Stages of Business Growth

  1. Initiation: There can be varied reasons for a business start-up but the main values in running the business are of those who are the founders. We can see that company exhibits the main skills of the founder in its spirits, for example, if the founder is an engineer, he will emphasize in production rather than sales and marketing which should not be neglected. Main efforts are centered on the acceptability of the product in the market. If the owner can provide the demands of business i.e. time, energy, and finances, he/she can move to the second stage. Otherwise, he/she will have to wind up their business as there is limited time for the company to stay at one stage. Here the main focus changes to establish the company and earn profits. With this financial push company will need to formalize the system and start record keeping, an unskilled manager can’t handle this all. After this, there will be demand for change in administration’s style because of increased activity in his business.
  2. Growth: The moment a company moves forward to the expansion stage it should be able to earn a decent profit, but that profit will not go to the owner. This is because it will be invested in the business in order to assist in the capital demands of the company. It demands time for coordinating functional managerial activities; it demands complicated organizational structure mainly focusing on functional lines. Now research and development will be established in order to increase product range. At the start, it will be on a smaller scale because of lack of capital. If management continues changing its environment, the company can stay at this stage for some time. In many cases, owners sell their business at this stage for substantial benefits. The increase of new markets and product will demand more finances. This stage faces larger competitors who deal the situation by putting stress on emerging firm; this stress can be in the form of very low prices as well. At this stage over trading is the biggest threat if not handled properly it can lead the business to demise. As the company grows it need to extend geographical trading and distribution, so ‘supervised supervision’ will be required at this stage. If new competitors enter the market and the owner wants to maintain his shares, he will have to put more capital by himself or attract some partners.
  3. Expansion: This stage demands proper management reports, budget control, and dispersed authority, along with a formal accounting system. Basic adaptation at this stage will be to systemize administrative roles which are keys to survival through this stage. The expansion stage demands stable long term funds which will be important and if there is not plan for partners then this stage must be considered right now. Although retained earnings are major forms of funds but dividends are the special attraction to the investors; at this stage these are inevitable. Now company’s track record will help in gaining long term loans but the company will have to give security in the form of assets.
  4. Maturity: At this stage main issues are about expense control, search for growth opportunities and productivity. The direction of authority can be towards functional lines or it is reorganized with production lines. As there is severe price competition, therefore, productions department should be the center of focus and authorities should emphasize on innovative moves towards betterment.

Now basic investments are in sales and marketing struggles and maintenance and plant up gradation. The company grows up to a level that income is sufficient to tackle this but occasionally more long term load prove to be a support. At this level firm may limit its operations or move on, normally acquisition or floatation in order to become a large corporation.

Move From Employee to Entrepreneur

  • Get clear on your goals/passions – It’s not enough to decide to become a business owner. There are several questions and things to consider before you move forward in becoming a business owner. You will need to think about what kind of business you wish to run. You`ll need to determine if you wish to grow it from scratch, buy an existing business or purchase an available franchise. But even before you decide that- you should think about how the business will fit in with the rest of your life. Running a business can be a huge commitment of time and money. So ask yourself what do you enjoy doing or what will bring you joy? You will spend much of your day on your business so it’s a good idea for the business to provide work you actually enjoy doing. Ask yourself what you are most passionate about? What would you love to do? What is your dream job/business?
  • Do your research/homework – Don’t make any rash or impulsive decisions and don’t leave your day job until you are absolutely sure of what you want to do and have a plan for doing it. Take the time to do good research by researching the industry, the marketplace, your potential target clients, your competitors. Do proper business research including a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis. Get a good handle on projected revenues and realistic operating costs as well as an understanding on how long it will take to breakeven and generate more revenues than expenses. Identify your personal strengths and skills and determine if there are any skills gaps. Determine how you will close any skill gaps or lack of expertise. Which gaps can be closed through skills training? Which gaps can be closed through recruiting the right people? Which gaps can be closed through coaching or mentoring? Determine what options and opportunities are available to you right now?
  • Learn from others’ mistakes – There is no shortage of people who have started or run a business. Speak to as many people as you can who have gone before you. Learn what you can about what works, what doesn’t, and what mistakes others have made. Don’t waste valuable time and money. Be open to hearing others` perspectives on what they would have done differently. Hindsight is always 20/20.
  • Business Plan ahead – Do the work and develop a business plan. While it may be a lot of work, it will be time well spent and most financial institutions will require one if you are searching for financing. The process of business planning is not only to prove to the bank that your business will be a success, it’s also a roadmap for you to follow to ensure success. Running your business finances can be like running your weekly, monthly or yearly personal budget – so if you haven’t developed good budgeting and financial management skills, it might be particularly challenging and doubly important to have a solid business plan.
  • Hire a mentor – Starting and running a business can be challenging or even lonely at times. In addition to the day to day operations of the business, you may be mentally or emotionally overwhelmed by being a business owner. Having a safe place to go to for advice, guidance, and accountability or simply as a sounding board can be just what you need to help you make the transition into entrepreurship easier and smoother. Good coaching and mentoring can really help you fast track your transition.

Common Startup Mistakes Must Avoid

Not prepping for it

Would you participate in a competition without some preparation and practice? No, you wouldn’t. Then why start a business this way? You need some prelaunch training to get you all warmed up because you have to have skills and knowledge to get started. Bear in mind that any startup requires focus, hard work, concentration and dedication from its entrepreneurs and you have to be ready to provide all that instead of just deciding to jump in.

Mixing a business with products

One of the biggest mistakes that most startups make is not thinking beyond the product. They have a product that can solve a problem and that’s all they concentrate on. However, if a startup wishes to survive in the long term, it needs to offer its customers something that will have them coming back for it again and again. Therefore, you need to think of potential revenue streams after the product has been purchased by customers. Think about longevity, where the business will be in three to five years, and this will help determine if there is a business or not.

Not hiring experts

Another major blunder that startups end up making is taking on everything. It is not possible for an entrepreneur to be good at everything. But, it is a fact that every aspect of the business needs to be dealt with expertly, especially in tricky areas such as legal and tax issues. If anything is structured in the wrong way, it will eventually come back to haunt you. Therefore, it is better to hire experts for dealing with major issues. It will cost, but it will definitely pay off in the long run.

Not checking data

Just because you believe you will succeed doesn’t mean that you actually win. You actually have to crunch some numbers, look at the market and do an analysis to know if you can and will. There needs to be proper and reliable data that validates your idea as something that can be profitable and viable. When you have collected some data, you can use it for creating milestones or key performance indicators to check exactly how your business is progressing.

Moving too quickly

One of the top reasons that startups fail is because they simply move too fast. A number of them are able to raise money and when they have the cash, it is spent on the wrong things. By the time they figure out that it is a mistake, it is often too late for them. What do they usually spend on? The funds usually go towards hiring people or marketing, but the fact is that neither of these are necessary for expansion. It is not a good idea to start spending unless you have a way to generate more.

Following the wrong idea

A lot of entrepreneurs who enter an unfamiliar market or first-time entrepreneurs often make the mistake of following the wrong idea. They are so focused on their idea that they don’t realize it is failing. In this competitive market, you cannot simply make decisions based on gut; you have to have evidence to back it up. You need to see exactly how a product fits in the market and do an experiment on what features or changes attract customers to it.

Entrepreneurial Leadership

Talk about relentless determination. Here is a guy who knew no quit. I mean he never gave up on catching that prize! We can talk about determination in another post; but, picture this. The Acme box arrives and Wile E. dives into the contents with excitement and renewed determination. He thinks that this is the one. This is the idea: the invention and the contraption that is going to finally work in aiding him to catch that bird.

After emptying the contents, he straps on a rocket, puts wheels on his feet, and lays down railroad tracks along the road the Road Runner is going to come down. He dons his helmet and waits eagerly. Without hesitation, the Road Runner appears in a flash and stops and gives his customary greeting – “Beep Beep.” And, off he goes. The coyote, ready to pounce, lights his rocket and bends into position and the fuse goes out. It is a dud! As he stands up in complete frustration and takes off his helmet, WHAM! He is hit by a train coming down his tracks. Who is the conductor? Beep Beep! That’s right, his nemesis, the Road Runner.

I always laugh to myself. But, it also reminds me what Will Rogers said, “It’s not enough to be on the right track. You’ll get run over if you just sit there.” Many entrepreneurs feel this reality when they are beginning their businesses. The question is often asked, “How do I get my business off the ground?” The truth is, after finally quitting your job, and launching out after your dream, it is not enough to just get started. If you can’t get that business humming and get the cash flowing, then you are just sitting there; and failure is your destiny.

How do you get it going? I have discovered that succeeding in business is like getting a plane in the air. The secret to getting a plane off the ground is overcoming the law of gravity by replacing it with the law of aerodynamics and lift. Therefore, if you want to improve cash flow in your business, then you have to improve productivity by getting the results that produce lift. Lift is that force that moves your idea from a hobby to a hustle.

There are four things that you must do to break the gravity that is holding your idea to the ground: Lean on the gas. Inspect the gauges. Focus on tracking straight. Transition by changing the trajectory.

Simply put, there must be massive action employed in the business that is immediately evaluated with corrective actions taken according to the critical feedback. You must also focus your attention and not veer to the left or right by the distractions of life. And finally, you must change your trajectory by aiming all this energy towards a goal that is massive enough to stretch you into a new dimension. Those are the key fundamentals to getting your business flying!

Small Businesses That Generate the Biggest Profits

Some industries are more Soloprenuer-friendly than others. Accountants and bookkeepers, real estate sellers, attorneys, landlords and certain healthcare practitioners are all able to operate a one-person shop quite well, perhaps with a single employee to provide administrative help.

Educational requirements and professional credentials pose a formidable barrier to entry for several of these high-yield business opportunities, most notably dentistry, chiropractic, law and accounting (CPA or certified financial analyst). In contrast, real estate sales requires only a license to do business, the right relationships and no real selling skills if you are in a hot market. If someone with a broker’s license brings you into the business, you can work under the umbrella of that person’s credentials.

I look askance at the stated prospects for attorneys, however. There have been many mergers between big law firms and as a result, many lay-offs. From a former employee of a very prestigious law firm who was let go six or seven years ago and eventually started her own boutique firm, those who venture out on their own can encounter stiff competition in certain legal specialties. Welcome to the new normal. Below are the small businesses that on average have the healthiest profit margins.

Business Net profit margin

Accounting / Bookkeeping 18.4%a

Landlords 17.9 %

Legal services 17.4 %

Management of companies 16.0 %

Real estate sales 14.9 %

Dentist’s office 14.8 %

Health practitioners (chiropractors, etc) 13.0 %

Medical & diagnostic laboratories 12.1 %

Automotive equipment rental or leasing 12.0 %

Graphic and industrial design 11.4%

Warehousing & storage 11.0 %

Management, scientific, or technical consulting 10.3 %

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