to understand the fundamentals of growth. By keeping a few basic principles in mind, businesses will be able to realise their growth in a sustainable manner.
Invest in technology
There are a multitude of ways to cut costs when you are starting up a business.
However, to remain innovative and scalable as a business, you need the right technology to do so.
For example, if you have a business with inventory, you need online inventory management software that can grow with you. If you don’t have an online inventory management solution that can grow with your business, then you won’t be able to fulfil orders and manage shipments in a reasonable time. It is truly an investment worth making.
With the right solution, you will be able to manage your inventory from any location with internet access. This kind of technology is shaping how businesses can grow and work.
So, if your business is growing, look for online inventory management software to lead you into the next phase.
Provide noteworthy customer service
Building a good customer base can be a tricky exercise.
Once you have those customers though, you do not want to lose them. That’s why it is imperative to provide excellent customer service.
Customers really notice when they are treated well. If you are growing, it is even more important to maintain great customer service. With more customers, there is more pressure to maintain your reputation and continue providing them with a quality product and service for their purchase.
Invest in a hardworking customer service team and go to great lengths to provide ample support for your customers.
Take advantage of social media
There are many ways to leverage social media.
One of the biggest benefits to a growing business is that social media can have an extremely far reach. Not only does it have the capacity to reach a lot of people, it is usually free or very inexpensive. By promoting a few posts, you could reach thousands of people.
If you tried to do that with a TV commercial, you would feel the dent in your budget.
Use different social media platforms to advertise your product and brand. With each platform reaching different markets, it’s important to identify who you are targeting.
This will allow you to cater your advertising and make the most out of each platform.
Hire the right people
With the right people on board, your company will be able to expand and grow much more successfully. When you hire the right team members, it will be a very strategic move for your company.
By combining the right skill sets with high amounts of motivation, you will be on track to grow your company.
Identify and shape your vision
The first task of any endeavour if it is to be successful is to define it and shape it so that it is clear and achievable.
We all need a target if we are to proceed forward with anything. Once you have refined your vision, it is then important to share it and encourage your staff to uphold it.
To do this, incentivise them to be better by reaching key performance indicators (KPIs). It is also beneficial to allow them to make a case for their pay.
The effect of doing these two things is creating a sense of ownership of the vision, which not only keeps the company grounded but also gives staff a sense of self-worth and achievement.
Boost operational efficiencies
Beyond the fundamentals of a great product and strong market demand for that product, sustainable business growth needs a robust operational basis that will mitigate the risks to the business over the long term.
Improving your operational efficiencies will help to cut unnecessary expenses. A good starting point to achieving this is to encourage a workplace culture that operates effectively to streamline activities for optimal efficiency.
Research your competitors
Understanding trends and patterns in your market by researching your competitors is vital as your business begins to expand.
Having thorough knowledge of what’s already out there can help you spot opportunities, make changes to your own business model where relevant and ultimately, enable you to capitalise on any gaps in the existing market.
Related to understanding your market is the need to understand your customers. Often, business owners see their customers as a challenge, and this can lead to adopting an “us versus them” mentality.
As your business expands, you need to avoid this mentality and find a way to see your customers as partners in your business’ journey to success.
Keep an eye on trends
A major part of sustaining company growth is your ability to remain competitive against other companies in your industry.
Trends come and go, and if your products seem outdated or lose relevance, your customer base will decrease, and growth will stagnate.
Our advice is to do your research and to do it regularly. Keep an eye on trends as they come and go and try to make sure your products follow suit. This will ensure your customer base stays strong, which is key for sustaining growth.