Phases of business growth – What successful business leaders focus on
One of the things I’ve observed about high growth businesses is that they go through similar phases, and the successful entrepreneurial leader has to change their focus accordingly.
Phase 1 is all about understanding the market opportunity. Or as I prefer to look at it –understanding the problem that exists in the world that needs to be solved. And key here is of course understanding not just the problem, but also the number of people who have that problem, how much of a problem it is for them and how much it is worth to them to solve it.
Phase 2 is all about developing the product, or again perhaps thought of as your brilliant solution to the problem. This stage, and the word brilliant, are critical because IF you have a brilliant solution to the problem and you can build a business that is brilliant at solving the problem for the value people with the problem place on having it solved you’ll make a lot of money – at least until others copy you or innovate better solutions.
Phase 3 is then about getting real paying customers on board. And this may overlap and iterate with phases 1 and 2 as you home in on your target – the phenomenal business model! And this is really the biggest test of all in getting a business going. Getting your first customer is often the most difficult bit. Once you’ve done that you can use them as a reference for how good you are to get the second (which is still difficult, but probably less so) and then you’re off! You have a real business with revenues.
Which if you are successful leads straight on to stage 4. The key challenge then becomes coping with the customers and keeping them coming. And the business leader has to move on their focus to recruiting and retaining good staff to do some of the work all these customers are creating, and to help with finding more like them. And that is as far as many entrepreneurs get! Their growth levels out at the volume of business they, and the staff they can manage themselves directly, can generate and handle.
The best entrepreneurs though move on to the next phase. They introduce the dreaded ‘management’. The processes, systems and structures that enable the organisation torepeatedly sell and deliver quality in increasing volumes. In other words to grow!
By that stage many people find they’ve built a nice business that generates them a nice income with a nice lifestyle. And that’s it. But there is one more stage that is critical if the entrepreneur leader want’s to remain and entrepreneur and pursue the next opportunity – or even retire to their yacht. And that is when they put in place a strong management team that can run the business without them – at least on a day to day basis. Their role then evolves to one of Leadership. Developing the vision & direction, motivating the team to go in that direction and being able to trust them to get on with it.
In summary the phases and the focus needed in each phase are:
- Market – Defining the (big enough and valuable enough) problem
- Product – Developing the economic and effective solution
- Customer – Proving that someone will pay to have their problem solved
- Staff – Recruiting and retaining great people
- Management – Enabling the business to do what it does in volume
- Leadership – Motivating followers to pursue a shared vision