In Ready, Fire, Aim, Michael Masterson describes four stages of growth common to every business. Each stage has its own problems, challenges, and opportunities.
Here are the main traits of each stage, and the skill you’ll need to be effective in it.
Stage One: Infancy – Zero to $1 Million in Revenue
Main Problem: You don’t know what you’re doing.
Main Challenge: Making the first profitable sale.
Main Opportunity: Getting a minimum critical mass of customers.
Main Skill Needed: Selling your product.
Of the various business functions- including product development, customer service, accounting, operations, and marketing-the top priority in a business venture is selling.
Without sales, you won’t have cash flow, and it’ll be hard to keep your business alive and pay for any of the other business functions.
Set aside the other things you’re inclined to do-such as leasing office space or buying furniture-and focus on making the first sale.
Stage Two: Childhood – $1 Million to $10 Million in Revenue
Main Problem: You’re just breaking even, or even losing money.
Main Challenge: Creating more profitable products quickly.
Main Opportunity: Increasing cash flow and becoming profitable.
Additional Skill Needed: Coming up with a stream of new ideas.
If you’ve hit the $1 million mark, you’ve likely sold your product very hard, using every marketing campaign that exists. But the best products and selling strategies don’t last forever.
Sales are likely slowing now, and you know that something different needs to be done. What is that something?
The key to growing your sales beyond this mark is to start selling new products. The faster you do this, the faster your business will grow.
Stage Three: Adolescence – $10 Million to $50 Million in Revenue
Main Problem: Your systems are strained, and customers are noticing.
Main Challenge: Creating order out of chaos.
Main Opportunity: Establishing useful protocols, and managing processes and procedures.
Additional Skill Needed: Running your business with just three or four simple management reports.
Being innovative and launching new products not only results in growth – it also changes the nature of your business.
Now, you need stronger controls. This means better accounting procedures, more definite customer service protocols, and more efficient operations.
To implement these controls, you’ll need to retrain your people, and maybe even hire some outside executives.
Stage Four: Adulthood – $50 Million to $100 Million in Revenue and Beyond
Main Problem: Sales slow down, or even stall.
Main Challenge: Becoming entrepreneurial again.
Main Opportunity: Getting the business to run itself.
Additional Skill Needed: Determining the role you’ll play in the business’s future.
At this stage, you’re no longer a small business. You’ve become big, and you now have opportunities you didn’t have before. They include:
- Selling your business.
- Going public.
- Stepping back and becoming chairman of the board.
Another option includes continuing to be a manager who develops efficient systems. If this doesn’t appeal to you, you can be a business builder and focus on your vision for the future. The last option is to step back and become a wealth builder, focusing on ways to increase the value of your business.
Now you’ll need to reassess the role you want to play.
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