The 7 Stages of Small Business Success and What They Mean
Every business starts from a humble beginning. As much as we’d like to think brands like Nike or Gatorade were overnight successes, it’s a pipe dream. In reality, many great businesses started with a single idea from a solopreneur who then took action. Thoughts became things, and from there hard work helps the business grow. Yet, there are many different stages of small business success. This feature will lay out these stages so you can understand each individual step and what it takes to get there.
1: Solopreneur
In the early stage of a new business, many entrepreneurs try to do everything themselves — hence the term solopreneur. This brave entrepreneur is a team of one who manages all facets of his or her business. A solopreneur takes care of customer service, sales, marketing, accounting, social media, meetings, sales calls, prospecting, deal structuring and many other pieces that create small business success. All of this falls on one individual’s lap and you need to hustle to get everything done. Sales for a solopreneur business are generally less than $100,000 per year.
The determining factor in business success for a solopreneur is time. We all have the same 24 hours in a day; time can be your greatest asset or your biggest drawback depending on how you manage it. Solopreneurs who wake up early and get hustling before the rooster crows can generally accomplish many things during the day — it’s all about time management and productivity.
Being a solopreneur puts you in the largest business classification in America with around 22 million other business owners. It can be an extremely stressful stage of your small business success, but it’s also a very important one. Some entrepreneurs decide to stay in this stage forever, while others continue through the stages mentioned below.
2. Partnership
Some businesses don’t start with just the idea of one person, such as with a solopreneur. Sometimes, the idea comes from a couple of people who are chatting about solving a problem and decide to go into business with each other and form a partnership. However, a solopreneurship can be started and grow into a partnership if another party shares the same passion and they agree to become equal partners (or whatever percentage of the business that is agreed upon). A partnership is generally a business with two to three individuals. This form of business is the third largest in America. The annual sales of a partnership is between $100k-$300k.
The most important piece to factor into a partnership is how well you can sell a product or service. While having more employees (or owners) than a solopreneurship, a partnership needs to divide and conquer yet be sales driven to bring in revenue. Without sales for your product or service, there is a high probability that the business will not survive.
3. Steady Operation
As a business grows, eventually, so should the number of employees it has. Once a business has around four to ten employees, it has graduated to becoming a steady operation with annual sales of around $300k-$1M. At this stage, you are in the company of the second largest number of businesses in America with around 1.9M others. To continue down the path of small business success, you need to think about the pieces of your business that weren’t truly focused on when you were a solopreneur or partnership. What was missing in those stages that held you back?
The main focus during this stage is generally on marketing the business. Prior, you needed sales to stay afloat and continue down the path, but at this stage you need to be focused on getting the word out and showing exponential growth. While many solopreneurs and partnerships grow slow and steady, there comes a time where you go from a flatline in sales to a vertical explosion. This can be achieved through marketing and getting the word out about your brand. The more people know about your products or services, the more people you can engage and potentially work with or sell to.
4. Local Success Story
Your small business success story has gone viral locally and your business is now bringing in around $1M-$5M annually and the number of employees has grown to 11-25. The marketing you focused on when you were a steady operation has helped with your overall growth. Now what? Now, it’s time to get laser focused on your vision. Where do you see the company in the next few years and what will it take to get there? Now is the time to get all of your ducks in a row for what you will need to win in the space.
Everyone around your business, locally, is aware of who you are and what you sell. They are all engaged with your business and are repeat customers—hopefully thanks to the marketing dollars you put behind your business. However, you are now faced with the task of taking your business to the next level. Unfortunately, not many businesses are able to move onto the next step because they don’t have a clear and decisive vision for their business and its growth. Some might have never thought they would make it as far as they did. Truth be told, of the 900k businesses in America that make it to this step, only 200k will make it to the next.
5. Managed Organization
As a local success story, you needed to buckle down in order to switch your thinking from the NOW mentality to the future. When you decide to make it to becoming a managed organization, you need to think in terms of double. How can you double your sales? How can you double your employees to get those sales? Who do you need to hire in order to achieve these results? Here is where you start to bring in the cavalry. In order to achieve your vision, you need to hire people and put them in positions that will help you get there.
A managed organization should have annual sales of around $5M-$20M and have anywhere between 26 and 100 employees. These employees should be made up of a sales team, marketing team, accounts payable and receivable teams, and any other team you feel you would need to help grow your business (such as a design team). The key is to bring on key high-level individuals to be a part of your team who can help you succeed.
6. Mature Company
A mature company is not one that happens within the first year, or even first few years of a business’s lifecycle. To get to this stage, it took precise actions to build a company where you now have upwards of 200 employees and annual sales of $20M-$40M. By now you have the business running like a well-oiled machine and it firing on all cylinders. Now is where you start planning strategically. How do you grow further? Are there channels and markets you can expand into? Are there key customers or groups that you aren’t focusing on that you should? Are your sales and marketing strategies still effective or do they need to be reworked?
This is the stage where you bring all of your teams together and get on the same page. Where is the business exceling, and what could be holding it back? Make the corresponding changes. Put together a plan of attack for each group within your company so each has a directive to follow. Continuously follow up with each team to ensure the strategy is not only being followed, but is operative. If not, you again need to tweak things and shape them around your vision.
7. Corporate Player
If you’ve made it to this stage, congratulations! You have made it to THE hardest step when it comes to small business success. Your vision as a solopreneur has achieved the highest level. However, this doesn’t mean you can take your foot off the gas pedal. What this really means is you need to figure out who on your team you need to develop into a leadership position or who you need to bring into your business who already has the experience so you have multiple feet on the pedal pushing it down so your business never slows down.
By now your business should be made up of around 201-500 employees who are collectively helping your business bring in between $40M and $100M annually. Employees who are great assets to your company you should look to move into a leadership role and replace them with another competent employee or again bring in someone from outside your company to fill their shoes in the previous role. You need to develop these individuals in such a way that you can focus on other areas of your business while the leadership team manages and overseas their respective team members. At this point, the leadership team should be the only people reporting directly to you. There’s no reason to have anyone else pulling you away from driving the ship.
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