The Five Stages of Business Growth

Stage Revenue Typical Descriptors Survival

$0 - $250K ! The Business is often seen as an extension of the owner ! The major focus is on getting new customers ! Very little formal planning ! The owner tends to take any work that pays ! Everything is constantly in flux ! Chaos is normative ! Communication is very informal ! The owner tends to put in extremely long hours

Growth
$250K - $1M ! The business is starting to gain some traction in the marketplace ! It has a product or service that has a predictable sales cycle ! Employees are added to leverage their time, talents and resources ! The panic of survival is over ! The owner begins working more on their business and not just in it. ! Starting to exploit their niche

Success
$1M - $10M ! The business has achieved a fair amount of success ! The work the business does is more routine and predictable ! The owners and other leaders tend to lose some of their driveness ! The primary product that drove previous growth isnt as effective as it used to be ! Communications and internal systems are more complicated with more people ! A real executive team is starting to form and CLevel titles begin to emerge Speed of Execution, Innovation and Infrastructure 2 Tiers ! Profitability ! Everyone is so busy problems dont get fixed ! Systems are breaking down ! Inadequate training ! Not great at managing growth ! No plan or poor planning

Expansion
$10M - $50M ! The business has to keep moving into new markets with both existing products and new products to keep growing ! Acquisitions begin to be strategic initiatives ! Executive team members who arent performing are replaced with higher caliber talent ! Business siloes are commonplace and breaking them is a constant imperative ! Alignment becomes a major issue ! Everything has become more complicated with more layers and projects Execution Excellence, Professional Management, and Finding Growth Opportunities 3 Tiers ! Strained systems ! Customer service breakdowns ! Quality levels dropping ! Founder/CEO capabilities may not be sufficient ! Trying to run a larger business the same way as when it was smaller ! At $20-25M, revenues Over $50M

Mature
! The business has become stable and predictable ! Multiple large revenue streams are in place ! Margins begin to become a problem as more competitors enter the marketplace and start lowering prices ! Differentiation has become more difficult with more competitors ! Acquisitions have become a way of life for driving growth

Major Barriers

Predictable Sales

Marketing and Systemization

Efficiency and Continuous Innovation

Tiers of Employees Major Problems

0 1 Tier ! Finding a niche ! Positioning the business as a preferred provider ! Establishing competitive advantages ! Understanding the target market ! Discovering the right offer and message

1 Tier ! Not knowing how to run a business that does technical work (vs. doing technical work) ! IP residing in a few peoples heads ! Insufficient capitalization ! Being overwhelmed with too much to do ! Still seeing the business

3+ Tiers ! Sales slowing down ! Complacency/ lack of passion ! Lack of risk taking ! Unwillingness to change ! Lack of focus (too much brand extension) ! Lack of speed ! Reliance upon past successes ! Bloat (esp. staff expense)

Bruce D. Johnson and Wired to Grow www.WiredToGrow.com

! Cash (having any) ! The owner tends to be the primary sales person ! Delivering the products and services promised

as an extension of self ! Not giving work away to others ! Waiting too long to hire others

! Acquisition of capital ! Limited market size for core product ! Easy for owners to get comfortable

Major Challenges

! Managing cash as the burn rate exceeds its infusion and sales are unpredictable ! Time management (owners typically feel overwhelmed) ! Focus ! Getting new products and services to market fast enough

Key Skills Required

! Selling ! Tracking and managing cash ! Empathy with prospects and customers ! Product development

! Generating enough cash to fund growth ! Managing cash flow and turning a profit ! Finding talent ! Learning to sell well-and continuously ! Differentiation ! Planning ! Learning to delegate and manage talent ! Adding additional sales personnel ! Selling ! Marketing ! Creating systems ! Managing people ! Hiring and training sales people ! Planning and establishing direction

! Creating additional and profitable products quickly ! Hiring quality people ! Creating space and time to fix problems (vs. bury them) ! Obtaining staff buy-in ! Communication ! Managing cash

tend to flatten while costs increase ! Lack of a growth strategy ! Not paying attention to external changes and threats ! Inability to expand products and/or markets ! Creating order ! Getting back to a customer first orientation ! Changing management style (old to new) ! Creating new roles for previous leaders ! Hiring top talent ! Differentiation ! Creating Alignment

! Not paying attention to external changes/trends

! Leading ! Delegating (not dumping) ! Training ! Innovating ! Managing ! Execution and Project Management ! Systems Design ! Optimization ! Strategic Planning

! Coaching ! Leadership ! Culture creation ! Strategy Development ! Communication ! Vision-casting ! Empowerment ! Organization Development and Design ! Collaboration

! Becoming entrepreneurial again (fighting bureaucracy) ! Getting the business to run itself ! Ensuring alignment ! Developing multiple core businesses ! Giving people the freedom to fail ! Changing fast ! Differentiating products and services ! Innovation ! Leadership ! Creativity ! Project Management ! Complex sales ! Searching for new opportunities ! Cost cutting ! Merging cultures

Bruce D. Johnson and Wired to Grow www.WiredToGrow.com