Exploring the 5 Stages of Small Business Growth In 2023
You probably have heard that, but starting a business is the best route to financial independence.
But you may not have heard the challenges of taking a business from the first day to becoming self-sustaining.
According to government statistics, 20% of all new businesses fail within the first year and almost half within five years.
The difference between the survival and failure of a business depends on how prepared the stages of business growth an investor is, which starts with understanding the stages before you start your business. This guide explores five stages of business growth in 2023.
#1 - Existence Stage
The existence stage is the beginning of a small business's journey. At this stage, an entrepreneur actualizes what was previously an idea by starting an actual business. The business merely exists, and it's more of trying out the business idea's viability, and formal planning is almost non-existent.
More often than not, the business owner runs almost every aspect of the business. At this stage, entrepreneurs encounter difficulty getting customer acceptance and limited finances.
To survive this stage, entrepreneurs must learn about available financing options to stay afloat while investing more in product and service improvement to earn customer trust.
#2 - Survival Stage
If you have succeeded in creating a substantial customer base and not generating some revenue, your business is now in the survival stage. Making it to the survival stage is quite an accomplishment, but it doesn't get the business out of the woods yet.
You already know your idea is viable by now, so you'll be looking at its survival. At this stage, the focus should be on making consistent profits and putting systems in place for scaling. Your need for human resources will increase, but before you take in new hires, it is best to leverage technologies to enhance the efficiency of the available resources.
For example, if you are in the brewery industry, you can use Ollie or similar software solutions rather than increase your workforce. Investing in the right tools helps you streamline inventory control for your brewery, get the most out of the existing workforce, cut your overhead cost and record more profits.
#3 - Success Stage
Also known as the maturity phase, the success stage is the phase where the business can be said to be making significant profits in thriving. Most entrepreneurs consider bringing experts such as sales executives and other departmental leaders at this stage. With expansion control, the entrepreneur can finally relinquish some important roles of running a business they had held from the existence stage.
At this stage, the investor doesn't have to keep worrying about surviving, not to mean that failure is out of the question. Instead, the focus is on continuing the trend of success and making even more profit.
Also, it's at this point where as an entrepreneur, you can talk about having your money work for you, unlike other stages where you have to work for your money.
#4 - Take Off Stage
After months in the success stage, most businesses will enter the take-off stage. At this stage, companies experience exponential growth, which is the reward for spending time building your business.
The main concern in the take-off stage is the expansion and how to fund that expansion.
Different organizations and businesses will choose different paths for expansion. For some, it will be merging and buying into companies. Others may be looking at developing new products or moving into new markets.
#5 - Maturity Stage
The maturity stage is the stage at which a business can be said to have achieved the highest level of success. The highest level of success can mean different things to two different entrepreneurs or organizations. But as a general rule, a business has matured if it is an industry leader.
Also, the business must have almost exhausted all growth opportunities in its current market. The greatest challenge for businesses at this stage is stagnation and decline. Applicable strategies to counter these challenges include exploring new markets and focusing on innovation and the development of new products.