7 Stages Of Business Growth: SME Edition

There are 7 stages of business growth that play a vital role in a business’s success. Each of them has its own benefits and challenges. Every company goes through these growth phases, and no journey is the same. To take advantage of each business growth stage, you need to be able to forecast future problems and address each challenge individually.

Seed Stage

During the early days of your company’s existence, you focus on getting things off the ground. This stage is often associated with “seed funding” – seeking early investments from friends and family or angel investors. But for bootstrapped businesses, this means making the first steps and establishing solid foundations.

  • The most common difficulty that businesses face is market acceptance, which they will have to overcome. 
  • At this point in the company’s growth, you need to focus on matching the business opportunity with your talents, skills, and interests. Other focal points include selecting a company structure, obtaining professional advisors, and developing a business plan.

Start-Up Stage

Your company now has a presence in the market. It’s offering products or services, and you’ve secured your first clients. At this stage, businesses start noticing significant growth and need to ensure they have the resources to support it. 

  • It is critical to have a clear vision of where you want your business to go in the coming days, weeks, and months. The main problem is not to use up whatever money you have. Instead, you need to figure out your clients’ needs and conduct a reality check to see if your firm is on the correct path.
  • Businesses need to build a customer base and market presence and manage cash flow.

Growth Stage

At this stage, your revenue and customers are growing. So profits are good, but the competition is becoming more fierce. 

  • The most serious difficulty that growing businesses face is dealing with the never-ending stream of issues that come with daily operations. Effective management, as well as a new business plan, are required. Learn how to teach and delegate to overcome this stage of development.
  • Focus: Businesses are more formal in managing rising sales and consumers in the growth life cycle. To deal with the increase in business, you need improved accounting and management systems. In addition, you will need new employees to handle the rise in business.
  • Banks, earnings, partnerships, grants, and leasing possibilities are the most common sources of cash.

Established Stage

Your company has now evolved into a flourishing firm with a stake in the market and devoted consumers. Sales growth isn’t dramatic, but it’s sustainable. As a result, business life has grown more routine.

  • The Millennial generation, often known as the “generation me,” is growing up in an era of upheaval and globalization. They are a group that expects to be rewarded for hard work—and expect everything from cheap living to higher pay once they join the workforce.
  • Focus: A successful life-cycle business will be dedicated to growth and efficiency. To compete in a mature market, you’ll need enhanced company procedures and automation, and outsourcing to increase output.
  • There are several ways to make money. You can get it by selling items, doing a job, or investing in the stock market. Profits, banks, investors, and the government are just a few.

Expansion Stage

After the ‘established stage,’ also known as the maturity stage, a company can try to reach new markets. This is an exciting period for any organization seeking to attract new customers and distribution channels.

  • The challenge is that you must first plan and research to grow into new markets. You should focus attention on businesses that compliment your current experience and skills. Moving into unrelated fields can be extremely costly.
  • Focus: Add new goods or services to existing markets or branch out into new ones and appeal to a broader range of consumers.
  • Sources of funding: joint ventures, banks, licensing, new investors, and partners.

Decline Stage

Economic, social, and market developments may hurt sales and profits. As a result, many small companies might not even survive this stage.

The question is, how long can a company sustain negative cash flow? Businesses in the decline stage of the lifecycle are fighting declining sales, profits, and negative cash flow. They are basically shutting down. If it’s time to move on to the final lifecycle phase—exit.

  • Investigate new business ideas and possibilities.
  • Reduce expenditures, and look for methods to maintain cash flow in the declining stage.
  • Suppliers, clients, and property owners are examples of money sources.

Exit Stage

It’s an excellent chance for your business to profit from the investment and years of hard labor. They can do this by selling the company to a more prominent company and making a good profit!

  • The first stage of closing your business involves determining the fair market value of your company. 
  • Use it to focus: Get an accurate assessment of your firm. Examine your company’s operations, leadership, and competitive limitations to make it more appealing to a buyer. Create legal buy-sell agreements and a business transition strategy as part of the process.
  • Find a company valuation partner. Consider your accountant and financial advisers for the best tax approach for selling or shutting down your firm.
  • If a company cannot exit the market and is at the decline stage for too long, it might have to file for bankruptcy.

The lifecycle of a business may not progress in chronological order. For example, some firms will rapidly go from start-up to exit, while others will choose to avoid growth and remain in the current stage.

To sum it up, your company’s success or failure depends on your capacity to adapt to its life cycles, which change constantly. Change is inevitable. What you concentrate on and overcome right now will alter in the future. Understanding where your company sits in the lifecycle can assist you in anticipating forthcoming difficulties and making the best business decisions possible.