With extensive experience of the gaming, tech and real estate industries, Russian-born entrepreneur and business leader Roman Semiokhin keeps abreast of entrepreneurship trends.
This article will explore the different stages of growing a business, identifying appropriate strategies for each phase.
The 3 Phases of Business Development
Entrepreneurs venture into their chosen markets fuelled by boundless enthusiasm. While a positive attitude can take them far, to truly succeed in competitive markets they will need to develop a long-term business growth strategy.
The lifecycle of a business essentially consists of three stages:
- Starting Up
- Business Growth
- Business Expansion
Each step requires careful planning from business owners to poise the company for commercial success.
Phase 1: Starting Up
The start-up phase is an incredibly exciting time for an entrepreneur, but the process can be fraught with challenges. Common issues faced by businesses during the start-up phase include:
- Financial struggles, incurring significant expenses in getting the business up and running before it has started generating revenue.
- Brand awareness, with the business struggling to establish itself. Until the enterprise has built a solid reputation and business history, it is an unknown quantity.
- Spreading resources too thinly.
The start-up phase is typically the most challenging stage for any business, with many failing due to lack of investment, poor brand visibility and lack of customers.
It is essential for business owners to consider how they will overcome these hurdles, strategising how they can plan and manage cashflow better and identifying both short-term and long-term goals.
Business leadership must prepare an in-depth budget, enabling them to plan for investing and financing activities. Hiring a marketing agency at this stage makes the business a more attractive proposition for higher-value clients and investors.
Phase 2: Business Growth
Once the business has established itself, its owners need to prime it for growth – increasing its customer base, revenue, profit margins, funding and brand visibility.
The growth phase can present unique challenges, with many businesses struggling with a lack of resources, increased workload and inconsistent growth, culminating in a decline in performance.
At this stage, business owners could mitigate many of the problems by:
- Hiring an accountant to efficiently manage finances and resources.
- Evaluating processes to identify where improvements can be made.
- Undertaking business health checks regularly, and consistently monitoring business performance to ensure growth is sustainable.
- Monitoring business activities to ensure they correlate with corporate objectives and goals.
Phase 3: Business Expansion
To prevent stagnation businesses must expand, increasing their brand visibility and market presence.
In this phase of the business planning cycle, leadership should be focused on sustaining business performance while simultaneously increasing local or global diversification and expanding into new markets, products and territories.
Challenges commonly encountered in the expansion phase include:
- Problems in managing business performance throughout the expansion process.
- Difficulties introducing new products while expanding and managing quality.
- Obstacles hindering leadership from scaling the business, such as communication, demographic or geographical issues.
To overcome these issues, leaders must adapt expansion strategies, planning and preparing before taking action.
Businesses must ensure that they target the right market for their products, avoiding high-risk markets. Additionally, it is vital to manage expectations, plan the expansion process meticulously, and stress test it before launching.
It is crucial for businesses to develop business development strategies for each phase of their company’s life cycle, enabling leadership to identify potential issues and strategise solutions in advance of problems arising.
The sad truth is that, for many entrepreneurs, failing to prepare sets them up for failure. Neglecting to create and maintain a business development strategy can cost companies dearly.