Establishing a business requires hard work, determination and careful planning and strategy for it to hit the ground running. Business owners encounter various challenges, and their ability to overcome them determines their chances for success. As the business grows, it’s also essential for owners and decision-makers to adjust their strategies and be on the lookout for more opportunities for advancement. Through consistent efforts, persistence and patience, many attain the competitiveness and profitability they aspire to achieve.
The journey towards business growth is similar for many, with five distinguishable growth stages for businesses across industries. The business lifecycle begins with ideation, followed by the startup stage, which leads to growth and maturity. The final stages can be either rebirth or decline, depending on how each step was planned and executed. In many cases, the business owner’s ability to identify which stage the company becomes the key to success or failure is why they must know the signs to look for and take action as needed.
Can you identify the phase your business is in at present? Continue reading this article to learn more about the different business growth stages.
The ideation stage
According to 2022 data by Statista, Australia is one of the leading countries when it comes to producing startup companies, with a rate of 5.8%. Startups continue to thrive in the business world, with most beginning by identifying a problem and devising a solution they can distribute to the market.
This problem-solution framework will serve as the foundation of the enterprise. Hence, the earliest stage of establishing your company will focus primarily on formulating business ideas, testing models and strategies, and creating a framework for your organisation.
It’s essential to think about the execution of the planning stages to ensure that they’ll take form at the right time as this stage relies heavily on concepts and theories. Moreover, it’s possible to go off track and be distracted by too many ideas, so it’s crucial to remain focused on the problem and the solution you’re designing.
The startup stage
The startup stage is the best time to showcase creativity and competitiveness, but many businesses fail early on. For some, this may be due not only to financial constraints or lacklustre products or services offered which make them vulnerable targets for competition if they don’t expand rapidly into different markets with broadening offerings soon enough; For others, many employees take on more than one role as the corporate structure grows.
According to a 2021 global survey, 38% of startups failed because of fund shortage, while another 35% folded due to lack of market demand. The source mentions that there’s rarely one reason behind a company going bankrupt, it’s rather a mixture of several issues. Keeping check of operating expenses and profit margins is a key factor for survival in any business.
Cashflow is key at this stage, and business owners should work with their business model to grow revenue and become profitable enough to sustain and advance operations.
The growth stage
The growth stage of a company is all about building up your business. You might invest in strengthening the organizational structure, defining roles and responsibilities or training more personnel- so that you can continue expanding into new markets with confidence!
Other factors that would require a significant investment of time, effort and resources include product development, marketing and distribution. The growth phase allows you to improve the structure of your business with long-term growth in mind.
The maturity stage
The maturity phase of your business should display more stability and profitability compared with the first two stages of growth. You should see steady annual growth; your team should also have attained several years of tenure. Moreover, your relationships with investors and partners should have been strengthened and expanded in various aspects. As the owner, many of your responsibilities should be delegated to senior managers and other employees with an executive role.
Overall, the business should run smoothly apart from occasional disruptions or concerns. Your revenue should also be stable for a couple of years, and you can fulfill financial obligations without delay.
The renewal or decline period
You can tell if your company is headed towards a period of rebirth, renewal or decline based on how your business has performed for the past two years. For instance, one of the industry’s first signs of deterioration is reduced capital and revenue for two to three consecutive quarters. It’s common for declining businesses to experience a high employee turnover rate, exceeding 12%, the average for small to medium-sized companies. If you realise at this point that your current strategies aren’t producing sufficient revenue, then it might be time to consider cashing out or reinvesting.
Conclusion
Understanding the different business stages and identifying your progress can help you make strategic decisions that propel your enterprise to further growth. Moreover, you can avoid costly mistakes by addressing any issues head-on or adjusting your business approach when needed. Continue learning about the different business growth stages, conduct an honest assessment of your current position and reposition yourself to be more competitive.
