The Four Stages of Growth for Every Business

stages of business growth

There’s a natural life cycle for every business, and every stage of this cycle brings with it its own unique challenges. Because, you know, there’s just never a dull moment when you own a business.

How you approach these growth challenges will depend on what stage your business is in. Just like with parenting, you wouldn’t approach your toddler and your teenager in the same way. Well, you could try — but your teenager is just going to resent you for it, and you aren’t likely to have much success.

Let’s look at the four major stages of business growth, along with the challenges you should expect to encounter with each one, so you can be better prepared and know how to handle them.

The Four Major Stages of Business Growth

  1. Startup
  2. Rampup
  3. Expansion
  4. Maturity

#1 Startup

The startup phase can be a struggle for most businesses. Sure, being a part of a startup can be very exciting – but, easy? Not so much. It’s no secret that 80% of new businesses fail during this stage — and when you’re neck-deep in it, it’s not hard to imagine why.

Typically at this stage, a business will be bootstrapping (funding a business with personal finances or very little capital), which means resources are extremely limited and there’s a high risk of burnout for the business owner.

Common Challenges:

  • Limited resources (e.g. money, time, manpower)
  • Poor cash flow management (or no cash flow at all)
  • Pricing products/services too high or too low
  • Preparing a realistic budget
  • Lack of processes and systems

Suggestions: Put as much of your energy as possible into acquiring clients, developing your position in the market, carefully managing your cash flow and avoid ad-hoc planning.

You’ll find more suggestions for startups here:

How Financially Ready Are You to Start a Business?

Your Financial To-Do List for Your Growing Business

How to Reduce Risk for Your Growing Business

#2 Rampup

During the rampup stage, your business is picking up momentum, you’ve got customers, and you’re starting to build your team. Yee-haw!

But, wait. This stage can get messy really quickly when the business operations can’t keep up with the new business flowing in. Also, even if your business is earning more at this stage, you may not be making a profit yet because of increased expenses — so there could still be some financial strain until you’re able to balance things out.

Common Challenges:

  • Cash flow, cash flow, cash flow
  • Operations overwhelmed
  • Building to support growth today and in the future

Suggestions: Delegate responsibility and gather additional resources — this might mean outsourcing or even bartering with other businesses. Also, managing expenses and cash flow is incredibly important at this stage.

#3 Expansion

This is the stage when your hard work seems to be paying off, you’ve got your systems and processes nailed down, and you may want to consider moving towards selling or scaling the business.

Expansion is of course optional – otherwise, if you’re happy with where your business is currently operating, you can maintain it at that level indefinitely.

Common Challenges:

  • Operational inefficiencies
  • Hiring, training and managing staff
  • Poor planning and execution

Suggestions: Now is the time to manage your inner control freak and learn when to let go. Hire more help or outsource some responsibilities, and then trust those people to handle the details. Make sure you have a clear picture of your finances, as this will inform your decisions about the future.

#4 Maturity

When you’re sustaining a mature business, you’re likely to face challenges related with having more employees, more expenses, and a lot less flexibility than the early days.

This is the stage when complexities and inefficiencies in your operations can really bog down your business. For instance, you might hear that terrifying phrase, “That’s how it’s always been done.” [shudder]

Common Challenges:

  • Keeping employees motivated
  • Greater operational challenges
  • Less agility
  • Loss of momentum
  • Decreased sales

Suggestions: Focus on company culture and inspiring your employees. Do a review of your finances and identify operational inefficiencies that could be hurting your bottom line.

What stage is your business in? Can you relate to the challenges discussed here? We’d love to know your stories in the comments below!

UPDATE: We now have an infographic on the four stages of business growth!

One thought on “The Four Stages of Growth for Every Business

  1. My partners and I just launched a new, fresh consulting firm assisting start-ups and existing businesses refine, renew and reinvent themselves for success. Your article is absolutely on point. Growth must be targeted and managed no matter the stage of any business.

    Rise Up!

    Alex Ruby.

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