IAN FERGUSON: Navigating through five life cycle stages


Ian Ferguson

Every new micro and small business that grows into a medium-sized enterprise goes through five stages of evolution. These phases include existence, survival, success, take-off and resource maturity. All stages of small business growth come with challenges that every company has to overcome.

Whether you are still toying with a business idea or have already taken the plunge into entrepreneurship, this column will help you navigate the challenges of starting and growing a business.

Stage 1: Existence

In the existence stage, also called the start-up phase, the company’s business structure is simple. For the most part, the owner manages the operations or performs all-important operating activities. At this point, in the absence of investors, the owner is also the one funding the whole venture. The business is no longer just a hobby. The first plunge has been taken and everyone around you knows that you mean business.

Having the necessary capital is critical in this stage. The business needs funding to develop a viable product, plus deliver the product and/or service offerings to customers, plus cover daily operating expenses.

Stage 2: Survival

Survival is the next phase after the existence stage. At this point, the business has proven it is a viable brand and has found a market for its products or services, as well as acquiring customers.

Most companies in this stage still operate with a simple structure. Even if the company now has employees, the owner oversees and makes the major decisions. They may not have systems in place yet for hiring practices and marketing models. In addition, some businesses may still be operating with minimal formal planning, with the goals for the company existing only in the mind of the owner.

Stage 3: Success

The third stage of business growth is success. At this maturity phase, the company is thriving. It has established a strong presence in the industry to ensure consistent profits. As a mature business, it has the brand recognition and size to be financially healthy.

At this stage, the business would have grown enough to add more employees and probably a couple of managers. The brand might even be completely separate from the owner at this point. Accounting practices, marketing plans and production systems will also be in place. With other skilled leaders in place, the owner will not need to supervise every aspect of the company.

Stage 4: Take off

Even if a business owner simply wants to maintain their successful position, market changes and trends in the industry may compel expansion. This next stage is where companies can experience rapid growth because they can leverage the streamlined sales, marketing and operating strategies, and processes they have in place. The main concern now is how to grow and how to fund that growth. Some take the route of merging with another business or buying out a smaller, similar enterprise.

Stage 5: Resource Maturity

After a successful take-off where the company has achieved the rapid growth it aimed for, the main concern of businesses entering the resource maturity stage is proper management of financial gains from the last phase. It should also carefully review its systems and processes to resolve inefficiency issues that come with rapid growth.

At this point, the goal for the company is longevity. The business has the staff, the financial resources and well-developed systems to achieve this goal as long as the owner keeps their entrepreneurial spirit and takes advantage of the talent available to maintain the company’s standing in the industry.

• NB: Ian R Ferguson is a talent management and organisational development consultant, having completed graduate studies with regional and international universities. He has served organsations, both locally and globally, providing relevant solutions to their business growth and development issues. He may be contacted at tcconsultants@coralwave.com.


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