While all small businesses are unique in their own ways, generally speaking they all move through similar company growth stages throughout their lifetime. Every business, no matter how big or small or which industry it serves, will invariably move through the following four business development stages of growth over its lifetime:
- Start-up
- Growth
- Maturity and
- Renewal or decline.
Each stage of the business cycle, often referred to as ‘maturity phases’ or ‘growth phases’, has its own challenges, meaning that as a business owner you will at times be required to find creative solutions to these unique problems.
Let’s take a closer look at each stage of a business’ existence and determine where your small business currently sits by learning more about each stage of business growth. Knowing which stage your business is in now and where you want it to be can help you plan for your future and develop a meaningful business growth strategy.
Stage 1: The Start-up phase
Many people consider the first year of a business life cycle to be the riskiest. One reason businesses fail is because they don’t make the necessary changes to their business model.
The start-up phase is where business owners spend most of their effort and time to bring their promising business idea to fruition. While you’re trying to spread the word about your products or services, as a small business owner you also have other responsibilities.
It’s common for start-ups to have many important duties to oversee at various business growth stages to get their business off the ground. In this start-up phase business owners need to ensure that their company has an efficient system that will enable it to grow, including having well thought out plans for:
- hiring employees;
- how tasks will be delegated; and
- how creativity will be cultivated.
Be prepared to take calculated risks as you move from the start-up stage into the growth stage.
Stage 2: Business growth
Stage 2 is considered the corporate growth phase, during which your business plan starts to deliver results and your products and services are well-known by your customers. Your revenue is growing, you have less turnover, and your market share is increasing, as is your customer base.
This is a very exciting time for your company and for you as a business owner, but it is also important to be smart about how you manage for growth. It can be difficult to stay focused on your business goals during this stage, but the following three tips can help:
- Create goals that allow you to grow with purpose, which will enable you to use your resources most effectively.
- Keep capital in reserve, because without it you won’t have the ability to meet your financial obligations.
- Make realistic and accurate forecasts to help you achieve your goals.
- Hire employees to help run your business and meet customer demand.
Stage 3: Business maturity
When your business reaches the maturity stage you will likely feel secure and safe. This stage offers a completely different feeling from the first two stages. The start-up phase posed certain risks because you didn’t have a formalised product or service in place. You had to carefully manage how your business grew in order to achieve its goals.
However, now your business is established and has a brand and has a stronger presence in the market. At this point, new start-ups in your industry won’t pose as much of a threat to your business. What can make maturity difficult though is stability.
There will still be many opportunities for your company to grow. Ensure that new products or services that you introduce are embraced by customers, which will help your business diversify its offering and increase market penetration.
It’s also worth noting that during the business maturity stage some business owners may consider selling their business, merging with a competitor, or buying another company in order to grow.
Stage 4: Business renewal or business decline
Every business owner wants to avoid decline, but invariably over time decline can be inevitable for almost all businesses. There are multitude of reasons for why this can happen, including:
- Choosing not to pursue opportunities to grow during the maturity stage.
- Industry changes that negatively impact customer demand.
- New competitors entering the market or existing competitors introducing better products or services.
- Refusing to keep up with technological advances in your industry.
Is your business in decline?
Sometimes it can be difficult to determine if your company is actually in decline. It may seem like your customer base is growing and that your business is meeting the increasing demand from customers. If your business has had a drop in revenue for several years, that could be a sign that it is experiencing a decline.
As such, it is important to examine your finances regularly. You have two options when your business is at this stage in its life cycle: sell the business or reinvest in it. If you decide to stay the course, you can help strengthen your business by making strategic investment in it.
If you take this route, the investment in your business should be made before it is in decline and on its last legs. If you decide to reinvest in your business you will benefit from moving quickly.
Regardless of what stage of business your company is in, knowing where you stand will help you plan for the future. No matter how old or new your business is, always be on the lookout for opportunities to improve your business.
How BizCover helps small businesses grow
A major part of succeeding long-term as the owner of your own small business in Melbourne, or in anywhere else in Australia, is ensuring that your business is built to endure long-term. And a key strategy for long-term success in business is reducing your risk.
At BizCover we make buying your business insurance* in Melbourne faster and easier than ever – and without the hassle you may have experienced in the past when buying your business insurance.
We provide a quick and easy online platform for small business owners throughout Australia to compare competitive business insurance quotes online and purchase their business insurance in less than 10 minutes – and without any paperwork.
Common types of business insurance that you may consider for your new business include:
Professional Indemnity insurance: Protects your business from losses arising out of acts, errors and omissions from a wide variety of services.
Business Insurance: An insurance package designed to provide cover for your business contents, stock, tools and commercial premises when an insured event occurs.
Public Liability insurance: Business insurance that protects you from claims and supports your profitability in the event of a cyber breach or attack. If your business is based in Victoria, visit our dedicated Public Liability insurance Victoria webpage to compare competitive quotes from leading insurers.
Cyber Liability insurance: Cyber Liability insurance is a type of business insurance which protects your business against both the legal costs and expenses related to cybercrime incidents.
Visit our dedicated online destination for small business insurance to compare competitive business insurance quotes in Melbourne, get covered in just 10 minutes, and get back to business. If you prefer to speak with us, you can reach our friendly team on 1300 920 867.
This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording.
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ABN 68 127 707 975; AFSL 501769
