In this week’s lesson, I am going to summarize the first two stages of business growth so you can better understand the drivers of success and how they impact your company. However, I recommend you read the timeless article, The Five Stages of Small Business Growth by Neil Churchill and Virginia Lewis, and carefully consider what stage your business is at, and most importantly, what the implications are for growth.

During the First Stage, referred to as Existence or known as the Startup Phase, it is common that the owner/founder does it all. If there are no other members of the team, then it is critical that the founder be able to manage every function of the business from sales to operations and product development. Cash is tight at this stage and there’s a tight alignment of business and personal goals. The key challenges the business faces include:

    • Identifying and obtaining customers
    • Delivering your product or service
    • Ensuring cash flow
    • Determining if you can even expand from this initial launch stage

Managing a team, doing heavy strategic planning or implementing sophisticated systems are usually not critical, as you are in true launch mode.

The Second Stage
is referred to as Survival. In many ways this stage isn’t that much different than the first stage since you are still heavily reliant upon the owner and perhaps now a small team to do all of the work. There continues to be a delicate balance between revenues and expenses with cash flow challenges impacting your growth. The owner and the business are still tightly integrated and you likely don’t have too many sophisticated systems in place to manage the business. This begins to change at the next stage.

The skills required to lead through each of the different stages of business are really quite different. At every stage, being able to recognize opportunities (getting “lucky breaks”) is critical, and what you might consider to be a lucky opportunity at one stage will seem different in another, since the ability to seize the opportunity will vary at each of these stages. That’s why it’s critical to recognize the different strengths and capabilities needed such as:

    • Developing a superior product/service offering
    • Selling the product
    • Juggling and controlling multiple tasks

Weekly Lesson Five (Try this…)
If you’re in the early stages of growth, you need to make important decisions about the future of your company and your skills, interest and expertise. Consider the challenges below and if you are facing one of these, write down one action that you can take in the next two weeks to improve your situation.

As the owner, I struggle to delegate activities and responsibilities.
Action to Improve Situation:

Our business is constantly struggling with cash flow challenges.
Action to Improve Situation:

My business and personal goals are intertwined.
Action to Improve Situation:


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