Stages of Business Growth

As businesses expand, they pass through various phases of growth in a predictable manner. Each stage of business growth has its own unique characteristics that distinguish it from others. The four stages of business growth are startup, growth, expansion and maturity. While each business may undergo the process of business expansion at its own pace, all companies must pass through these phases, just like a person must experience infancy, childhood, puberty, and, finally, adulthood. This paper will identify the four stages of business growth and the unique characteristics of its every step.

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Startup stage is the first phase of the business growth cycle. If one person owns the firm, the owner would be in charge of every business operation, including production, sales and marketing, record keeping and advertising. This stage is usually capital- and labor-intensive as a lot of financial resources as well as time are required from the owner. The insufficient financial input may force the business to stay in this phase for an indefinite period (Zandi & Lalvand, 2014). This stage is also characterised by limited factors of production, cash flow challenges, pricing challenges and inadequate processes as well as systems.

The second step of business development is the growth stage. During this period, the business starts to pick up momentum, customer base begins to grow, and the owner of the firms hires more employees so that the business can meet the growing needs of customers. The owner of the company will continue to perform the duties he/she has been doing during the startup stage with the additional role of hiring. This stage is characterised by increasing expenses and overwhelming operations. Cash flow challenges are also common in this phase of business growth. Sales and profit of the firm start to increase as the company establishes its market (Byrd & Megginson, 2013). At this stage, the CEO of the business will schedule and supervise staff as well as administer benefits to employees. The incidences of financial strain are common at this phase as the business owner tries to strike a balance.

The third phase of business growth is expansion. This stage of is akin to adulthood. At this point, the hard work of an entrepreneur starts to bear fruit. At this stage, effective processes and systems are in place. However, such features as operational inefficiency, poor execution and demotivated employees are common. At this stage, the business may consider selling or scaling its operations. However, expansion is the dominant feature of this stage. The business expands its operational activities and networks by opening more units (Byrd & Megginson, 2013). The company also adds new employees, including professional management personnel. The business may also seek new partners. The product line of the company starts to stabilise. Contacts become established and steadier profit comes in. At this stage, the business is able to easily get funding from financial institutions to meet its expansionary needs.

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The fourth and final stage of business growth is maturity. At this point, the firm is becoming established. The business has many employees, incurs a lot of expenses and becomes more inflexible as compared to the previous stages. Operational complexities and inefficiencies become prevalent at this stage. Other common characteristics of this phase of development include declining sales, low agility, the challenge of keeping staff motivated, and the loss of business momentum (Bhattacharya, 2014).

All things considered, every stage of business growth has its unique characteristics. Just like a human being must pass through infancy, childhood and puberty to adulthood, every business must go through the startup, growth, expansion and maturity stages of its life cycle. Therefore, one is able to discover in which stage of business growth a company is by observing the salient features associated with each stage of development.

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