When developing your business from an idea, it is essential to work through both the action planning and growth planning tasks. When starting and growing a business, entrepreneurs face a continuous stream of challenges. When one hurdle is overcome, another challenge presents itself. With a proactive mindset, entrepreneurs can learn to predict and overcome potential barriers to growth. Regardless of your industry, all startups face and overcome the same type of problems and challenges.
Startups progress through six life cycle stages:
1) Pre-Start Stage
As an entrepreneur consider starting a business, the pre-start stage begins. The pre-start stage is characterized by a high level of uncertainty, a great deal of insecurities, and insufficient motivation. The three associated growth challenges are: (1) finding and developing the right idea, (2) establishing the right network, and (3) taking the initiative to solve problems. To reach the start-up stage, it is essential to identify your team and the right network. A business partner, a customer, a potential supplier, or a business advisor can help you turn your idea into a business concept.
2) Start-Up Stage
With a business concept in mind, the entrepreneur reaches the start-up stage, which is characterized by: lack of profits, a variety of business ideas, and insufficient funds for the owner’s salary and the first employee. There are three typical growth challenges: (1) finding the right customers to generate revenue, (2) developing the right product portfolio, and (3) learning the discipline needed to build a business. It is crucial to identify that one good customer who can provide long-term work and provide the funds necessary to develop a business.
3) Pre-Growth Stage
With regular income and customers, the business reaches the pre-growth stage. The pre-growth stage is characterized by: regular income and customers, a state of chaos without systems, and sporadic, reactive sales efforts. The three typical growth challenges include: (1) systematizing the sales efforts, (2) establishing systems to document processes, and (3) identifying the right market position. To reach the growth phase, it is essential to develop systems to transfer knowledge and enable delegation so that the founder has the time to focus identifying new customers and growth strategies.
4) Ripening Stage
With a business concept, satisfied customers, and stable business operations, the business enters the growth stage. The growth stage is characterized by: an attractive business concept with a sales force, monthly hiring of new employees, and liquidity under pressure. The typical growth challenges include: (1) controlling liquidity and acquiring financing to sustain growth, (2) recruiting the right employees, and (3) developing a management culture. To reach the ripening phase, it is crucial to ensure financing for continuous growth and to implement a top management team.
5) Mature Stage
With a well-functioning business on a day-to-day basis, the business enters the ripening phase where the business reaps the rewards of their efforts. The ripening phase is characterized by: independent company divisions, good liquidity and capital for investments, and a competent management team. The three typical growth challenges include: (1) maintaining the innovation and developing new business areas, (2) retaining the best employees, and (3) maintaining competitiveness.
6) Transition Stage
As a new competitor enters the market or a new technology changes the market, the business enters the transition stage. The transition stage is characterized by: a dwindling market due to changes in the environment, owners and employees exiting the company, and acquisitions or mergers. The three typical growth challenges include: (1) morphing the business model or adopting a new one, (2) creating new partnerships, and (3) adapting to changes while building momentum for new beginnings.
As a business progresses through these stages and overcome hurdles, resiliency builds and the business becomes stronger. The transition stage resembles the pre-stage start such that the business has come full circle. The life cycle can span a year or many years. Regardless of the timing, the life cycle phases allow an entrepreneur to anticipate future challenges. With these patterns, entrepreneurs can learn from one another and mimic another entrepreneur’s approach to overcoming a shared challenge. For more information, download "Know your Next Growth Challenge – Before It Comes".
What stage is your business in? What challenges are right around the corner? Are you prepared to overcome these challenges? All these questions and potential challenges may seem daunting to the first-time entrepreneur.
GrowthWheel coaches are here to help! Our Certified GrowthWheel coaches have experienced these challenges and continue to guide startups to success. GrowthWheel coaching can help you be proactive, anticipate these challenges, and build resiliency in your company. Contact us to coordinate a one-on-one consulting session.