Decoding the Stages of Business Growth

Decoding the Stages of Business Growth

Growth is the critical aspect for any business to survive. As they say, "if it's not growing, it's dying." hence, scaling up is not an option but a compulsion, especially for small and medium-sized businesses, to survive. But, for an entrepreneur, it is more critical to understand the stages of growth to plan and structure the business for successful expansion year after year effectively.

The Enterprise Growth Model

This model was developed to help entrepreneurs identify and proactively solve business challenges associated with a growing company. It was developed over a period of 3 decades after studying hundreds of small and medium enterprises across industry verticals. The study was aimed at discovering the growth pattern of successful businesses that were able to overcome the growth chasm. It also identified why most businesses do not survive over five to 10 years or longer, let alone be able to scale up.

This growth model suggests that any successful business goes through 7 different stages. These stages are not defined based on revenue or profitability but the number of employees. Revenue is only one of the determinants of growth. However, most organizational complexities are developed due to the people working there. Managing human resources is the most challenging part of a growing organization. As the business expands, it hires more and more people to support its operations. Unless the business is structured around the human element, it runs into chaos in no time. Hence, at each stage of its growth, a business requires different management approaches to simplify the stumbling blocks and stay focused on growth.

Stage 1 Company : Start-up

Stage 2 Company : Ramp-up​

Stage 3 Company : Delegation​

Stage 4 Company : Professional​

Stage 5 Company : Integration​

Stage 6 Company : Strategic​

Stage 7 Company : Visionary

Each of the above stages of a business demands the CEO or the founder to adapt to the company's needs in the current stage and plan specific activities to move along the growth curve. The organizational architecture needs to be different in each stage to manage internal complexities and stay focused on growth towards the next stage.​

Evolution is an inevitable part of every business considering today's dynamic environment, which is quite volatile, uncertain, complex, and ambiguous (Welcome to the VUCA world). The only way to survive and grow is through continuous innovation and embracing organizational transformation as a part of the growth process.