Every business, be it small or the largest ones, goes through several ups and downs. All these peaks and valleys are a part of different stages a business goes through – from success to frustration. What business owners need to know is what to learn from these stages and recognise what to do at which stage of growth. This will help in understanding what can be done to reach the next level effectively.
In general, there are five stages of business growth that help us categorise where the business is and where it is heading. The following are the five stages of business growth:
- Growth – Take Off
- Resource Maturity
Let’s know discuss these stages of growth of a small business to help you determine where your business is heading and how you can further scale it up.
Stage 1: Existence
At the stage of existence, every small business faces a number of challenges. It is especially challenging when the business owner is handling all the work alone. One of the major pain points for them is getting customers for their products and delivering them everything on time. It goes with saying that in order to remain in the market, a new business must look for customers. At this stage, the only focus is on getting customers and not earning profits. So, you too, can keep your focus clear.
Stage 2: Survival
A small business at the stage of survival needs to work more efficiently than before. Now, it needs to focus on earning profits. So, at this stage, the business owner needs to seek and retain customers as well as start looking for the returns on his investment (ROI).
In essence, merely opening the shop and selling is not enough. The business owner needs to establish new systems and processes in the survival stage. It must ensure that it is getting ROI consistently and it grows in the upward direction only.
Stage 3: Success
Once the systems are established, and revenue generation is consistent, it is the time where the business can be called successful. Here, you need to choose whether you want to maintain success at this point or grow your small business further.
Now you have all the systems in place, and you need to understand the difference between survival and success stage. At the success stage, the business owner doesn’t anymore look for a bulk of work. The main reason for this is that the business owners look more towards meeting the current requirements.
Stage 4: Growth – Take Off
At this stage, the small businesses require to increase the capital investment in the business to accommodate and serve higher volumes of customers. Well, this means more employees and staff, more machinery and equipment, and better processes. Your small business now has the chance to become a big company. However, if you mismanage this opportunity, your business can fail miserably, and your expenses may come over revenues.
In case your business requires additional funds, but you don’t have contingency funds, you can avail a business loan. You mustn’t miss the growth opportunity! Before you apply for a loan, you need first to perform a CIBIL score check and also use the business loan calculator before finalising the lender and loan product.
Stage 5: Resource Maturity
A small business virtually reaches this stage once it is ready and all set for diversification. Your small business is now big but runs at a slower pace. However, this does not mean that your mature business is now not able to react to market changes. Hence, you still need to diversify your business by finding related products and markets. You can look for them and expand your existing customer base beyond your reach. This will keep your business flowing, and you will witness different stages of growth.
Here, you can also look forward to opening a new store in a new place. This will provide you access to new customer base plus you can explore new markets. You can also think of adding new products to your inventory to meet the different needs of your current customers.
How can you understand where your Small Business is?
Every business continually goes through these stages at one time or another. To determine where your business stands, you need to look at your business in a holistic way. This will certainly help you know your business in a better way. However, if you are still unsure of where your business is, the best way is just to keep looking for customers and how to retain them by keeping them happy. With your customers returning to your business, it will provide you surety that you are growing in the right direction. After all, customers are the ones that will buy products/services from you and help you grow your business.