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5 Stages of Small Business Growth

Every start-up and new business goes through the five stages of business growth, no matter if it is small or big. These stages include existence, survival, success, take-off, and resource maturity. Each phase of small business growth has its challenges. Therefore, to make things go smoothly, every business needs to overcome these challenges. Knowing where your firm is in the cycle is crucial. It can help you understand the solutions you need to implement. Plus, it helps create growth strategies and plans for the future of your business. If you have already taken the plunge into entrepreneurship, this article will give you an idea of the stages of starting and growing a business.


The existence phase is also called the start-up phase. In this stage, the structure of a firm's business is simple. For the most part, the business owner manages the operations. Also, in this stage, the manager performs all vital operating functions. At this point, when there are no investors, the owner is also the one who funds the whole venture. For many, particularly solo entrepreneurs, formal planning is at a bare minimum. These formal plans include profit forecasting for the company. Plus, for the best potential for success, the owner needs to do market research and make a business plan.

Having the necessary capital is important in this phase. Alex Taylor, Head of Marketing at CrownTV, said, “The business requires funding to develop a viable product and deliver the product offerings to customers. Also, the fund is necessary to cover daily operating expenses—this is why the shortage of money is a small business’s biggest risk. Moreover, remember that the brand is still trying to acquire new clients in this start-up phase. Therefore, even if the company has revenue, the chances are not much in terms of profits. To go through the existence stage, entrepreneurs need to learn about options for raising money or finding investors. It is crucial to make sure they will have the cash on hand to make their plan for their business happen.”

A big part of a firm’s longevity and success also stems from adequate cash management. Hence, the owners need to have the business acumen. Also, they must learn early on how to manage the finances of the organization. They will deal with the delicate balance between the right amount of cash to cover expenses and pay obligations. Meanwhile, they also ensure that no capital gets wasted when it can be invested to expand the business. The majority of the businesses in this stage who are successful in introducing their products start looking to expand. Expansion may mean improving or modifying products. It is needed to increase production and match customer feedback. Also, expanding is crucial to developing more products and breaking into other markets to expand their customer base.


Survival is the next stage, following the existence stage. At this stage, the business has proven that it is a viable brand. Plus, at this phase, it has found a market for its services or products and has acquired consumers. Also, most firms in this phase still function with a simple structure. Even if the firm now has workers, the owner supervises and makes the major decisions for the business. Plus, they may need to have systems in place for marketing models and hiring practices. Additionally, some companies may still need more planning. They work with the firm's goals, which exist only in the owner's mind.

After the accomplishment of breaking into a market, the strategy at this phase of growth is to survive. This means that the business has to start looking for ways to make money consistently. Most firms expect to make little profit in the first few years of operation. However, they should at least break even and make enough revenue to cover expenses. Also, they need to generate income to replace capital assets as they wear out. The alternative is the need for more money. The result is either selling the firm or selling its assets. However, to move to the next stage of business growth, the firm needs to make profits. Making a profit means generating sufficient cash flow to fund development and stay in business. Undoubtedly, profits come from increasing production and growing a customer base.

The owner needs to look into making or improving its business model. It is the period to learn, understand, and implement proven strategies. These strategies are applied to sales, marketing, and overall management of the firm’s operations. Business owners need to learn how to build a collaborative team and delegate tasks. Plus, they should learn to build the team with the skill sets to help the firm get to the next level of business growth.


The third phase of business growth is success. At this phase, Rudy Bush, Founder at Wiringgerman, said, “The firm is thriving. It has built a strong presence in the industry to ensure continuous profits. Furthermore, as a mature business, it has brand recognition and size that make it financially strong. At this stage, the company would have grown sufficiently to add more workers and probably a couple of managers. The brand could be fully separate from the owner at this phase. Marketing plans, accounting practices, and production systems would also be in place. With other expert leaders in place, the owner will not have to overlook every aspect of the firm. At this point, the business has become profitable and successful. Now, the main strategy is to keep the firm stable and profitable. Plus, at this point, it is crucial to manage cash flow so the business can suffer in rough times. The firm can cruise in this place indefinitely because there are no disruptions in the industry or management problems.”


“The business experiences accelerated expansion and growth at this stage. The primary objective is to expand the business into new markets and scale it up.” said, Harrison Jordan, Managing Lawyer of Substance Law. Even if an owner only wants to maintain its position, environmental changes in the industry may compel expansion. In this next stage, companies can experience rapid growth. This is because they can leverage marketing, streamlined sales, and operating strategies. Here, the main concern is how to expand and how to fund that growth. The brand can take many routes to broaden, like combining or buying another company. The leadership may also go for increasing the brand’s market share. They can do this by making new products and moving into new markets. Some firms also look into adding services and products to their existing offerings.

Resource Maturity

After a successful take-off, the firm achieved the rapid growth it had planned for. Now, the main concern of businesses entering the resource maturity phase is the management of the financial gains from the last stage. It should also thoroughly review its systems and processes. It is vital to resolve inefficiency problems that come with rapid growth. At this phase, the firm's goal is longevity.


Hopefully, this list has shed new light on your own business. Now you understand where your company has been, where it is now, and where it can go. You can do all this with the right understanding. As you get ready to move into future phases of growth, be sure you are equipped with the right tools that will help. In this way, you can save yourself from growing pains in the future. It is also important to evaluate your progress and the needs of your business at every stage.
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