How to Guide Your Business Through the 4 Stages of Growth

In the life of a small business, the most challenging periods are often the transitional phases when the company is growing from one stage to another.

Many entrepreneurs simply allow their businesses to “evolve,” but more successful business owners strategically guide their businesses through the stages of corporate growth so they can expand smartly and efficiently.

My Kaufman Rossin colleague Mike Moore, director of business consulting services, specializes in helping businesses streamline their operations by managing their people, processes, technology and infrastructure as they grow.

There are four basic stages of corporate growth, each with its own characteristics and challenges. To help you understand the different stages, here’s a useful chart that Mike shared with me:

Stage 1: $500,000 to $5 million in annual revenue

• Creative energy
• Organic growth
• Processes and procedures evolve on their own
• Limited profitability analysis

Stage 2: $5 million to $25 million

• Processes need to be standardized and streamlined
• Initial organizational realignment may be required
• Better reporting improves access to information

Stage 3: $25 million to $100 million

• Competition and customers force change in the organization
• Organization continues to realign; need for better internal talent
• Continuous improvements
• Performance metrics improving

Stage 4: $100 million+

• Business transforms
• New applications
• New processes
• New organization
• New performance metrics

How can I grow my business?

In the first stage of corporate growth, entrepreneurs tend to focus on day-to-day operations with little time for strategic or long-term planning.

“In Stage 2, however, it becomes critical to establish organizational infrastructure, processes, policies and standard operating procedures and learn to use technology more effectively,” Mike says. “Having the right people on your team and as advisors can help you navigate through this change.”

It’s a good idea to establish an informal board of corporate advisors.

The next steps are to look at your people, processes, technology and infrastructure. Ask yourself the following questions:

• People: Do I have the people I need on my leadership team to take my company to the next level? Have my employees received adequate training? Are they all effective at their jobs?

• Processes: Do we have set processes, procedures and policies in place to ensure consistent quality?

• Technology: Do I need an in-house IT team as we grow, or would it be better to outsource this function? Are we using the right software and hardware to meet our needs and operate efficiently?

• Infrastructure: Are our current facilities the best fit for our needs? Are there any inefficiencies or unnecessary costs in our supply chain or distribution channels?

“By concentrating on these crucial areas and strategically changing and managing your people, processes, technology and infrastructure through each stage of corporate growth, you can grow your business efficiently and effectively, instead of simply evolving,” Mike says.

Read about small business growth stages at bizjournals.com.