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The 5 Stages of Business Growth, from Startup to Maturity

On the surface, outlining the “xyz” stages of business growth might seem like a senseless exercise.
20 February, 2020

On the surface, outlining the “xyz” stages of business growth might seem like a senseless exercise. Every business is different and follows its own unique trajectory. The rate at which a company grows depends on its organisational and management structure, sector pain points — even company culture can have a significant impact on a business’ journey.

Nevertheless, there are certain milestones and challenges that almost every growing business is likely to face in one way or another. Understanding the five main stages of business growth can help business owners prepare, plan and — hopefully —  prosper.

Stage 1: Sowing the seed

For a plant to flourish, the conditions in which it exists must be able to sustain life and support ongoing growth until it reaches maturity. The same goes for businesses.

The “seed” stage marks the beginning of the journey, when everything is new and exciting. Idea in hand (or head, more accurately), you’re ready to take the plunge.

However, preparation at this stage is key.

To assess the viability of your idea, you should seek advice from a wide range of people: from friends, family, coworkers and business associates to industry experts.

The success of your business will rely on your skills, ability to attract talent and whether there’s an appetite for your product or service. Decide what kind of employer you want to be — do you value innovation and are you prepared to offer flexible working, for instance?

Stage 2: Thriving as a startup

You’ve tested your business idea and you’re ready to launch.

Many experts believe this to be the riskiest stage of the business lifecycle. This might explain why, according to the Small Business Association (SBA), 30% of new businesses fail during the first two years of being open, and 50% during the first five years.

One of the key factors at the startup phase is accessing the right funding for your business. Platforms like Funding Options help company owners find business loans that suit their requirements and financial situation. Common funding sources for startups include: 

  • Business loans
  • Invoice finance
  • Asset finance
  • Commercial property finance
  • Working capital finance
  • Revolving credit facilities
  • Merchant cash advances
  • Auction finance
  • Equipment finance
  • Trade finance
  • Startups loans
  • Business credit cards
  • Overdrafts
  • Angel investors
  • Venture capital
  • Personal savings
  • Crowdfunding
  • Government grants

Stage 3: The growth spurt

Companies experiencing growth will be generating revenue consistently and attracting a steady stream of new customers. At this stage, you’ll need to decide whether to expand the business or keep it stable and profitable.

If you’re eager to scale, you should work on adapting your sales and marketing models to improve profitability and operational success.

Founders should take an active role in the recruitment process.

Time — or lack thereof — is one of the biggest bugbears for businesses in the growth stage. Juggling revenue management with customer retention while remaining competitive in a crowded market is no mean feat. So, you need to be able to attract and hire the talent that will help you take your business to the next level.

Stage 4: Casting the net wider

Next comes expansion. At this point you’re “in the groove”.

You’ve got employees in place to expertly handle different parts of the business, enabling you to take a more strategic position within the company. You’ve cultivated brand awareness and established a firm presence within the industry. 

Still, careful planning is required to keep the momentum going.

A business can expand by: 

  • Adding new products or services
  • Selling additional stills or services to existing customers
  • Expanding into new locations
  • Targeting new market segments
  • Expanding new sales channels
  • Acquiring other businesses

Stage 5: Maturity

Mature companies are characterised by having stable year-on-year profits. At this point you may decide to invest your efforts into further expansion, sell part of the business, enlist a new CEO who is able to better navigate challenges or come up with a business exit strategy.

Although this is seen as the final stage, the journey doesn’t really end at maturity. To stay competitive you’ll need to manage your resources carefully, keep innovating and have your finger firmly on the pulse when it comes to future trends.

Final thoughts

Not every business will go through each stage of the lifestyle. Others will but not in the order outlined here. For instance, some entrepreneurs might experience huge growth during the startup phase and decide to move straight to the exit phase. At the end of the day, it’s all about balancing your gut instinct with practical business sense. 

This article was brought to courtesy of our sponsors Funding Options, the leading marketplace for business finance.