Four Stages of Business Growth

Four Stages of Business Growth

1st Stage Initiation

Although there are many reasons to start a business, the most important values for running it are those of the founders. It is evident that the founder’s primary skills are displayed in the company’s spirit. For example, an engineer founder will place more emphasis on production than on sales and marketing. The market acceptance of the product is the main focus. The owner must be able to meet the business’s demands, i.e., If the owner can provide the business’s needs, such as time, energy, finances, then he/she may be able to move on to the next stage. He/she may have to close the business because there is not enough time to keep it in one step. This is where the primary focus shifts to establishing the company and earning profits. This financial push will require the company to set up a system and keep records. An inexperienced manager won’t be able to handle all of this. Because of the increased activity in his company, there will be a demand for changes in administration.

2nd Stage of Growth:

A company should be able to earn decent profits when it moves on to the expansion stage. However, the gain will not go to its owner. It will be used to fund the capital needs of the business. It takes time to coordinate functional managerial activities. It also requires complex organizational structures that mainly focus on active lines. To increase product range, research and development will now be in place. It will start on a smaller scale due to a lack of capital. The company can remain at this stage if the management changes its environment. Many times, owners will sell their business during this stage to reap the benefits. More funds will be required to expand markets and create new products. This stage is dominated by larger competitors, who place stress on the emerging company and can also cause meager prices. If not managed properly, this stage can pose a significant threat to the business. The company will need to expand its distribution and geographic trading. This stage will require supervised supervision. If there are new competitors on the market, the owner will need to either attract partners or put more capital.

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Third Stage-Expansion

This stage requires proper management reports, budget control, and dispersed authority. This stage will require essential adaptation to organize administrative roles, which is crucial for survival. Stable long-term funds are necessary for the expansion stage. If there is no plan for partners, then this stage should be taken seriously. While retained earnings are a significant source of funds, dividends are a more attractive option for investors. While the track record of the company is essential for securing long-term loans, the company will need to provide security by way of assets.

Fourth Stage of Mature:

This stage is about cost control, growth opportunities, and productivity. It is possible for the authority to be directed towards functional lines, or it can be reorganized with the production line. Because of the intense price competition, the production department should be at the center of attention. Authorities should also emphasize innovative steps towards improvement.

The most critical investments now are in marketing and sales, as well as maintenance and plant upgrade. This is when the company has enough income to handle this, but sometimes more long-term load can be a support. This level allows the company to either limit its operations or move on. Usually, acquisitions or floatations are used to make a large corporation.

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