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The Four Developmental Phases of Small Businesses

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Running any business is a difficult proposition and it certainly can be a frustrating experience as well. Without a grand understanding of what lies ahead, the natural growth and contractions of your business over time may seem random and unforgiving. Today’s article will help you understand that business growth happens in stages. Each stage of growth requires its own specialized focus to achieve success. As a business owner, you only have a limited amount of resources to give at any time, so making sure you’re spending those resources appropriately is extremely important. Therefore, we will introduce what we feel are four distinct stages in the developmental phases of a small business: Start, Build, Grow, and Take-Off. Throughout this process, we highly recommend that you’re using a strong metric system to accurately measure growth throughout the process. Without knowing where and how your business is growing, it would be like trying to throw a dart while blindfolded. You might make the throw with the best of form, but still entirely miss the mark.

Start

At the very beginning of your business, you should implement a system of measurement to log all of your sales. Even if your sales figures are so small and few that you can recite them in your sleep, you should still note them down. In this phase, it’s crucial to have this data in hand so that you can see how well your business is fitting in your target market. Keep track of who is using your product and what they like about it. Pay special attention to anything your customers feel could be improved about your product. Your goal in this phase is to make your product fit in the market as nicely as possible. If you try to scale too early without securing a solid hold in your market, you’re going to be scaling towards disaster. Make your product as good as you can before you consider worrying too much about scaling and profits.

Build

Once you’ve built a product that suits the market and draws in customers all on its own, then it’s time to start considering the process of scaling. A normally clear indicator that you’ve arrived at this stage is that you feel like you don’t have enough product to satiate your customer’s needs. There’s too much demand, and you don’t know how to keep up with it. Your focus needs to shift from improving the product to improving the business itself. At this point, besides tracking to whom you’re selling to and what you’re selling, you should be tracking work. Specifically, you should be tracking how much work is being done per task to find the most effective strategies. You want your business to perform at peak performance to meet the incredibly high demand from your customers.

This is the stage where you can finally begin to look at improving creature comforts in the business as well. You can invest in office furniture accessories, for instance, to improve the work output of your workforce by making them more comfortable and productive. There’s a number of studies that show that office design indeed has a positive impact on your worker’s “morale”, and it would be safe to say you need to carefully execute it if you want everyone at their peak performance.

Grow

After a while, you should begin to be able to hit customer demand without negatively impacting their experience. Once here, your business has entered the growing phase. It’s at this phase where you can begin to exponentially grow your business, rather than just scale it up as you had during the build phase. The idea is to achieve an explosive growth that can reach a much larger market as quickly as possible to sustain this growth spurt. In this phase, you’ll need to be tracking far more than ever before. Since you’re expanding at remarkable speed into unfamiliar markets, keeping a close eye on the metrics is crucial. It’s during this phase typically when you can look at opening multiple locations for instance. Start examining the cost of acquiring new customers vs the profit that each new customer brings to the table. Begin maximizing profits!

Take-Off

Now that you’ve built a quality product, a streamlined business, and a system of growth, your business is truly ready to take-off and explode! Your goal here is to continue to sustain your growth into the stratosphere. Reaching this phase is incredibly difficult without having set up the metric system that we mentioned in the beginning. In this phase, you should be able to focus on big, bold changes that can shift the market entirely into your favor. The foundation of knowledge and experience you’ve built up to this point is sustaining your business.

There we have it, the 4 key stages of business growth. You need to build a product that fits the market and the customer, make your business more efficient, grow your business and push into new market space, to finally have your business reach a self-sustaining size. Of course, life and business growth do seldom follow frameworks or the phases we laid out here, but they should at the very least allow for a better self-evaluation for any growing business. By being aware of where your business is at, you know how to react and grow.

About the Author

Chloe Smith is a cycling enthusiast and a part-time writer always willing to share tidbits of advice. She believes that passion, courage and, above all, knowledge breed success. When she’s not working, she’s probably somewhere cuddled up with a good book, and a cup of lemongrass tea (or more honestly binge-watching the newest Netflix hit show).

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