The experience of starting and running a small business may vary from one entrepreneur to the next. But one lens for business growth that’s recommended by experts is the so-called “five stages of small business growth” model, which was first proposed in the 1980s. These five phases can help you indicate where you are in your entrepreneurial journey, plus the particular challenges you can expect to confront in each stage of moving your business forward.
The Five Stages
Here, let’s take a quick look at each of the five stages in detail and what your small business may experience throughout each milestone. This knowledge may help you conceptualize good solutions for your problems and prepare you for future hurdles when it comes to running your business.
1) The Existence Stage
Every small business starts in the existence stage. On top of marking the beginning of a business’s journey, it’s also the stage where the business first establishes a foothold in their chosen market. Your two main goals in this stage are to attract new customers and to fulfill their orders. However, since you’re just starting out, it can be understandably difficult to build brand recognition and trust—especially when you have steep competition and a limited cash flow.
One of your priorities should be to keep overhead costs low and manage your cash flow with precision. This way, you can easily manage your business operations and keep them running without the risk of running out of funds—a mindset that you’ll need to carry with you throughout your entrepreneurial run.
To this end, you can use a variety of modern business solutions that are tailored to address your SME business banking needs.
Maya’s Business Deposit, for example, is a fully digital deposit product in the Philippines that promises hassle-free online business banking services. It’s designed to simplify your small business banking and money management processes, allowing you to receive sales revenues, transfer funds to any bank or e-wallet via PESONet or InstaPay, and disburse salaries and benefits to employees all in one account. Entrepreneurs based in the country can pursue solutions for business banking Philippines-based companies trust, from the existence stage to the maturity stage.
Another thing you should do before clearing the existence stage is to develop a clear business plan that outlines your strategies for survival and early customer acquisition. Your business plan should help you stay on target and prevent you from losing sight of your goals. As early as in your existence stage, consider choosing a niche market where your company’s unique value proposition will resonate the most.
2) The Survival Stage
After you’ve properly established your business, the next step is to keep it alive. During the survival stage, your focus must be on achieving business stability and making your operations sustainable, all so that your company can break even and become profitable.
However, you need to understand that the revenue growth in this phase often happens at a modest, albeit steady pace. To ensure that your cash flow doesn’t dip or stop, you’ll want to continuously monitor and proactively manage your finances.
This stage is also an opportune time to diversify your customer base. Expanding your target audience will reduce your reliance on a single source of income and give you a chance to make your small business known to more consumers.
3) The Success Stage
Once your small business has made it through the survival stage, it enters the success stage, which is considered to be a turning point in many entrepreneurs’ careers. In this phase, your business will have successfully established a strong market presence and earned recognition among your target audience. You’ll also see a significant growth in your revenue, which is the push you need to explore further investments in your business development and expansion.
4) The Take-Off Stage
Although reaching the success stage proves that your small business can make it in the industry, your entrepreneurial journey doesn’t end there. Running a small business is a continuous process, and if you want it to keep a significant share of the market, you’ll need to secure adequate funding to support its growth.
This is why the take-off stage is important. Since this phase is characterized by scaling up operations and managing increased complexity, you’ll have to shift your focus on balancing out that fast growth with sustainable operations. The take-off stage is the best time to invest in efficient operational processes and infrastructure, as well as expand your team. With your small business growing, you might also want to consider professional management to help you stay on track of your original goals.
5) The Maturity Stage
The final phase in these five stages of small business growth is the maturity stage, and by this point, your business will have already attained financial freedom. After establishing streamlined processes and achieving a strong market position, all that’s left to do is for you to maintain and optimize its operations. In this stage, take advantage of your wiggle room to explore potential product diversification and new business opportunities.
Now that you’re aware of the five stages of small business growth, you may have a better idea of what to shoot for as your company matures. Use the tips above to adapt your approach for running your business through each of these phases, and over time, you’ll be surprised at your own ability to handle both the ups and downs of business growth.