What Business Stage Are You In? – Part 1

In an Inc. Live presentation last October, Les McKeown, President and CEO of Predictable Success, described his “7 Stages of Every Growing Business”.  These stages can help to define why some businesses grow and succeed, while others stall and/or fail.

In keeping with our recent posts on Business Growth and Strategy, we thought it would be helpful to provide an overview of each stage, and the related strategy and actions necessary to move a business forward.  Obviously, there are a great many factors, management skills, and organizational requirements that are required at each stage to make it through to the next one.  The complete series is at www.inc.com/les-mckeown/7-growth-stages-of-every-business.

As McKeown noted, all businesses will eventually pass through some, or all of these stages in their lifetime.  Each stage brings with it a different strategy, organizational culture and requirements, and a set of challenges that must be met to grow the business.  It is critical that a business understands these stages, what stage they are in at the moment, and hopefully avoid some of the hard lessons that other businesses have experienced.

The 7 stages include the following, in order:

   1. Early Struggle
   2. Fun
   3. White Water
   4. Predictable Success
   5. Treadmill
   6. Big Rut
   7. Death Rattle

As noted, a particular business may not pass through all of these stages, but as it grows, it will move through the stages in this order.  While there is no set duration for each stage, it is critical that the business make decisions about where it wants to go, to survive, and move on to the next one.

In this post, we’ll discuss the first two stages, and the strategy required to move to the next level.  The balance will be covered in our next posts.

Stage 1 – Early Struggle

This is the beginning stage for every business, the struggle to get, and keep it, going, and finding the Profitable, Sustainable Market (or PSM) for the long-term success.  It’s a race against time, and the most dangerous stage, with 80% of businesses failing in the first 3 – 5 years.

This requires an intense focus on identifying that PSM.  However, keep in mind that one large customer is not the PSM.  While that one customer may be profitable, at least in the short term, the customer base must be diversified, over time, to be truly sustainable.

Finally, this stage is also all about cash flow, and the ability of the business to fund itself, in any way possible, to survive and move to the next stage.

The strategy is to Find the PSM, Stop Being a Start Up, and get out of this stage as soon as possible!

 

Stage 2 – Fun 

The business has managed to survive, found its PSM, and can now mine it for growth, which can be dramatic.  In this stage, it can now have some Fun, grow, and build the myths and legends of the business.  The mantra is “do whatever it takes to grow the business and please customers.”

Sales and Profits are increasing, and there is usually a simple organizational structure, infrastructure, and processes in place to run the business.  The team is pulling together, improvising, and tap dancing every day, to make things happen and take care of their customers.

The strategy is “Sell More, and Grow!”.

As the growth continues over time, the complexity of the business will increase to the point that the management team cannot effectively manage, or control it.  The business is falling forward into Stage 3 – White Water.

It has a decision to make for the future – what will it be?

Stay tuned!

 “Think big, start small, then scale or fail fast.” – Mats Lederhausen

What Is Your Sales Strategy?

In a recent Inc. post, Geoffrey James quoted a statement by Gerhard Gschwandtner, publisher of Selling Power magazine, “that within 10 years, as much as 80 percent of the sales situations, currently handled by salespeople, will be handled automatically”. However, he also believes that there will continue to be a need for salespeople in specific situations, where the customer may not be able to identify his own problem, a solution, or an ROI for a purchase.

This means that for the remaining 20%, customers will be looking to their suppliers and sales representatives as resources to assist in providing solutions to help their business vs. just showing up to peddle their wares.  This will require salespeople that can understand their customers’ business issues and objectives, have the ability to be problem solvers, and the capability to build long term, personal relationships that bring value.

While this will be bad news for stereotypical, schmoozing, glad handing salespeople, it will create opportunities for businesses to differentiate themselves in their markets, and generate more profitable revenue.

As technology continues to automate and streamline the purchasing process, and time constraints increase with the pace of business today, there is less and less time for customers interact with salespeople that are “ just visiting”.   In fact, many organizations set specific limits on sales appointments, and only those salespeople that can help solve problems and bring value to the relationship, are invited and welcomed to participate as a partner.

This environment creates the opportunity for businesses to strategically differentiate themselves from the competition.  In many industries, the table stakes of the “game” are price, service, and quality and it is assumed that the majority of competitors in a given space, all have same relative levels of each.

As a result, without differentiation and value creation, the product or service eventually becomes viewed as a commodity, and the primary focus becomes price.  When this happens, price levels and profitability deteriorate, larger competitors take advantage of their economies of scale, and smaller competitors get squeezed out of the market.  A primary example of this evolution is the commercial printing industry which is now considered a commodity, and has become dominated by larger and larger organizations.

Those businesses that are able to differentiate themselves as solution providers, and can bring value to their customer relationships, will separate themselves from the competition, and as a result, create the opportunity to maintain, and possibly increase, their prices, profitability, and market share on the basis of that value.

Is your business considered a Solution Provider you your customers?  If not, now is the time to review your sales strategy and direction, training, and market message, and make the evolution from product peddler to a valued solution provider to protect and grow your business for the future.

If you have any questions, or would like to discuss your organization’s specific issues, please call us at (727) 637-4666, or email me directly at Don@HuttlinAssociates.com.
“A strategy delineates a territory in which a company seeks to be unique.” – Michael Porter

A satisfied customer is the best business strategy of all. – Michael LeBoeuf

Strategy is about making choices, trade-offs; it’s about deliberately choosing to be different. – Michael Porter

Trying to do what your competitors are doing but basically a little bit better is probably not going to be the winning strategy. The problem is finding what your competitors wouldn’t even consider doing. – Jamais Cascio