Category: Business

5 Stages of Small Business Growth

Development and growth

Small business may be different from computer stores to cyber cafes to coffee shops, but they still experience relatively common problems and they will generally follow certain stages of development and growth. By understanding these patterns, its possible to know which stage your business is in and what you can do to mitigate the challenges and problems associated with that stage.

Stage 1. Staying Alive
When a Business is starting, the main objective is usually to stay alive. Customers are few and there is need to increase the client base and a good way to do this is through a quality website. Resources such as the starting capital are gradually getting depleted with time and with more production.

The owner of the business is the business and manages every aspect of it. If there are employees, they are usually of average capacity. However, this is usually what is needed as the production is not very advanced at this stage.

The business may either use up the starting capital, fail to secure more clients and therefore die or if its lucky, the can be sold for the current asset value.

Stage 2. Maintain Operation
When the business enters into the second phase of survival, it is now apparent that it can continue to operate. It has a well-established client base whose needs are well satisfied.
Some of the main questions in this stage is whether there can be enough cash inflow to break even, make repairs and increase stock.
There are still a few employees but this time could be under supervision by a subordinate of the business owner. His task is to lay out instructions.

Stage 3. Success
At this point the business is profitable and thriving. The owners have two choices, increase the size of the business or simply maintain the current state.
The owners may also use it as a platform to venture into other types of businesses and engagements such as run for political seats.

Stage 4: Taking-Off
This stage is characterized by the need to increase business growth in a rapid fashion. This usually means finding ways to finance the business.
We often see delegation at this point where certain tasks are given to subordinates to improve the managerial effectiveness.

Step 5: Resource management
When a business reaches this stage, there are usually many systems that are well developed. Income is streaming in at a considerable rate and the management levels are increasing with more business. Management continues to be more decentralized to be able to maintain efficiency.
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