There are stages to small business growth. You can go from one stage to the next stage quickly or slowly, but you will go through them as an entrepreneur with no to a low budget. Corporations come in with business plans and capital to start hiring from the top down -all before ever opening their doors. However, most entrepreneurs do not have that luxury -most don’t even have capital at all. Let’s talk about these stages, what it looks like to be in them, and how to get out of them to get to the next one.
Transactional. You get this idea that you can get or create something that people buy. Or maybe, an idea is planted because people keep asking you for something that you have and some are even willing to pay for it. This stage is all about moving from ideation to accepting money to make it a transaction. This is usually the phase where “momma nem” (your immediate circle of influence and relation) may support your endeavor and it feels like this could really be something. It feels good and if feels like a bright future doing this entrepreneurship thang. Then you hit a wall. You realize the business cannot continue with just your immediate circle. The bubble of new business has burst and you don’t know how to keep people buying. You are hurled out of the fantasy and into the truth, you have to find clients outside of your close connections.
Making it plain…
- Key Characteristics: This stage is marked by the initial excitement and support from close connections. It’s a crucial proof of concept phase where the business idea is tested in a small, familiar market.
- Challenges: The main challenge is the limited scope of the initial market (friends and family), which is not sustainable long-term. The transition to finding external clients is a significant hurdle.
- Strategies for Advancement: To graduate from this stage, entrepreneurs need to expand their marketing efforts beyond their immediate circle, leveraging social media, networking, and word-of-mouth to reach a broader audience.
Survival. This stage usually includes the recognition and halting of the extras you’ve been adding to make the offer attractive. You now realize that the expense is high and the profit margin is low. It’s different when you’re just doing it maybe for enjoyment, maybe for a hobby, etc… where you put your all into each offering. As a business, profit margins are important, but first you have to at least break even. So you no longer use that expensive, pretty box to deliver the product or add the extra stuff that takes up a lot of time to the service plan because you see it will put you out of business before you begin. Now that you have that under control, your ideas are no longer centered around whether someone buys and instead are focused on how to get more people to buy. You tell more people about what you have to offer, get friends and family to tell more people, and reach out to groups you are a part of to get more sales. Your network really is your net worth but a small network exhausts easily. You have to go outside of everyone you know to enlarge it.
Making it plain…
- Key Characteristics: Entrepreneurs begin to streamline their offerings, focusing on profitability and sustainability rather than extras that do not contribute to the bottom line.
- Challenges: The primary challenge is achieving a positive cash flow and expanding the customer base beyond the initial network.
- Strategies for Advancement: Effective cost management and a strategic marketing plan to reach new customers are essential. This might involve digital marketing, collaborations, and exploring new markets.
Capacity. Getting more clients means getting more help. This stage comes with the reality that you may not be able to do it alone. You start to realize that if you just had an extra set of hands or even maybe a clone, then you could make more money because you could service more people. This is where most modern entrepreneurs turn to tech first. What platforms can save them time? Then they hire support roles but they are still very much in the day-to-day doing the main thing that brings the money. Both tech and team can open your capacity giving you some growth. But with growth, comes growing pains. As you get bigger, your original way of doing things simply won’t work. You need new ways and rinse and repeat steps for efficiency to meet demand.
Making it plain…
- Key Characteristics: The business sees an increase in demand and recognizes the need for additional help, either through hiring or technology.
- Challenges: Managing growth without compromising quality or customer service is a significant challenge. Entrepreneurs must also adapt their operational processes to handle increased capacity.
- Strategies for Advancement: Investing in technology that automates routine tasks and hiring for support roles can help. Creating scalable processes and ensuring that the business can handle more work without a drop in quality is crucial.
Scale. This stage marks the breaking and rebuilding of everything. You have to identify what is working to do more of that and what is not working to do less of that. You have to be clear on your values to make sure all decisions fall in line to create a culture inside and with external touch points for your business. You have to create processes (what to do), procedures (how to do it), and protocols (when to do it) that will make up systems for a well-oiled machine that becomes your operations. This stage is usually the stage where you really start to build a business and not just do business. There are levels to scale… the more you grow the more you’ll have to repeat the process and overhaul everything but at this point, it’ll be “6-figure” and beyond problems.
Making it plain…
- Key Characteristics: This stage involves deep strategic planning, focusing on what works and eliminating what doesn’t. It’s about building a sustainable business model that can not only grow but scale (growth in excellence).
- Challenges: The challenge lies in maintaining a balance between growth and maintaining the company’s core values and quality. Additionally, creating scalable systems and processes requires significant effort and strategic insight.
- Strategies for Advancement: Continuous process improvement, adherence to core values, and strategic decision-making are key. Entrepreneurs must focus on building a culture that supports growth, innovation, and customer satisfaction.
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