Four Stages of Business Growth - Essay Sample

Introduction

All business organizations go through various processes before they become stable and be competitive in their industry. People planning to venture into entrepreneurship should understand that businesses go through numerous stages before they stabilize. Each business passes through these stages of growth at its own unique pace, just as the way human beings go through infancy to adulthood stage differently (Gilkey, 2014). Every stage has its challenges and characteristics, and the stakeholders have to deal with them accordingly.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

First, the start-up stage is when all corporations start as an idea of the entrepreneur who is ready to invest his capital. The business is struggling to come into existence and demanding a lot of money to be pumped, in order to survive. At this stage, they constitute a business plan and prototypes, and the owner is struggling to become experts in entrepreneurship (O'Farrell, 2018). Some business organizations pass this stage very fast, while others take significant time to progress to the next level. The financing of the business is secured, and it might be coming from the pocket of the owner, the business cards are processed, legal structure is formalized, and the corporation is focusing on acquiring and retaining clients (O'Farrell, 2018). The business usually is simple, and the owner acts as the manager with few employees. It is also referred as "make-it-or-break-it" stage because it entails a lot of trial-and-error as the firm tries to establish its client base, marketing, and pricing procedures and strategies (Houlihan, & Harvey, 2017). The entrepreneur as to prove his concept and attain positive cash flow before the business runs out of funds or otherwise the business will not survive. An example of businesses under this stage is any restaurant or retail store that has operated for less than two years.

Second, the build-up is the stage when the business organization has beaten all odds and attained a positive cash flow in order to establish itself in the industry it operates. The stage involves some growth, but the firm is mainly focusing on management and developing new methods that will assist it to survive and thrive in the industry. The managers have to formulate ways of overcoming challenges of personnel, cash flow, and distribution management (Houlihan & Harvey, 2017). The stage is very critical for the business especially if the management is not competent enough to deal with the challenges. The firm has already secured numerous clients, who assist the company in raising revenue to pay all its basic bills. The company has to give the best services to the customers in order to win their trust and loyalty. The firm's inventory management and systems of accounting become more elaborate and organized, new workers are being hired, new business practices are being adopted, although some processes might be outsourced (O'Farrell, 2018). The corporation is focusing on finding out what works well and which approaches will deliver the best value to the firm. The objective of the corporate at this phase is to increase cash flow, build brand equity, sustain profitability, and avert discontinuance by the major customers. For instance, GFBiochemical Company is still in this stage because it is struggling to establish its brand and attract customers using petroleum products to start using an alternative environmental friendly source of energy.

Third, the build-out stage is where the company is struggling to expand its branded products to other markets. The process assists the business to diversify as a strategy of reducing dependency on a single client. The firm's brand gains geographical recognition, and it aims at commanding the respect of future customers. As the company increases its geographical coverage, this is proof that the brand is in high demand in the market. The corporation has to support the sales with local representatives leading to a drastic increase in the cost incurred during sales, and this threatens the profitability of the business (Churchill & Levis, 2018). The goals are to expand gradually to afford the rising cost of sales in order to service buyers in a big geographical region. For example, Stitch Fix Corporation has become a brand name in the U.S., and now it is seeking to expand in other nations such as U.K.

Lastly, the turning point is when the firm's market share is starting to decrease, prompting more investment in order to maintain its market share and profits. The enterprise has achieved marketing its brand nationally, and it can reduce the cost of production by purchasing raw materials in bulk in order to get discounts. The business may invest in equipment upgrades, expansion, and remodeling (Churchill & Levis, 2018). Although the company has brand recognition and some other firms in the industry may be interested in merging with it, the corporation might suffer from a decrease of entrepreneurial spirit. With good motivation, employees are developing their professions as they are always engaged and innovative in activities that will assist the enterprise to thrive. At this stage, the objective of the business is to maximize efficiency without decreasing its entrepreneurial spirit. An example of a company at this stage is Samsung Corporation, which is investing heavily to enter in other emerging market such as India. The firm is also giving its employees an opportunity to develop their career by motivating them to be innovative. As an entrepreneur, it is crucial to be patient when building a brand since all businesses have to pass through all the processes.

References

Churchill, N.C. & Levis, V.L. (2018). The five stages of small business growth. Retrieved from https://hbr.org/1983/05/the-five-stages-of-small-business-growth

Gilkey, C. (2014). The small business life cycle: The no-fluff guide to navigating the five stages of small business growth (2nd. ed.). New York, NY.

Houlihan, M., & Harvey, B. (2017). The four stages of business growth each present their challenges. The Business Journal. Retrieved from https://www.bizjournals.com/bizjournals/how-to/growth-strategies/2017/06/the-4-stages-of-business-growth-each-present.html

O'Farrell, R. (2018). The stages of company growth. Retrieved from https://smallbusiness.chron.com/stages-company-growth-10202.html