And how do you move forward?
Been in business for a while? Wondering where your business sits in terms of development? Perhaps you are feeling stuck and want to break through to a new stage but aren’t sure how?
There are many models of business development. We’ve pulled together this high-level overview to give you some insights into where your business fits on the spectrum of business development.
The super-intense phase. You’ve had an idea and are working hard to make it a reality. Constantly implementing new ideas and addressing issues as they emerge, significant time is taken up meeting people and building market awareness. You are either doing many roles or your small team is working across many functions. Systems and processes aren’t tightly defined and documented because you aren’t exactly sure what needs to happen to create success (yet).
This is the period in which most businesses fail. It can be hard to fund employees and many business owners forgo paying themselves.
During the Start-Up phase, it’s critical to develop a workable business model that allows for consistent cash flow, growth potential and the ability to hire a team. Unless your financial aspirations are relatively low, it’s unlikely you’ll have a sustainable business long term unless you can bring on team members to support you in the business. If nothing else, you’ll burn out without the support of a team to take on roles that don’t need your specific expertise.
You’ve reached a point where you are clear on what you are doing (and for who) and your existing clients are clear on what you do (and can refer other potential clients to you). You’ve established a solid client base and are gradually increasing your pricing structure.
Now you have established a foothold in the market, you begin to look inwards – working on systems and processes, identifying issues and addressing them. This allows you to deliver more efficiently (and potentially, effectively) for your clients and strengthen your financial viability.
Identifying how (and if) you scale is important in this phase. Will you replicate the business in other locations? Or duplicate operational teams within the existing location? Will you introduce new products/services to augment the original offering/s?
This phase generally needs investment as you navigate it. You may be able to use your profits to fund the growth, or need to seek capital from investors or through debt. Balancing the risks and benefits of each option is important when making the decision on how to support your business.
You’ve reached the point where you’ve consolidated what you are doing and the business is running smoothly and profitability, with slow but consistent growth. There might be an occasional hiccup but overall, you feel confident and secure that the business is doing ok.
You likely have a trusted team taking care of day-to-day operations, although you may still be involved at some level. The business is ideally in a strong cash position and can take advantage of opportunities such as acquiring competitors, developing complementary businesses or new products and services, or investing in new systems or infrastructure to improve operations.
This is a period to enjoy, but it’s also important not to become complacent. Key an eye on the need to make changes, respond to competitors and grab opportunities. This is the perfect phase for growth and expansion with working capital available to fund new initiatives.
During this phase you should consider whether you’re ready to sell and move on, or reinvest and grow further as well as repositioning yourself in a changing market – either way, having a plan now will reduce your potential pain later.
Decline (or Renewal)
Decline is sneaky – you will often not realise you are in this phase until it’s been happening for a few years. You might feel safe and that your business is relatively stable but if revenue is declining over several consecutive quarters, you are already likely well into decline and need to take action.
If you aren’t willing to invest in reinvigorating the business, it’s critical to talk to a business advisor about selling the business – the longer you hang on, the less chance you have of a saleable asset. It’s optimal to look at selling your business during the Maturity phase, when its appeal to a buyer would be much higher.
If you are planning on sticking with the business and you want to avoid decline to the point of an unsaleable and unsalvageable business, you’ll need to invest to make the change and modify your offering and/or your market to stay relevant and profitable.
What phase are you in? And where to next?
Have you thought about where you want your business to be in the next five and ten years? What phase do you want the business to be in? What actions do you need to take this year? And this quarter?
If you need help ironing out a plan, we can help. We offer Strategy Intensives for deep dives into specific issues (or ongoing accountability and advice) as well as practical Business Plans and Bank-Ready Business Plans.