Three stages of a company’s growth
Growth is a given for business sustainability. If a business does not grow in some capacity, then it eventually fades away.
Please don't confuse growth with size. A company can grow but not necessarily get substantially larger. Growth can be in terms of better customers, a better customer mix, improved products or stronger market position. All of these contribute to more loyal customers, which translates to more sustainability.
In thinking about growth, there are stages or life cycles that practically every company experiences. These stages are not defined by time, but by the activities of the business. The life cycles are also determined to a degree by the age of the company. Understanding what stage or life cycle a company is in is important because it helps the leadership focus on the activities that will drive growth.
First is the Early Stage, often defined as the hectic, crazy, scary, stressful, “am I out of my mind?” stage. The Early Stage is the beginning, and the company looks for business wherever it can find it. The goal is simple – get customers. The Early Stage is all about selling.
The ultimate Early Stage goal is stability – market awareness and customers who continue to buy. To reach stability, be sure to listen and be flexible in terms of products, services and response. It's very seldom that someone gets it right the first time. Your customers will tell you with their purchasing decisions whether you have something they value and are willing to pay for.
If the organization listens well and responds well, the instability of Early Stage evolves to the more stable Expansion Stage. In the Expansion Stage, the company breathes a little easier, and begins to work on itself. Cash flow is positive and more predictable. Management can take some time to focus closely on the infrastructure, systems and employees needed to not only serve the existing customers but also serve additional customers on the way.
Working on oneself improves profitability. In the Expansion Stage, wean unprofitable or low-profit customers to higher-priced products and services, while cutting costs by eliminating waste and poorly designed processes.
As time passes in the Expansion Stage, all good things will eventually wind down. In a foreseeable future, the customer base may be saturated, market conditions could change, technology alters the offerings, competitors surpass your offerings, etc. The ability to grow the business slows or even stalls out.
When this occurs, the business must experience some type of Transition Stage. The transition can be new products or services, new markets, new technologies or even different industries. What's important is to recognize that a transition is necessary. If a transition does not occur, the business will eventually begin to decline.
Also, recognize that a business can be in an expansion mode in one area, and a transition mode in another area. They are not mutually exclusive.
Common to all three stages is focus on the customer and alignment of the company with their needs. Early Stage companies seek to find their place in the market. Expansion Stage companies to explore their customer base. Transition Stage companies reinvent themselves.
If company leadership understands its growth stage, they should be able to define the activities that accelerate profitable growth and sustainability.
Ken Cook is the co-founder of How to Who, an organization focused on helping people effectively build relationships and building business through those relationships. Learn more at www.howtowho.com
WBJ Web Partners
Most Recent
Most Recent
0 Comments