Stages of Business
I started my company 17 years ago. I was the typical solopreneur who did all the things. I taught the classes, handled customer service, marketing, you name it. And that lasted until it became too much, too full and I felt the pull of not enough hours. So I hired my first employee. And then another. Until here we are, almost two decades later, and I have nearly 100 employees. And I realize that no one really taught be that there are different stages in business, each of which needs its own strategy.
Stage 1: Start Up - You are officially in business. You have set up your name, opened the bank account and set up your website. The business is pretty simple. It’s probably just you. It’s a really exciting time, but filled with real challenges. No one knows who you are. And unless you are pre-funded (which most of us aren’t), you have no cash to adequately market your business. So you rely on word of mouth and social media. Your priorities in this stage are to establish your client base and to get the word out, all while protecting your cash flow. In this stage, you are probably not turning a profit. My advice for you at this stage is to create a business plan, even if just for yourself. Know who your target customer is, how you will reach them and set targets for your business. Best advice I got is to double your expenses and halve your revenue as that is most likely what reality will look like. Think about what challenges and obstacles will get in your way (because they will) and how you plan to get around them.
Stage 2: Growth - Revenues and customers are increasing, but it still feels like a game of survival. Excitement is often overshadowed with overwhelm. With servicing more customers, you have less time for other parts of the business. This is the stage where there is a constant battle for time. You start to realize that you will need to delegate. You are spending too much time on things that you know you aren’t good at but need to get done. But that means getting the knowledge out of your head and into a repeatable system. My advice in this stage is to think about what you aren’t good at and what you don’t like and make that your first hire. For me, that was a bookkeeper. And then an assistant. For you, it could be social media or marketing. To get to the next stage, continue to grow yourself as a leader.
Stage 3: Established - You now have a small team and a loyal customer base. But be careful not to rest on your laurels. A good business continues to innovate, to raise the level of service. With less chaos, this is a great time to create repeatable processes for all parts of your business. You do not want to depend on any one person. Challenges in this stage include the evolution in your customers needs and competition. How will you differentiate yourself? It’s very important that you nurture your culture and focus on teamwork. Many business owners get stuck here. The business owner is so stuck working in the business that they don’t have the space to work on their business. This is a stage where you may want to bring on people who know more than you do to take the company to the next level.
Stage 4: New Lifecycle - This stage is where new products or distribution channels come out of your business. You figure out new ways to serve your current customers or new ways to reach future customers. The challenges here resemble your start up stage: Money and Research. You may not have the funding to launch new products and you might not have the plan for how to execute. Very often, this is a time for raising money to take your business to the next level.
There are many versions of the stages of business. Names may differ and some may be more levels but they all boil down to this:
Customers - Do you know how to get customers? Will they buy your product? What is the value of the customer to you?
Cash - Do you have the cash to acquire the customer? Do you have the cash to sustain the stages of business? Do you have the cash you need for yourself?
Delegation - Do you know what needs to be done by you vs by other team members? Do you know how to find great people to carry out your vision?
I always thought of my business as so unique, but in truth, the stages of business are very much the same across all business types. I find that knowing the stages has helped me anticipate coming challenges and plan for better strategies. You need to focus on the right things at the right time.