Up to a point, starting a business is really thrilling, but when it comes to building one that grows sustainably, you are much farther down the road. If you have ever asked yourself what the factors are that incline some businesses to thrive while others are at the brink of failure, then most times, the answer is in the business growth stages. Each one contains the opportunities, obstacles, and lessons, and if you are familiar with these phases, you will be able to plan instead of just reacting in a panic.

Seven growth stages of business, the difficulties that meet you in each stage of the business growth, and the ways of preparing for the long-term success, all these will be our points of discussion in this blog. Acknowledging your position will be the light of your journey whether you have already taken the first step or are on the way to widening the horizon.

The Importance of Understanding Business Growth

Many entrepreneurs poorly envision growth as a phenomenon that one can simply be obtained by working hard. But the truth is that growth is predictable. Regardless of the business, companies undergo the same fundamental stages. So, knowing the current phase of your company will give you the aim of targeting the incorrectly spread problems with the right amount of energy instead of engaging with other diverse issues.

The thing you must consider when the company is being set up is very different from the decisions that will face you if you are going to scale new markets. How business growth stages affect you, helps you:

• Not only to foresee challenges but also not to be surprised when they arise.
• To use resources for activities that bring higher returns.
• To take decisions that are in harmony with the long-term goals.
• To be able to take risks at the right moment and steps back at the right time at the same time.

Stage 1: Seed and Development

This is the stage where your business is an idea only. There is no income, a team, or a place. The company is already complete concretely. Nevertheless, it is still far from being a practical thing. In fact, here it is only about your idea and whether this idea will turn into something real.

Some of the important problems at this stage are related to:

• Creating a business plan that is feasible and believable.
• Analysing the strengths and weaknesses of the targeted market.
• Getting your hands on the first money needed through your savings, taking a bank loan, or letting investors invest in you.

Successful business at this point is accompanied by the right amount of research and lots of patience. Most entrepreneurs die in this stage as they rush to do without having their ideas tested. The major question you must address here is: will the product be solving a real problem for a real audience?

Stage 2: Startup

After testing and developing the idea, you have arrived at the startup stage. At this point, you have the debut of the product or service, the first customers are recruited, and you start understanding by trial and error what is working and what is not.

Among the problems are:

• Creating a cash flow model that is reliable and stable.
• Building ways to reach the customer trough.
• Recruiting the first four or five.
• Trying for the first time the pricing and positioning of the product.

Most startups are not surviving because of the way they are managing their money: they are running out of money very fast. To be able to last through this period you must concentrate on confirming your idea in the real market. The customer’s opinion is like gold here—it will be the light of how your products will be corrected by you.

Stage 3: Survival

The situation is similar this that your business has become functional and has people to whom you provide services, but profit is probably not stable yet. One main issue is making sure that you will not run out of business in less than a year to be able to build up your business base into something stable and solid.

The biggest priorities comprise the following points:

• Paying the bills on a regular basis every month.
• Taking care of staff duties.
• Keeping an eye on the income and the expenses.
• Changes in the company from operating on the principle of chaos to relying on systems.

At this point, it is very likely that the feelings of the founder will be tested. Cash might be tight. A couple of minor mistakes might result in big troubles. Despite that, if this period is your survival time, then you are, in fact, strengthening your business’s scope for further growth.

Stage 4: Expansion

One of the most exciting developments in the history of a company is the business’s growth later to be referred to as the Expansion stage. You are pretty much done proving the viability of your business model, and by now backing strategies up with data is available for you.

Expansion might encompass:

• Geographical expansion to new areas or regions.
• Addition of new products or services.
• Recruiting more human resource to cope with the growing demand for your services.
• Advancement of the company in technology that leverages business at a large scale.

Growth in this stage requires careful mastery of the art of planning since growth in this sector can very well lead to the demise of the company. Boom without stage can end in downfall of the business soon after. Keep a balance between increasing your business and maintaining your quality and consistency.

Stage 5: Maturity

Here, the business has turned out to be stable and profitable, as well as being known in its market space. Transition to survival mode has been avoided for a long time. Income is on the safe side, while operations feel more like traditional ones. However, at this stage, maturity gives with it a new challenge, that of escaping stagnation.

The main areas to focus on are:

• Looking for the new ways of keeping a step ahead of the competition.
• Simplifying operations for the purpose of maintaining profitability.
• Opening new sources of income.
• Motivating and involving employees in the activities of the company.

The danger of complacency is high. Even in maturity, the capacity to change is vital. Change is the main reason that keeps highly successful companies going.

Stage 6: Diversification

The point of diversification business is when the business is powerful enough to do something new, apart from the things that the company is originally known for. It may be done by purchasing companies in other industries, creating completely different divisions, or using new ways to make money.

At this point, it is more of a calculated risk than a mere gamble. The question is no longer about survival but about where to grow next. There are companies that develop new products that complement the existing ones, the global borders of which they might choose to cross, or invest in technology that makes their processes more efficient.

The difficulty is to guarantee that new businesses reflect the brand and its values and are aligned with long-term objectives. When done right, diversification is a wonderful tool for the company, while it becomes a money sink when done wrong.

Stage 7: Renewal or Decline

Transits the business life-cycle a passage where business must face the final choice: changing for better or decline. Market requirements change, the tastes of customers shift, and disruption of various industries occurs. Big, well-rooted companies also have the risk of falling if they do not reinvent themselves.

At this point, the questions to be asked are:

• Will it help us if we changed and produced different goods and services?
• Can we remain competitive by adopting the latest technology?
• Does the leadership need refreshing for a new vision to sparkle?

Revival needs daring steps. For instance, brands that successfully made the transition from physical retail to online were able to flourish, whereas the ones that resisted change gradually disappeared.

How to Advance Through the Stages of Business Growth

Recognizing the stages of business growth is just part of the process; implementing strategies that take you beyond these stages is what counts. Here are some of the principles that work at any stage, which are equally valid today as they were before:

Invest in people: the power of successful companies is in the hands of the strong teams behind them.

Start putting systems in place early: the chaotic nature of businesses kills their potential to grow. Develop good working procedures right from the beginning.

Track the advancement: Keep track of dealing with cash flow as if it were a game of chess but without smiles: cash is the “heart” of any company.

Always keep your customers in mind: Do not assume their needs; be sure by asking and then acting accordingly.

Show a willingness of change: practicing that businesses which adapt to market changes are the ones that survive.

Common Mistakes to Avoid

Many entrepreneurs fall into the trap of facing difficulties while handling the growth process because they transition improperly from one business stage to another. There are certain mistakes that are made most frequently, among which we can name:

• Grow too fast before confirming constant demand.
• Forgetting the task of separating the personal from the business account.
• Do everything by yourself instead of sharing the workload by assigning others to do it.
• Keeping your head down and not innovating even after reaching maturation.

The sooner you discover these mistakes, the better it is for you as you will save a lot of effort and resources for years.

Real-World Examples

• Just before reinventing itself with game-changing devices like the iPod and the iPhone, Apple was at the point of downfall in the 1990s which ultimately made it clear that renewal is indispensable.
• Amazon was nothing more than an online book store (startup and survival stage) at the beginning but went beyond the borders of the world by selling various goods and services, cloud computing, etc.

Netflix changed its business model from mailing DVDs to streaming and later to content creation, which is a perfect illustration of transition from expansion to diversification and renewal phases.

These cases illustrate that even these success stories cannot escape going through the same predictable business growth stages, but what makes it a difference is their ability to adjust and outstandingly perform if they do not fail.

Final Thoughts

Being an entrepreneur is not just one sole straight path but a flight of stairs with phases that experiment, develop, and brand-new business ideas not only for the business but also the entrepreneur himself/herself. When you are aware of different enterprise growth stages, you get more understanding about choosing what to prioritize and what issues lie ahead.

Keep in mind that surviving is not the only aim but also thriving, adapting, and securing long-run sustainability are added benefits. For instance, it is said that majority of businesses do not help themselves in passing through the survival phase, however, the ones that do and keep on transforming in maturity and renewal stages become the subject of our admiration as industry leaders.

Now suppose you own a company and I were to ask you what stage of growth your business is at and what it took to get at the next level, how would you answer? The future of your business depends on what you come up with.

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