In a now world-famous whitepaper from Harvard University entitled ‘The Five Stages of Small Business Growth’ authors Virginia L. Lewis and Neil C. Churchill shine a clear light on the important stages of development for small businesses.
Their findings don’t just apply to stateside companies, they are also relevant to businesses all over the world, especially here in the UK, where thousands of new companies are started each and every week.
There are many trap falls laying wait for small business owners, so it is important that they can understand where exactly they fit in to the five-stage timescale. When they know where they stand, they can recognise what to do to make the move to the next step and help secure their business as a success.
But what are these five stages?
Stage 1: Existence
To have an existing business you need to take that idea you have floating around in your head and make it a reality. This is the first step in bringing a business to life and will demand a lot from the business creator; they will be responsible for nearly all of the work and shoulder all of the responsibility in the early stages. First step – for a business to exist, it needs customers.
Stage 2: Survival
Once a client base is established and profit is being made the work cannot let up. From here the profit needs to remain and more clients need to be found in order to start securing a return on investment (ROI).
Stage 3: Success
Once a business has systems in place, is making profit and has an established clientele, the owner can choose to maintain the current form or grow. At this point the business owner should no longer be undertaking all of the major tasks himself but should have a team of experts in place to deal with the everyday running, freeing them up for further tasks.
Stage 4: Take-Off (Growth)
As the customer base grows and the business continues to intake more profit, more staff, equipment and materials need to be resourced to meet the demand. From here a business will continue to grow as long as current systems are maintained and improved upon.
Stage 5: Resource Maturity
In the beginning stages a small business can grow rapidly. At stage five, things begin to slow down and a business operates at a reduced pace, freeing up time to diversify into other products or areas of business where they can tap into expanded markets and reach customer bases further afield.
Along the way, small businesses can be held back by outstanding invoices that reduce their ability for growth. With Quote Goat, businesses of all sizes can compare range of business finance options from merchant cash advances to invoice finance quotes from major lenders, which can help free up that capital and reduce the amount of time they need to spend chasing down late payments.