Every budding entrepreneur has to start small and cope with the challenges of growth as they evolve and learn from past experiences. At first glance, it might seem to be a fruitless task to categorize specific problems in microscopic detail, but you might be surprised to learn that the same issues and obstacles tend to come up repeatedly, whatever type of small business you are running.
With the help of professional guidance in the form of things like tax planning for small businesses, and some valuable insights gained from past experiences of others, you could safely navigate the five key stages of small business growth.
Here is a look at the sort of bumps in the road that many small businesses have to negotiate.
The business of winning enough customers
One of the most obvious challenges to growth is your ability to find enough customers and turnover to first of all exist, and then thrive as a result of increasing sales.
The question of existence is the first critical stage. Your focus needs to be on working out how to get enough customers and what sort of cash demands you will have to address in the embryonic stage of your fledgling business venture.
The simple truth is that all businesses, regardless of which sector they operate in, need to acquire a sufficient number of customers and gain acceptance of their product or service as quickly as possible.
This existence stage is all about survival mode. Once you are up and running with customers who are interested in what you are selling, you are ready to move on to the next challenge.
Survival of the fittest
It’s all very well hitting the ground running and confirming that you have a business idea that is potentially viable, but the next stage of your development is just as critical. The second stage of your growth is all about survival.
You need to be able to generate enough cash flow to cover your overheads and invest capital for future growth.
Sometimes, even a business that is enjoying rapid success can fail, if it can’t fund the growth properly. That’s why planning for future growth and knowing what you need to be able to survive in the short term is so important.
Dealing with success
By the time you reach stage three of your small business growth you could be forgiven for thinking that a lot of the hard work has been done at this point. Sadly, success creates its own set of problems that you have to deal with.
In simple terms, once you reach a certain point in your life cycle, do you stick or twist? You need to decide if you are going to focus on staying at the level you have reached and improve profitability, or go for expansion and see where your ambitions take you.
Both options are fraught with danger. You could take your eye off the ball if you decide to stick with what you have got and the business could stagnate. Alternatively, your ambitions could prove to be a drain on your cash flow and resources. You could also suffer growing pains with staffing problems and a need for bigger premises.
All of these challenges are solvable. It is just a case of recognizing what lies ahead when you try to contend with your initial success.
A good example of the issues that come with expansion would be how you delegate tasks and add layers of management. It may be the case that you need to consider getting someone else at board level to help your growth, for instance.
It is always a good idea to take stock regularly of where you are with the business and what direction you want to travel with it in the future. As the business grows, it also opens up the possibility of a sale or merger so that you can crystalize some profits. This is something you need to think about and plan for as things develop.
Consolidation
The last classic stage of a typical business growth model is about focusing on consolidating where the company is at and where it is headed in the future.
The business landscape is constantly changing and every business needs to adapt to the changes or risk being left behind. Every industry has its specific challenges and some sectors have experienced seismic changes in recent time, mainly as a result of factors such as technological advancements and important legislative adjustments.
Your focus always has to be on making sure that the business responds to all of these obstacles and knows how to navigate a change of course that meets what lies ahead. Maintaining a level of profitability is not a given for your business. If you don’t evolve and adapt to every new challenge it is going to have a detrimental impact on your business profitability.
Another obvious area to focus on as part of your consolidation phase is staffing. A natural part of business growth is for the owner and founder to have a strategy for hiring the right managers and staff who can work alongside them with the same goals and ambitions.
There is also the issue of investing in infrastructure and systems so that your business is future-proofed, as best as possible.
As you can see, although your business will be unique and have its very own individual identity there will be familiar challenges that you will face as part of your growth journey. You can apply the stages identified in a wide variety of different business settings and scenarios. Whether you are launching a retail enterprise or entering the service sector, you are almost certainly going to have to navigate your way to success by working out how to contend with these familiar stages of growth.
Planning for success is non-negotiable. If you know what lies ahead and how to deal with each challenge, it will help you to create a blueprint for success.
Are you ready and equipped to grow your business?
