With the tremendous number of small businesses that have come into existence and either prospered or faded away, it has become possible to clearly identify the stages of small business growth, and categorized them. Of course, not all small businesses proceed through all the stages described below, but assuming that a startup survives to a point where it assumes a position in the marketplace, these 5 stages characterize its business growth.


During this phase, the main objectives are to secure a regular customer base which needs the product or services you have to offer, and to then deliver those products and services. This requires that a sufficient flow of ready cash is available at all times, or at least enough to maintain the business while it gets established in the marketplace.


Having made it through the initial startup phase, this period focuses on consolidating gains made, and branching out to secure a greater customer base. Solidifying cash flow is also a major concern at this time, as is strategizing about how to grow the business, so that stagnation and slow demise can be overcome.


Having achieved at least modest success and become a stable force in the business marketplace, owners are faced with the next major question. Should the current success and company stability be made to take on an entrenched character, or should risks be taken to go to a higher level? In some cases, owners begin considering an exit strategy at this level, because the business may have become attractive to other entrepreneurs.


This is a point at which an owner or manager realizes that delegation to talented employees is usually in the company’s best interests, and that personal involvement on a daily basis may not be necessary. This is commonly a phase during which an owner might look for other business opportunities, or for growth by acquisition.


Having reached this mature phase, there are still some issues which confront a small business owner. For one thing, streamlining all operations for maximum efficiency is very desirable, especially since it can help the company stay true to its small, agile origins. At this stage, a company has all the resources and talent it needs, and can engage in long-term planning. The owner is usually distant from the company, and has gone on to other business opportunities.