Beth Goldstein, Edge Institute Branding, Business Growth, Business Planning, goal setting, Marketing, Sales, Uncategorized

Bloginar Weekly Lesson Five: Stages of Growth Existence & Survival

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:

Beth Goldstein, Edge Institute Branding, Business Growth, Business Planning, Marketing, Sales

Bloginar Weekly Lesson Four: The Entrepreneurial Moat

Growth is challenging for all businesses, and of course the challenges you face tend to be quite different depending upon the stage your company is at. If you’re a new, emerging company, then you might be struggling on a day-to-day basis with concerns about driving enough cash into the business and paying your vendors (and employees) on time. You’re probably hoping that you get a lucky break that helps take you to the next stage. You’re wearing a multitude of hats and working non-stop to keep all the balls in the air.

However, as you grow and the business becomes more stable (and you get better at recognizing these lucky opportunities), your concerns will likely begin to take another form. You will always be thinking about driving revenue (that never goes away), but you should also be concerned now about how to control and manage the growth that you’re experiencing. Sounds like a “good problem,” right? Sure, it’s better than the alternative, yet significant growth can be just as big a problem as not growing quickly enough or getting off the ground. Why? Because if you don’t or cannot manage your growth, you can face serious cash flow challenges, unhappy customers or a loss of control over your company’s destiny. It is possible to grow too fast and not be able to sustain or manage what you have created, which can lead to serious consequences.

There’s a classic article written about this very topic, published in the Harvard Business Review back in 1983 entitled: The Five Stages of Small Business Growth by Neil Churchill and Virginia Lewis. This is required reading for many of my entrepreneurs because the article, while almost 30 years old, contains lessons that haven’t changed, even as the nature of many companies, the marketplace and various industry sectors have all evolved tremendously in the same time period (e.g., the Internet, social and mobile

The Entrepreneurial Moat
I’ve often referred to these five stages as the Entrepreneurial Moat because there’s an enormous LEAP that has to be made going from the early stages of a business to the later stages of success and take-off. Business owners must become leaders of their organization or step aside to allow the organization to develop its own personality. A disconnect between personal goals and business goals can be a challenge for many entrepreneurs, and many have to choose either to learn the skills of running a very different organization than the one they started, or leave the organization because they simply love the early, startup phase that has fewer people, systems and processes and they can keep their hands in all aspects of the business.

Weekly Lesson Four (Try this…)
Here’s an important self-evaluation to determine the critical challenges that impact you at various stages of growth that you are in.

Rank your agreement with the following statements: 1 is strongly disagree and 5 is strongly agree

Business Stage Challenge Your Score____________
1. The owner delegates most activities 1 2 3 4 5
2. Cash flow is not a constant issue 1 2 3 4 5
3. Aligning business and personal goals is not a challenge 1 2 3 4 5
4. The quality and diversity of the team are critical to success 1 2 3 4 5
5. We have a strategic plan in place and use it regularly 1 2 3 4 5
6. We have systems and controls to measure and manage performance 1 2 3 4 5

Your total maximum score is a 30. If your score is below 15 you are likely at the early stage of your business either in existence or survival. If you score is over 15 then you have likely reached a stage of success where business is taking off. However, if you score low and your business is advanced then you are likely experiencing growth challenges. Below note any concerns you have. The next two lessons focus on important drivers of success at different stages.
1.

2.

3.