How to Take your Small Business to the Next Stage
Is your small-to-midsized business growing? As a company grows, its needs grow too. While many companies tend to “evolve” from one stage to another, more successful leaders consciously guide their businesses through growth stages, with a focus on streamlining operations and expanding smartly and efficiently.
There are four basic stages of corporate growth, each with different characteristics and challenges:
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 in annual revenue
• Processes need to be standardized and streamlined
• Organizational realignment may be required
• Better reporting improves access to information
Stage 3: $25 million to $100 million in annual revenue
• Competition and customers force change in the organization
• Organization continues to realign; need forbetter internal talent
• Continuous improvements
• Performance metrics improving
Stage 4: $100 million+ in annual revenue
• Business transforms
• New applications
• New processes
• New organization
• New performance metrics
Businesses that grow most effectively don’t simply evolve between stages – their leaders strategically direct change and manage the people, processes, technology and infrastructure through each stage of corporate growth.
Many entrepreneurs struggle with the transition from Stage 1 to Stage 2 and the challenges it brings. Leaders of these early stage businesses tend to focus more on daily operations than on strategic 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. Having the right people on your team and as advisors can help you navigate through this change.
During this stage, you should establish an informalboard of corporate advisors and use available resources, such as SCORE,Vistage and your local office of the U.S. Small Business Administration (SBA).
Next, focus on the four elements that facilitate growth between stages: people, processes, technology and infrastructure.
• People: Make sure you have the right people in the right positions – especially key leadership roles – provide training, and measure effectiveness.
• Processes: As your company grows to Stage 2 and beyond, it is no longer good enough to just “get it done.” Establishing processes, policies and procedures will ensure that things are consistently done the right way. Change management is crucial for a smooth transition.
• Technology: This can be a key driver in boosting business efficiency. But what software and hardware you should use and who should support or manage it can vary widely depending on your particular business and stage of growth. For example, Stage 1 and Stage 2 companies may not be able to afford to compete for talented IT staff and having an in-house team may not be needed. They may want to consider using cloud-based technology to store and manage their data. On the other hand, Stage 3 and Stage 4 companies may prefer to recruit internal IT staff to handle their more robust needs.
• Infrastructure: At each stage of growth, evaluate your infrastructure (including facilities, supply chain and distribution channels), and make sure it is the best and more efficient fit for your business’ present needs.
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 Moore is a director of business consulting services in Kaufman, Rossin’s Miami office. Kaufman Rossin is one of the top CPA firms in the country. Moore can be reached at mmoore@kaufmanrossin.com.
Read about this small business article in the South Florida Business Journal.
