The Four Stages of Growth for Every Business

The Four Stages of Growth for Every Business | FusePhase Accounting

No two businesses are exactly alike, and that means the journey of every business will be different in some way. However, no matter the type of business or industry, there are four common stages of growth that every business will face at some point in its operation, each with its own set of challenges.

The more prepared you are in advance for each stage of growth and the challenges that might come along with it, the greater your chances are for a successful business in the long run.

Let’s dive right in and take a look at each of these stages to help you be better prepared for the potential challenges.

The Four Major Stages of Business Growth

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

1. Startup

Cities don't start out big and neither do companies. They grow.The startup phase is a struggle for most businesses. Sure, being part of a startup can be exciting – but, easy? Not so much. It’s no secret that 80% of new businesses fail during this stage — and when you’re in the thick of it, it’s not hard to imagine why.

At this stage, you’re likely bootstrapping your business (i.e. funding a business with personal finances or very little capital). This means resources are extremely limited, so there’s an extremely high risk of burnout.

Common Challenges:

  • Limited resources (such as money, time, staff)
  • Poor cash flow management
  • Pricing products/services too high or too low
  • Preparing a realistic budget
  • Lack of processes and systems

Suggestions: Put as much energy as possible into acquiring clients, developing your position in the market, and carefully managing your cash flow.

2. Rampup

During the rampup stage, your business is picking up momentum – you’ve got customers and money coming in, 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 revenue 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
  • Supply isn’t keeping up with demand
  • Building to support growth today and in the future

Suggestions: Delegate responsibility and gather additional resources as soon as possible — this might mean outsourcing or even bartering with other businesses. Also, having a solid budget, and managing your cash flow is incredibly important at this stage.

3. Expansion (or Maintenance)

This is the stage when your hard work seems to be paying off, you’ve got your systems and processes nailed down, and you might even be entertaining plans to sell or scale the business. Having accurate, up-to-date financial records will be especially important at this stage, since you could be sharing this data with potential investors, shareholders, or other interested parties.

Expansion is of course optional – otherwise, if you’re happy with where your business is currently operating, you can maintain it at this level indefinitely. No matter if you expand or maintain your business, you’re likely to face some operational challenges at this stage.

Common Challenges:

  • Operational inefficiencies
  • Hiring, training and managing staff
  • Poor planning and execution
  • Creating (and actually sticking to) a budget

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 and outline a reliable budget to guide you, as this will inform your decisions about the future.

4. Maturity

Once the shiny newness of your business has worn off a bit, it will reach the stage of maturity when there’s much less rapid growth and change to contend with. That said, this isn’t a time to just kick back and put the business on auto-pilot.

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. Complexities and inefficiencies in your operations can really bog down your business and prevent it from keeping up with competitors.

Common Challenges:

  • Keeping employees motivated (and happy!)
  • Greater operational challenges
  • Less agility (leading to slow, clunky processes)
  • Loss of momentum
  • Decreased sales due to failure to innovate

Suggestions: Focus on boosting company culture and inspiring your employees. Do a thorough review of your finances and identify any operational inefficiencies that could be hurting your bottom line. (Consider hiring an Operational CFO to help with this.) Streamline your processes as much as possible to keep everything running smoothly.

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: Are you more of the visual type? Well, you’re in luck! We now have an infographic on these four stages of growth. Check it out here.

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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