Just like living, breathing organisms, businesses undergo certain stages of growth. These stages of the business lifecycle – sometimes referred to as “growth phases,” “maturity phases,” or “growth stages” – come with certain challenges.
For a business to keep growing and achieve its goals, it’s important to study each of these growth stages. By knowing which stage of growth your business is in, you can plan for the future and devise strategies or come up with creative approaches to address existing and anticipated challenges.
When you plan for the growth of your company, you can work with business consultants in the UAE (or wherever you are based) in crafting the appropriate strategy.
But what are these stages of business growth and what should you do at each stage?
Here, we talk about the four stages of business growth — startup, growth, maturity and renewal or decline — in detail.
1. Startup stage
Most people are familiar with the term “startup” – which usually indicates the early stages of business-building. This is the time when you are still a fledgling company and struggling to overcome various obstacles.
The startup stage is considered the riskiest in the business lifecycle, with about 80% of companies surviving beyond the first year, before dropping to 70% in the second year.
During the startup phase, you’ll be focused on building the foundations for your business and actually bringing it to life. You could be flying solo or with a partner or two, dividing up your time between being employed and working on getting your business up on its feet.
You could be doing the marketing, sales and accounting yourself. But then, you can’t keep doing everything yourself indefinitely if you want your business to grow. And if you don’t take the time to study how your business is doing and make the required changes, you could see your startup folding within the first or second year.
To avoid such a scenario, it’s crucial to achieve a level of efficiency and put a system in place to facilitate growth. Doing this usually entails:
- Hiring the right talent
- Delegating tasks
- Encouraging creativity and initiative
- Cultivating a progressive culture
As you reach certain milestones, you also need to prepare for calculated risks. For example, would you need to hire more people for sales now that you’re gaining some market traction? Should you get a commercial space and stop working from your virtual, serviced, or shared work space?
Look back and see where you started and where you are now. What did you do right? Where did you stumble?
Use your knowledge to prepare for and tap into new growth opportunities.
2. Growth stage
Now that people are aware of your business and you’ve been gaining customers and growing profits steadily, you’re experiencing a period of steady, rapid growth.
This, of course, is an exciting time for you as you see all the hard work, money and time you put into finally paying off. You have an office, a growing customer base and investors coming in.
While you enjoy these years of success, managing your business for growth is essential. You need to keep yourself focused on your business objectives; else, you could get swayed and end up somewhere you did not exactly plan for.
To stay on track, try to:
- Review and set your business goals to achieve purposeful growth and make efficient use of your resources.
- Maintain and grow your capital to ensure you meet your business’s financial obligations.
- Create data-driven, realistic forecasts to help you meet your business objectives.
- Hire the right talent to help you manage your business and provide stellar customer service.
- Cultivate and maintain business relations with vendors and suppliers.
3. Maturity stage
When your business matures, you achieve a certain level of security.
You’ve overcome the risks and challenges in the startup stage and fulfilled and perhaps even exceeded your business goals during the growth stage. Now, you already have a well-established brand, a substantial customer base and a strong market presence.
You’ve successfully expanded both geographically and in terms of the products and services your business provides. Your company enjoys a steady and strong cash flow, and you have the means to take on risks and address issues as they come.
With this level of success, what could go wrong?
Among the biggest risks for companies in the maturity stage is stagnation.
As the owner of a mature business, you cannot afford to rest on your laurels and just sit back as the market changes and new entrants start to make your business seem irrelevant. You need to keep going and growing.
You can avoid stagnation by expanding your offerings and tapping into new markets. You also need to stay on the pulse of your market and be prepared to meet new customer demand.
At this stage, some companies begin to seriously consider the idea of selling, merging or buying other companies to grow some more.
4. Stage of renewal or decline
What happens at this stage depends primarily on what you decide to do when your business matures. If you want to avoid a period of decline, you should:
- Look for opportunities to expand.
- Be aware of changes in the industry that impact customer demand.
- Conduct competitor research to see what other avenues you can tap into.
- Stay abreast with technological changes or advances for your business to adapt.
During this stage, it may be difficult to tell with certainty if your business is on the decline, although a reduction in revenue is a clear-cut sign. Therefore, make sure you regularly check the health of your finances through internal and external audits.
This is also the best time to assess your business with the help of consultants who can tell you whether a business process reengineering is in order.
You may also decide to either sell shares or reinvest in your company. Either way, you need to work toward avoiding a decline and ensuring you have a strategy in place to continue growing, identifying new market opportunities and meeting customer needs.
Keep Going and Growing
Whatever stage of business growth your company is in, knowing this with certainty can enrich strategic planning and ensure your success for the long term.
Remember, whether you’re a new entrant or established company, it’s crucial to avoid complacency as this can lead to stagnation.
Focus on achieving your goals and always be on the lookout for growth opportunities.
Need help strategizing? Contact us today.