Monday, June 24, 2024


The Different Stages of Small Business Growth

Management Tips for Ecommerce


When it comes to small businesses, the goal is to grow as quickly as possible. And this isn’t even anything to do with the ambition to create a bigger and more successful business (although no company will succeed without this goal). Instead, the real imperative for small business growth stems from the fact that it is usually stagnation – and not disruption – that tends to spell the end for many. In any case, most small businesses fail within the first five years, so growth should be constantly on one’s mind.

But how do you know when it’s time for your company to grow? Some particularly good advice is to learn about the stages of growth, recognize which one you are on, and when you can progress to the next one.

Keeping Afloat

Of course, you don’t just move through the stages of growth automatically. Stagnation may be death, but so too is not being able to stay afloat before you reach the point where the time is ripe for growth. Small businesses are very often beset by all sorts of problems that threaten to snuff them out before they really get going. Luckily, there are ways to stay afloat when times are tough (and there can be plenty of tough times for a small business). Once the crisis is over, you can start working towards expansion.

One of the biggest problems – perhaps the biggest – for small businesses is an unhealthy cash flow. Cash flow refers to the capital available over a certain period of time, but not the total profits. If total profits are in advance of total expenditures, you can still have a cash flow problem if you are ever waiting for money to come in and missing payments as a result. Invoice factoring is the best way around this problem. It involves hiring a factoring company to supply the payment sum of an invoice before the invoice has been paid by a client or customer. Once the invoice is paid, the factoring service collects the amount.

Invoice factoring company fastFACTR, also offering invoice factoring for small business, say that this is one of the best tools in your arsenal for staying afloat until you can begin to progress through the stages of growth.

The Stages of Growth

But what are the stages of small business growth?


The toughest stage in many ways, surviving as a small business involves much of what has just been discussed; it is a stage of limited resources and a customer base that hasn’t yet been built up. The main goal at this stage is collect customers and deliver products to the satisfaction of those customers. This is when you hope to simply break even.

First Success

At this point, the business will be stable and profitable. It will not be incredibly profitable, but revenues will be steadily growing, cash flow will be healthy, and the company will be beyond breaking even. The biggest question at this point is whether to keep the business stable and profitable or whether to invest in growth. You might hang around here for a while, but remember the kiss of death that is stagnation.

Take Off

At this point, the business will have expanded and not linearly, but exponentially. If the measures you have put in place for growth pay off, you can begin to move ahead a lot quicker at this stage, which might well require serious new investments (normally staff and a massively expanded inventory or number of outlets).

Passing through these three stages isn’t easy but knowing what they are gives you a clear path of growth. The challenge is to walk down that path.

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