[et_pb_section fb_built=”1″ custom_padding_last_edited=”on|phone” _builder_version=”4.23″ custom_padding_tablet=”” custom_padding_phone=”0px||||false|false” da_disable_devices=”off|off|off” locked=”off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row column_structure=”1_3,2_3″ _builder_version=”4.23″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” width=”100%” custom_padding=”||0px||false|false” global_colors_info=”{}”][et_pb_column type=”1_3″ module_class=”table-contents” _builder_version=”4.23″ background_color=”#f3f2f6″ custom_padding=”25px||25px||true|false” sticky_position=”top” sticky_limit_bottom=”section” sticky_position_tablet=”top” sticky_position_phone=”none” sticky_position_last_edited=”on|desktop” border_radii=”on|24px|24px|24px|24px” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text _builder_version=”4.23″ text_font=”||||||||” global_colors_info=”{}” background__hover_enabled=”on|desktop”][\/et_pb_text][\/et_pb_column][et_pb_column type=”2_3″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text admin_label=”Copy paste body text here” _builder_version=”4.27.6″ header_2_font_size=”32px” hover_enabled=”0″ header_2_font_size_tablet=”30px” header_2_font_size_phone=”26px” header_2_font_size_last_edited=”on|tablet” locked=”off” global_colors_info=”{}” sticky_enabled=”0″]<\/p>\n
Business growth follows five stages of the business life cycle: Existence, Survival, Success, Take Off, and Resource Maturity. Depending on which stage a business is in, the priorities change. What makes a business successfully navigate these stages requires knowing how to adapt each priority and manage cash flow.<\/p>\n
[\/et_pb_text][et_pb_image src=”https:\/\/www.reckon.com\/au\/wp-content\/uploads\/2024\/07\/Stages-of-growth-1.png” alt=”Stages of business growth” title_text=”Stages Of Growth (1)” align=”center” _builder_version=”4.27.6″ _module_preset=”default” custom_margin=”-50px||||false|false” hover_enabled=”0″ global_colors_info=”{}” sticky_enabled=”0″][\/et_pb_image][et_pb_text _builder_version=”4.27.6″ _module_preset=”default” global_colors_info=”{}”]<\/p>\n
The business life cycle stages show how most, but not all, small businesses evolve. Different industries move at different speeds. Some businesses skip stages. Some stall. Some pivot into new markets.<\/p>\n
A good way to stay grounded is to keep coming back to the same question: Which stage of the business am I in, and what does that mean for cash flow<\/a> and risk?<\/p>\n All small businesses should understand their position in the business life cycle to make better, informed decisions for future growth.<\/p>\n This is the seed stage and startup phase rolled into real life. You\u2019ve launched your business idea<\/a>, you\u2019re up and running, and everything is about proving demand.<\/p>\n At this stage of the business, most owners are focused on two things: getting customers and delivering goods and\/or services. Your business model is still being tested, so it\u2019s normal for cash flow to feel tight. Sales begin, but they\u2019re inconsistent. Your business expenses are front-loaded. If you\u2019re bootstrapping<\/a>, you\u2019re probably funding early costs yourself.<\/p>\n In the Existence stage, ask yourself a few important questions:<\/p>\n Don\u2019t be overly concerned if cash flow is negative at this point in time. It doesn\u2019t always mean the business is failing. It can just mean you\u2019re generating momentum.<\/p>\n Survival is where companies prove the business model works. You\u2019ve got customers, and you\u2019re delivering quality goods or services. Best of all, you can see a path towards sustainability.<\/p>\n Now\u2019s the time to focus on whether revenue minus costs leaves you enough cash to move forward. You\u2019re trying to stabilise your operations and keep up with bills. Not to mention steer clear of nasty surprises that can arise at any stage of the business life cycle.<\/p>\n This is where you start watching financial metrics more closely, with hopes of shifting into the growth phase. You\u2019re not just trying to sell, you\u2019re trying to sell profitably<\/em>. You\u2019re also likely to feel the tension between growth and control. The temptation is to chase new markets straight away, but poor cash flow can sink many businesses even when sales growth looks healthy on paper.<\/p>\n In Survival, cash flow forecasting<\/a> is king. So is pricing discipline. This is also a time in the business lifecycle where lots of businesses fail because they either underprice or overhire.<\/p>\n Success is the point at which your business is both stable and profitable. You\u2019ve reached a level of operational confidence, and your cash flow is probably cash positive or at least trending towards positive cash flow.<\/p>\n It\u2019s also at this point that you\u2019re likely choosing between two paths.<\/p>\n This is also where the business life cycle becomes personal. Some business owners want lifestyle and stability, whereas others want scale and market share.<\/p>\n Take Off is another term for the classic growth phase, involving expansion, momentum, and pressure. If you\u2019re seeing rapid sales growth or experience rapid growth in emerging markets, this stage can feel extremely exciting, but it\u2019s also unforgiving.<\/p>\n We\u2019ll be blunt: in the Take Off phase, you need cash. Growth consumes cash. Inventory, staff, systems and marketing can all surge faster than revenue arrives.<\/p>\n This is also the stage at which businesses start seeking capital<\/a>. You might bring in debt capital, equity investment or both. Debt increases in this stage for many businesses because growth demands working capital. Your job here is to scale without breaking the business<\/a>. That means crafting solid processes and reporting systems. It also means knowing what not to do, even when demand is high.<\/p>\n Some businesses chase rapid growth and then hit a wall when cash flow can\u2019t keep up, which is how a profitable business can still run out of money. If you\u2019re scaling aggressively, you might also be positioning the company for an exit or even an initial public offering. While rare for small business, it\u2019s very common in high-growth sectors.<\/p>\n Resource Maturity is the maturity phase where the company is well-resourced and operationally strong. You\u2019re no longer improvising. You\u2019re managing.<\/p>\n In this maturity stage, your systems are established, and financial management is consistent. That also means the business can handle market bumps. Cash flow stays healthier, and business risks decrease relative to earlier stages.<\/p>\n But maturity comes with a new challenge: complacency.<\/p>\n In lots of industries, sales peak and then growth slows. Profit margins can also become slimmer if competitors undercut your pricing or consumer behaviours change. The good news? Mature businesses win and stay relevant by staying adaptable. They refresh their offering and keep listening to the market, even when things feel steady.<\/p>\n Some business lifecycle frameworks are broken down into four stages. Others see five stages. And others go even further, including a shakeout phase and a decline phase as the final stage. Here\u2019s what that might look like:<\/p>\n A shakeout occurs when markets become crowded or mature. Competition is becoming more intense, which means customers have more choices. The result? Your growth slows.<\/p>\n Sales begin to plateau. Then decrease slowly. Some businesses explore new markets to see if they can maintain their momentum. Others streamline their services and focus on core profitability.<\/p>\n In a shakeout, you\u2019ll need to protect cash flow, defend market share, and \u2014<\/span> most important of all \u2014<\/span> sharpen your competitive edge.<\/p>\n Decline is when sales fall \u2014<\/span> and then continue to fall. You might see consistent drops in revenue or customer retention. The business can still be profitable for a while, but the trend is overall negative.<\/p>\n Decline isn\u2019t always failure. Sometimes it\u2019s the right time to reposition yourself or pivot into new markets. Or it might just be the right time to exit.<\/p>\n The most important thing is to treat decline as a chance to make smarter, more informed decisions. It\u2019s not a reason to freeze.<\/p>\n Not every business needs to scale. Plenty of small business owners build strong companies that stay in earlier stages and remain healthy. Still, if you do want to pursue growth, bear the following in mind:<\/p>\n Not every successful business has to make the same aggressive or passive decisions for growth. What’s most important is making the decisions that are right for you and your business.<\/p>\n [\/et_pb_text][ba_social_share icon_bg=”#03002e” icon_padding=”10px|12px|10px|12px|true|true” layout=”classic” show_text=”off” btn_padding=”0px|0px|0px|0px|false|false” btn_bg_color=”RGBA(255,255,255,0)” _builder_version=”4.23″ _module_preset=”default” custom_margin=”50px||||false|false” custom_padding=”25px||||false|false” custom_css_before=” content: %22SHARE THIS%22;|| font-size: 16px;|| font-weight: 700;|| line-height: 22px;|| letter-spacing: 0em;|| text-align: center;|| color: #ff5447;|| margin-bottom: 10px;|| display: inline-flex;|| position: absolute;|| margin-top: 10px;” border_width_top_main=”1px” border_color_top_main=”#e4e4e4″ border_radii_icon=”on|5px|5px|5px|5px” global_colors_info=”{}” custom_css_before_last_edited=”off|desktop”][ba_social_share_child _builder_version=”4.23″ _module_preset=”default” global_colors_info=”{}”][\/ba_social_share_child][ba_social_share_child network_type=”facebook” _builder_version=”4.23″ _module_preset=”default” global_colors_info=”{}”][\/ba_social_share_child][ba_social_share_child network_type=”linkedin” _builder_version=”4.23″ _module_preset=”default” global_colors_info=”{}”][\/ba_social_share_child][ba_social_share_child network_type=”email” _builder_version=”4.23″ _module_preset=”default” global_colors_info=”{}”][\/ba_social_share_child][\/ba_social_share][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":" Find out the different stages of business growth in this article. Learn about each of them and bear them in mind when growing your small business!<\/p>\n","protected":false},"author":16,"featured_media":272846,"menu_order":0,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":"","inline_featured_image":false,"_lmt_disableupdate":"no","_lmt_disable":"","footnotes":""},"sbh_category":[203],"class_list":["post-270071","sbh","type-sbh","status-publish","format-standard","has-post-thumbnail","hentry","sbh_category-business-growth"],"yoast_head":"\nStage 1: Existence life cycle<\/h3>\n
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Stage 2: Survival life cycle<\/h3>\n
Stage 3: Success life cycle<\/h3>\n
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Stage 4: Take Off life cycle<\/h3>\n
Stage 5: Resource Maturity life cycle<\/h3>\n
How ‘shake out’ and ‘decline’ fit into the business life cycle<\/h2>\n
Shakeout phase<\/h3>\n
Decline phase<\/h3>\n
Challenges in the growth stage of a business<\/h2>\n
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