Growing a business is hard. There’s no denying it.
This is why most people struggle when starting out and consider giving up along the way.
The problem is that we tend to avoid talking about the struggles and pitfalls and instead, we like to focus on the positives and like to imagine that it will be smooth sailing. The reality is that it’s normal for businesses to struggle.
Please understand that every business has to go through different stages in order to run a more successful and profitable business and the more we understand the entrepreneur journey, the easier you can move through the stages quickly and achieve the business that’s right for you.
Hint – It’s probably a Lifestyle Boutique or a Performance business
Through extensive research and experience, I’ve discovered a common sequence of stages that entrepreneurs go through when growing their business. Each of the 9 stages presents its own unique set of opportunities and challenges.
In this article, I’ll walk you through the key stages in the entrepreneur journey to help you maximise your business growth.
Stage 1: The Start-Up
Example: A person who wants to start an eco-friendly clothing line
Every business begins as a start-up.
A start-up business often stems from an innovative concept, driven by passion or an appetite for change. It’s exciting and the possibilities are endless but success is uncertain.
You’ll face challenges such as:
- Scarce resources: Limited financial, human, and technological assets hamper business growth.
- Uncertain market validation: Doubts surrounding product-market fit and customer demand.
- Struggle to raise capital: Difficulty in attracting investors and securing funding.
- It’s difficult to secure customers: Challenges in customer acquisition and retention.
- Winning and retaining customers in a competitive landscape.
How to grow your start-up business
Despite the risks, most start-ups have to go through this but hold the potential for swift business growth and considerable impact. By tackling these obstacles with determination and strategic execution, start-ups can reshape industries and redefine the future. In essence, a start-up signifies the initial phase of an exciting journey, steered by innovation and an unwavering commitment to turning a daring vision into reality.
Stage 2. The Wilderness
Example: A solo graphic designer struggling to find clients and manage their workload
The wilderness stage is a critical phase in the entrepreneurial journey, where founders often find themselves isolated and overburdened. Operating single-handedly, entrepreneurs grapple with various aspects of their businesses, such as sales, service delivery, and daily operations. This solo endeavour can lead to stress, boredom, and a seemingly unbreakable cycle of challenges.
In fact, a staggering 75% of businesses in the UK, USA, and Australia never reach the point where they can employ additional staff. There are some obstacles you will face while in the wilderness stage, such as:
- Client acquisition: Finding consistent, high-quality clients can be a daunting and time-consuming process.
- Time management: Balancing business development, client work, and personal life often proves difficult.
- Financial strain: Limited cash flow and unpredictable income create financial stress.
- Skill development: Keeping up with industry trends and acquiring new skills can be challenging.
- Loneliness: The absence of a support network or team can lead to feelings of isolation and self-doubt.
How to escape the wilderness business stage
To successfully navigate the wilderness stage, entrepreneurs must develop resilience, adaptability, and a growth mindset. By embracing these qualities and seeking out resources, support, and opportunities for collaboration, you can overcome the challenges of the wilderness stage and lay the foundation for future growth and success.
Stage 3: The Struggling Boutique
Example: A local bakery in a quaint village, boasting a small team but struggling to make ends meet
At the struggling boutique stage, businesses form a small team that brings more focus to individual roles, yet profitability still appears unattainable. Often defined by their geographical location, these businesses typically exchange time for money and fail to develop substantial assets or establish a strong market presence.
Potential challenges could include:
- Limited profitability: Struggling boutiques often face cash flow issues, making it difficult to invest in growth or reward employees adequately.
- Geographic constraints: These businesses may find it challenging to expand beyond their local area, limiting their potential customer base.
- Lack of significant assets: With a primary focus on trading time for money, struggling boutiques may not develop valuable assets, such as intellectual property or a robust online presence.
- Scaling issues: Small teams may struggle to handle increased demand, hindering business growth and causing potential missed opportunities.
- Brand differentiation: In competitive markets, struggling boutiques may find it difficult to stand out and create a unique brand identity.
How to grow your struggling boutique business
The struggling boutique stage presents numerous challenges that can hinder growth and long-term success. By recognising and addressing these obstacles, you can work towards building a more sustainable model, moving beyond their geographical limitations, and transforming their venture into a thriving, profitable enterprise. The key lies in strategic planning, innovation, and a relentless commitment to overcoming these challenges while staying true to the entrepreneurial spirit that fuels the journey.
Stage 4: The Lifestyle Boutique
Example: A flourishing content marketing agency with a vibrant team and a robust online presence
At the Lifestyle Boutique stage, businesses boast a small yet dynamic team with minimal overheads and a spirited culture. Often centred around a ‘Key Person of Influence’ within the industry, the company exudes an image of being larger than it truly is. You reap the benefits of a superior income, enhanced freedom, and a more significant impact than a traditional corporate role could provide.
Challenges could include:
- Trying to maintain a healthy work-life balance for the team, while sustaining the business’s growth trajectory
- Attracting and retaining top talent, especially when competing with larger corporations or well-funded start-ups
- Continuously innovating and evolving to stay ahead of industry trends and maintain a competitive edge
- Scaling the business without compromising its core values, culture, or service quality
- Diversifying revenue streams and ensuring long-term financial stability, while keeping overheads low
A lifestyle business might be perfect for you
The Lifestyle Boutique stage represents a critical turning point in the entrepreneurial journey, where the business owner enjoys the fruits of their labour while juggling the challenges of growth and sustainability. By embracing innovation, nurturing talent, and staying true to the company’s values, the Lifestyle Boutique can continue to thrive, creating a lasting impact in the industry and paving the way for future success.
Stage 5: The Desert
Example: A mid-sized marketing agency grappling with scaling and sustaining profitability
In the desert stage, businesses find themselves in a challenging transition phase, stuck between the identity of a small boutique and a large enterprise. As overheads rise and the need for a more robust workforce becomes apparent, the company struggles to afford crucial leaders, managers, and technicians. The race against time to grow or downsize looms large, and maintaining a harmonious company culture becomes increasingly difficult.
Problems you might face at this stage:
- Balancing increased overheads with revenue generation
- Attracting and retaining talent to fill leadership, management, and technical roles
- Sustaining company culture during significant transitions
- Managing cash flow to avoid running out of capital
- Adapting and implementing effective strategies for growth or downsizing
How to avoid the “desert” stage
Navigating the desert stage requires resilience, adaptability, and strategic decision-making. Businesses that successfully tackle these challenges can evolve into a more mature, sustainable business, better equipped to handle the complexities of growth and profitability. By embracing change, refining strategies, and maintaining a commitment to their vision, businesses can emerge from the desert stage stronger and better positioned for long-term success.
Stage 6: The Factory
Example: A call centre with high staff turnover and stagnant growth
Entering the factory stage means you see a significant increase in headcount, which, creates a challenging and stressful environment. Businesses in this stage often struggle with staff retention, stagnation, and constant cost-cutting measures, making it difficult to achieve sustainable growth.
Challenges could include:
- Retaining top talent: High-performers often leave due to insufficient rewards or lack of career progression, resulting in a loss of valuable skills and expertise.
- Limited funds for R&D: With strained finances, businesses struggle to invest in research and development, hindering innovation and growth.
- Inefficient resource allocation: A focus on cost-cutting measures may lead to poor resource allocation.
- Eroding company culture: Rapid expansion and high staff turnover can damage company culture, leading to reduced morale and productivity.
- Scaling challenges: The pressure to grow quickly can lead to shortcuts, compromising the quality of products or services, and ultimately damaging the company’s reputation.
Overcome the Factory business model
To overcome the challenges of the factory stage, you must focus on optimising revenue per person and implementing strategic growth plans. By fostering a healthy company culture, investing in innovation, and ensuring efficient resource allocation, you can break free from the factory stage, paving the way for a more sustainable and successful future.
Stage 7: Performance Business
Example: A thriving software development company with a proficient team and top-notch assets
At the performance stage, businesses experience a significant transformation, boasting a dynamic team of professionals collaborating with well-developed assets. The company now caters to a broader market and multiple territories, generating reliable, consistent profits. Owners have the luxury of savouring the profits or making an exit for a life-changing sum.
Running a performance business might come with some key challenges:
- Maintaining a strong company culture amidst growth and expansion
- Continuously innovating to stay competitive in the market
- Scaling operations efficiently without compromising quality
- Attracting and retaining top talent in the industry
- Balancing short-term profitability with long-term strategic investments
- Navigating potential legal, regulatory, and tax complexities in new markets
- Ensuring seamless communication and collaboration across teams and departments
High-performing businesses achieve outstanding growth
The performance stage, although rewarding, comes with its own set of challenges that entrepreneurs must skillfully navigate. By fostering a strong company culture, embracing innovation, and efficiently scaling operations, you can build a truly outstanding business. Whether the goal is to enjoy the fruits of hard work or make a life-changing exit, overcoming the hurdles of the performance stage is a testament to an entrepreneur’s commitment.
Stage 8: The Unicorn
Example: Tech giants like Facebook, Uber, Tesla, and LinkedIn
Unicorn businesses are exceptional entities in the entrepreneurial landscape. These high-performing teams capitalise on the perfect blend of timing, opportunity, and substantial funding. As a result, they gain considerable attention, achieving skyrocketing valuations in a relatively short period. While challenging to emulate, unicorns stand as a testament to the power of ambition and entrepreneurial spirit.
Unicorn businesses face some unique challenges, such as:
- Securing substantial funding: Attracting the necessary investment to scale rapidly and seize opportunities is a significant challenge for unicorn businesses.-
- Maintaining rapid growth: Sustaining exceptional growth rates and market dominance while facing increasing competition requires constant innovation and strategic planning.
- Scaling organisational culture: As the business expands rapidly, preserving the original company culture and values becomes increasingly difficult.
- Attracting and retaining top talent: Unicorn businesses must constantly recruit and retain the best talent to stay ahead of the competition and continue driving growth.
- Managing public perception: As unicorns receive heightened attention, they face increased scrutiny and must manage their public image carefully.
What makes “unicorn” businesses so successful?
Unicorn businesses represent the pinnacle of entrepreneurial success, demonstrating what is possible when the right ingredients of timing, opportunity, and investment align. Navigating the challenges unique to this stage is crucial to maintaining their extraordinary status and continuing to push the boundaries of innovation and growth. The legacy of these exceptional companies serves as an inspiration for entrepreneurs worldwide, reminding us of the limitless possibilities that can arise from a bold vision and unwavering determination.
Stage 9: The Corporation
Example: A multinational consumer goods company
Large, established corporations, like multinational consumer goods companies, boast numerous assets and a vast workforce striving to enhance them. Despite their size and market dominance, these bureaucratic entities must adopt an entrepreneurial mindset to fend off disruption from rapidly growing competitors and unforeseen unicorns. Nowadays, the financial resources surrounding corporations are up for grabs by ambitious entrepreneurial teams eager to claim their share.
Corporations face constant challenges, such as:
- Maintaining agility and innovation in a bureaucratic structure
- Attracting and retaining top talent in a competitive market
- Adapting to shifting market demands and consumer preferences
- Integrating technological advancements and digital transformation
- Balancing short-term profitability with long-term growth and sustainability
- Navigating an increasingly complex regulatory environment
- Managing and mitigating reputational risks in a hyper-connected world
Corporate businesses need a growth mindset
In the era of the corporation, embracing an entrepreneurial spirit and proactively tackling challenges is paramount for success. By fostering a culture of innovation, adaptability, and ambition, corporations can secure their place in the market, ward off disruption, and continue to grow. As a multinational consumer goods company or any other large corporation, recognising and seizing opportunities for transformation will help you thrive in an ever-evolving business landscape.
Revenue Per Person: A Key Indicator of Success
Throughout the entrepreneurial journey, one crucial metric to monitor is revenue per person. This vital number helps gauge the efficiency and profitability of your business. By focusing on increasing revenue per person, you can ensure that your business remains agile, competitive, and financially healthy.
For example, a struggling boutique with low revenue per person might consider investing in technology, refining their product or service offering, and optimising their sales and marketing efforts to increase revenue. Similarly, businesses in the factory stage must find ways to improve revenue per person to avoid high staff turnover and stagnation.
How to grow your business the right way…
Understanding the stages of the entrepreneurial journey is crucial for navigating the inevitable challenges and maximizing your business’s potential. By recognising the pitfalls and opportunities at each stage and focusing on optimizing revenue per person, you can create a more efficient, profitable, and successful business.
Want more business growth strategies?
Whether you’re at the start-up stage or transitioning into a performance team, the entrepreneurial journey is a thrilling, rewarding, and sometimes daunting experience. Keep learning, adapting, and pushing forward, and you’ll be well on your way to realising your vision and creating a lasting impact in your industry.