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The Three Natural Phases of Successful Small Business Growth

growing a businessI’ve owned a small business for many years and have worked with thousands of small business along the way and I’ve come to sense what feel like natural states of successful small business growth.

A common small business plight is the frustrating cycle of expansion and contraction. I believe this not simply due to the cycle of markets, but more often due to the lack of strategy and proper expectation around planned growth.

I think business owners need to think about growth a lot like a parent thinks about the growth and maturation of a child. But, many simply dive in and try to do things they are not ready to do, lacking the proper foundation of an ideal market, core message and systems and processes necessary to deliver a thrilling customer experience. Now, depending upon a series of what I like to call “success factors,” things such as experience, resources, and networks, some business owners are able to move through these phases much more rapidly, but successful, long-term growth comes from moving in this same fashion no matter what.

Every business should look at progressing through as least three phases (although it’s never quite this linear)

Foundation – this is most commonly associated with start-up, although I’ve worked with plenty of businesses that needed to return here after years of trying to grow without it. In this phase, you are tasked with getting your house in order. This is where you must experiment with finding your ideal customer, testing out ways to differentiate, and finding your secret process sauce. This phase isn’t simply about getting your marketing materials and web site created. This is the crucial strategy laying phase and it often requires starting and restarting, but the important element is a mindset of finding your niche and special approach. This phase takes time and patience, something that’s hard to find while trying to pay the rent, but missing this step is lot like skipping grade school and then wondering why college comp is so hard.

Growth – Upon a strong foundation you can start to add the layers of a consistent brand. This, of course comes with a total understanding of your customer, a consistent message, and systems and processes that allow you to deliver a stunning customer experience. Growth now starts in earnest because your business is “referable.” In other words, people start to voluntarily send business to your doorstep. During this phase successful long-term growth is built on taking what you’ve learned about your customer and what they value and expanding your reach, confidently into a larger universe of prospects, knowing that you now have the right message and have developed marketing systems that help you educate and build trust.

In this phase many businesses feel the pull to expand and capture new markets or add new directions, but the wise move in many cases is to actually refine and narrow your focus even more. By this time you’ve likely developed a great feel for your ideal customer or ideal kind of engagement and now is possibly the time to look at becoming a leader in your market or dominating a narrowly defined niche.

This is dangerous phase as well because in most cases this is the place where the owner, the one who may have built the foundation phase as a one person show, will probably need to add staff and start letting go of certain tasks. I say it’s dangerous because some entrepreneurs struggle with the aspect of turning any part of their baby over to someone else and constriction is often the result. The need to build systems that ensure incredible delegation over aimless abdication is the key to success over failure in this phase.

Momentum – Once a business develops the sense of rhythm that comes with a strong foundation and steady expansion into a market, there becomes the space to think in terms of what I call momentum. In business, this is the phase where the business growth seems easy, seems to run itself. Like many things in life, this is simply the payoff for all the hard work put in to date, but it’s more than that. It’s a maturity that comes with an unconsciously competent awareness of opportunities to better serve your existing ideal customer base.

The momentum phase is often marked by other organizations expressing a desire to partner and align strategically with your brand. Your growth is sustained primarily though consistent referrals and a keen eye for spotting ways to do more business with your existing customer base.

This phase is not the done part, in fact, momentum is extremely hard to gain and strangely very easy to stall. (There’s probably a physics equation in that) Maintaining growth and momentum comes from continuously monitoring, measuring, and adapting to the wants and needs of your ideal customer. It comes from staying one step ahead of your competitors and two steps ahead of the new new thing. It’s achieved through your commitment to constant reeducation, your openness to new ideas and new ways of doing things, and willingness to take the time and space to get outside your business and learn from the experience that every industry has to offer.

My final point here is to attempt to provide any business owner struggling with growth the inspiration to appreciate that struggle is OK, in fact, it’s to be expected, but also that you must locate where you are these phases of successful growth and commit to doing what it takes to move to the next phase as your primary short terms approach. Do this and your frustration can turn to focus – and focus may be the world’s most powerful tool for growth.

Image credit: Clevergrrl

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  • elainefogel

    John, love your advice to focus more during the growth stage rather than get excited and expand. Makes such good sense.

  • Rick Meekins

    Great points, John, as always.

  • zoemcduncan

    Just found your blog through bloglovin'. Excellent article..I need to find my niche.

  • Exold

    Thanks, this is excellent! Realizing that my business is still solidly — as it should be right now — in the “Foundation” phase helps provide some needed context.

  • Ciscokid25

    Good points for the start up biz.

    What are you thoughts on review of your strategy? Not everyone gets it right the first, second or even third time. I find regular review and honest evaluation often leads to a stronger foundation.

  • ducttape

    Nice to hear that as I think that was my real point to give some context so people can relax and what's right now.

  • ducttape

    totally agree – it's not the plan but the planning process that nets the results

  • digghome


    Your site is one of my favorites seen around blog explosion. Keep up the good work.
    I enjoy reading your blog. It is great to find someone who can find the fun things in life!
    I wish you all the best in all years. I look forward to developing a friendship and networking with you.
    Take a look at my websites AriesTrade Network in Europe.

    With Regards,
    Karoly Domonyi

  • RedHotFranchises

    Great article John! This is one of the reasons many Business Owners go through so much trial and error. Most just know that they're going to do it and then comes the big mess ahead of them.

  • HelpYard

    I think that you hit the nail on the head in the final paragraph or two: measurement, followed by refinement, followed by measurement, etc, etc.

    So many business stumble, trip, and fall into growth. Everyone's so busy doing that they pay little head to what, how, or, most importantly, why they are doing it.

    Growth should be a deliberate act, not an accident.

    Great post.

  • washout

    Great article for sure. What so nice today in small business is the ability to tap into your customers and get in their head. There's no better way then providing what they want by just asking them what they want…

    Let them do the marketing research… help you with growth… and build your momentum.

    But that really helped me think about how one of my new businesses is going to grow because we are about to hit some fast growth.

    Thanks and I also love your podcast.

  • Justin

    Great post and nice advice John.

  • mlgreen8753

    Small business success hinges on advertising and a well thought out and tested marketing sales funnel.

  • Stormy Dean

    I think the points are right on. One of the main reason small business fail in the first year or two is they don't anticipate what it actually takes to start and grow a business. I talk about many of the same issues in my blog at Today I am announcing the winners of our August Stimulus Package where we offer a free marketing campaign to the chosen. Stay tuned and we can see how it works out.


  • Stormy Dean

    I think the points are right on. One of the main reason small business fail in the first year or two is they don't anticipate what it actually takes to start and grow a business. I talk about many of the same issues in my blog at Today I am announcing the winners of our August Stimulus Package where we offer a free marketing campaign to the chosen. Stay tuned and we can see how it works out.