Skip to main content
monday morning manager

Every new business is unique. But the path they each take is common, and knowing the outline of the journey that previous small businesses have followed can help you to grow more effectively.

"Entrepreneurs like to think their situation and their idea is original. But I find many people are comforted when they find the problems they are facing are common to others. We want to be unique but like to know others have faced the same problems," Charlie Gilkey, a consultant based in Portland, Ore., said in an interview.

Mr. Gilkey works with bootstrap entrepreneurs, individuals who start businesses without much financial backing and need to bring sales in as quickly as possible to keep their enterprise from imploding. In his book The Small Business Life Cycle, he sets out five phases you are likely to hit if successful:

The aspirational phase

A military veteran , he says it's common to have a Stage Zero before battle. Here, it's when the entrepreneur is thinking, reading and watching Shark Tank or Dragons' Den but not yet engaged in selling a product. A huge number of people remain forever in this stage, flummoxed by an inconvenient truth: There may be no market for the idea they have conceived or they may not have the resources for it.

To move ahead, you need to find a unique frustration many people have that you can solve, developing your beachhead offer. The idea may not be perfect, but just pick something that seems reasonable and move ahead. Focus on one group of customers and solve their problem rather than getting distracted by many different customers and issues.

The catalytic moment will be when somebody actually becomes your first paying customer. "This is huge, when you get someone who says they will pay you and they actually give you money. You're over the moon," he said in the interview.

The entry phase

You have started the business and are getting some traction, but don't yet have a lot of demand for what you offer. The inconvenient truth is that, at this point, you have no idea what you are doing. To move ahead, stay focused on your beachhead offer, testing and tweaking. "You are figuring out how the business works and how customers will come to you," he said.

Keep focused on the same customers, and alter the product to their needs, rather than getting seduced by other possible customer segments. It's easier to change a product than to change your market. The catalytic moment is when you have your first big success and things start to take off.

The growth phase

This the period entrepreneurs love, when they are riding a rocket of great growth. The inconvenient truth, however, is that you can't ride a rocket forever. Occasionally, you must slow down or find a different approach.

The way ahead is to offer supporting or complementary offers. If you publish a book, for example, coming out with a workbook supports the primary offer to your market, while a second book on other aspects of the same issue is a complementary offer. Both supplementary and complementary offers are focused on your existing market – cross-selling and up-selling.

You also need to strengthen your beachhead offer. "Don't get bored or lured into a new market too soon," he warned. The catalytic moment will be when market demand exceeds your capacity to deliver.

The crucible phase

This is an awkward and challenging stage that entrepreneurs hate. The inconvenient truth you have run up against is that you didn't really have a proper business. You succeeded largely on the strength of individual effort, and now must reduce the complexity, extraneous human effort, and information silos that sprouted up.

It's all about execution, building structure and processes, and reviewing revenue lines for margins and sustainability. It's not exciting, and you can be stuck for many years, developing the managerial systems. The catalytic moment is when your business backbone gels and you have your people, processes, systems and positioning in place.

The cruise phase

Your rocket ship is now a supersonic jet, moving not as quickly but still fast. However, the inconvenient truth is that your company, like that jet, has to turn slowly or will be torn apart.

The way ahead is to grow intelligently, if more slowly, continuing to serve your market, customers and employees. Another goal is to make your key players as obsolete as possible, so the business is no longer dependent on the founder or other long-time employees, and can eventually be sold if an exit is desired. It might well be, as many entrepreneurs dislike this stage, preferring some new shiny objects.

The catalytic moment is when you decide to introduce a new brand or business dynamic – or sell to start another new business – and you are back at Stage Zero.

"The takeaway is to understand where you are in your business journey and be superfocused on steps that take you to the next level, rather than getting sidetracked by all the other things you could be doing," he concludes.

Harvey Schachter is a Battersea, Ont.-based writer specializing in management issues. He writes Monday Morning Manager and management book reviews for the print edition of Report on Business and an online work-life column Balance. E-mail Harvey Schachter

Report an error

Editorial code of conduct