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

Advertisements

Your comments and feedback are important to us, please leave a reply or comment.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s