Stages of Growth from Small Business to Large

STAGE 1: HOBBY

  • More of an interest, avocation, or project than a business. Under $25,000/year sales.
  • Usually loses money technically, although owner is developing new skills and using new technologies.
  • The owner enjoys the learning curve because nothing is at stake. Creativity abounds.

STAGE 2: CUSTOMERS

  • Rather than selling to friends, now second generation referrals start coming in.
  • Customers expect more: quality, value, service, response, professionalism.
  • A reputation is being established. Better make it a good one!
  • Time for a business plan, including financial projections, budgeting, and capital needs.
  • Owner still pretty much doing everything, even answering the phone. Some help.
  • Sales are between $25,000 and $150,000.

STAGE 3: IT'S A BUSINESS!

  • The sales engine has been primed; the phone rings fairly consistently.
  • Staff is hired and accountabilities are created, but the owner still runs almost everything.
  • Profitability is now more important and needed to fund growth.
  • Owner starts seeing green (money) and seeks out bigger opportunities, customers, and products.
  • Owner begins to delegate key responsibilities to others. Mistakes occur.
  • Owner begins to feel overwhelmed and has unspoken fear. Responsibility for viability is felt.
  • To-do list begins to cause problems and sales/profit begin to dip during this transition.
  • This is a critical juncture for owner. Coach is very important here. Owner must grow who he/she IS, not just what he/she DOES.
  • First sense of needing to be a leader versus just an owner/manager/key salesperson, etc.
  • Sales are between $150,000 and $500,000.

STAGE 4: MANAGERS ARE NEEDED

  • Owner can't keep track of key information in head. Sophisticated reports are needed.
  • Owner replaces his/her functions with sales manager, ops/admin manager and/or production manager.
  • At this time, owner needs to be a developer of good people, not try to manage or sell.
  • Profits are seriously threatened at this time of adding overhead. Streamlining is job number one.
  • Owner needs to buff up his/her people/managerial skills to evoke top performance.
  • Owner is probably working on another idea/market/product. Needs to stay focused though.
  • Sales must still remain top priority; otherwise, everyone gets into mischief.
  • Sales are between $500,000 and $1,500,000.

STAGE 5: CONTROLS REPLACE THE OWNER

  • The owner now relies 90% on reports and 10% on direct customer contact for information.
  • The owner needs to season self to be truly a leader by now, inspiring, setting direction, saying what matters most, providing a big enough game for the management team and staff to play, being available, yet not sticking fingers in. Eyes should be on tripling firm in 1 to 5 years and adding infrastructure, accounting controls, management procedures, systems and the like so that the company self‑manages, people know what to do and the owner's "personality" isn't as necessary.
  • Sales are between $1,500,000 and $3,000,000.

STAGE 6: WELCOME TO THE BIG(GER) TIME

  • The growth now comes from the executives, managers, and staff (plus the owner's big ideas).
  • The better the staff can hear what folks want, the more new things can be created and sold.
  • The owner's job is to foster this innovative process and allocate seed money.
  • The "who" we are is now even more important than "what" we do.
  • A global sales effort should be well underway. If you're not global, you're missing out.
  • The owner desperately needs peers, roundtables, etc. with whom to be involved.
  • Sales are between $3,000,000 and $10,000,000.

STAGE 7: WELCOME TO THE BIG TIME

  • At this stage, the better connected the owner/founder is with competitors, trends, demographics, politics, the economy, and suppliers, the better. It is this openness to new information and the ability to synthesize it with the wisdom and good judgment that's been developed that will launch the owner/company into prominence where they shape the future, rather than just serve the present.
  • Sales are in excess of $10,000,000.
  • Often, at this time, the owner/founder is stuck by his/her own mortality, the desire to make a big mark, yet not give up anything personally. The owner knows there is a huge game to play, yet is still bound by doing what has worked well in the past. It is a time for trusting intuition, just as was done in the early stages. It's time to be a kid again. But to afford this, costs must be nuked in order to have that same level of flexibility (read: profitability). Every, every, every technology, automated system, dismantlement of overhead and delivery systems MUST be used or done. There is no option for this if the owner wants to play again.
  • This stage requires cash to get through. Because as soon as the owner/founder finds a better way, he/she will stop the pressure on sales/production, and so will everyone else. Ouch! Once a "new" truth (better way of doing things), whatever has worked before but is fundamentally out of integrity (read: old technology that requires effort/push/pain/stress), falls apart very, very quickly. Again, extremely low overhead and a cash reserve is essential for this transition (transcendence?).

STAGE 8: THE FLOW

  • After the eye of the needle growth in Stage 6, the owner/founder is now cleaned up, simplified, Roto‑Rootered and in touch with what works naturally in business, no pushing required.
  • It isn't that the company is passive, waiting for the phone to ring. Rather, the effort that staff puts into sales or the job is returned 3 to 10 fold. People don't burn out, profits occur naturally, the customers are your partners, the staff is a team and is cooperative, the vision is clear, and there's nothing in the way.
  • At this stage, the company is what's called "in the flow" and can trust its listening skills to keep it straight and serving/creating well. This stage does not happen until the owner/founder "gets it" and passes it on to everyone else.
  • This "introduction of a new culture" takes about a year. During this process, some staff leave because they aren't up to the easy, natural way; others are fired because they sabotage the effort, others are grateful and ready for the change. New people (who have just been waiting for the company to get to this stage) are now "attracted" to the firm because the firm is ready.

Used with permission from Coach University c. 1994

 

Joan Bolmer, 3307 Lake Ridge Bend, Spring TX, 77380; Office 832.458.0455
Copyright (c) 2007-2010, by Joan Bolmer, all rights reserved. Contact Joan Bolmer by e-mail at joan@bolmer.com Website: http://www.bolmer.com Permission is granted to reproduce, copy or distribute this article so long as this copyright notice and full information about contacting the author is attached.