Ready, set, grow: the five stages of business growth

Businesses are said to have a lifecycle. They go through stages of development. Experts—the kinds of folks who teach at top-tier business schools—typically identify five stages. Effective business growth planning depends on an understanding of these stages. In essence, a business either fails, sustains, or grows.

Stage I

Stage I is categorized as “existence,” and Stage II is “survival.” In the first stage, most businesses are busy growing their customer base and delivering their product or service. It’s the startup phase, and as such it is spending capital to refine sales and delivery infrastructures. The owner/founder does almost everything, and supplies most of the energy and direction. If there are employees, they are directly managed by the owner/founder.

The goal of a Stage I business isn’t growth; it’s to survive. Many business owners quit due to the demands on their time, energy, and resources. Those that remain viable, who turn their startup capital into a sustainable or nearly sustainable revenue generator, have reached Stage II.

Stage II

In Stage II, the key problem most businesses face is one of cash flow. That is, balancing revenue and expenses to earn a positive return on assets and labor. Business growth planning is minimal, the organization is simple, and the brand is still primarily identified with its owner. Profit margins may be minimal or nonexistent.

A business can remain in survival mode indefinitely. Mom-and-pop retail, small restaurants, and many local professional services fall into this category. There’s no moral judgment here; they are not bad businesses. They’re simply not growing.

Stage II is where many companies will engage a marketing agency for the first time. There’s a desire for profitability and growth, but not enough revenue to employ a full-time in-house marketing manager. Or there is a full-time marketing manager, but they are stretched thin with the demands that Stage II entails. They have little to no bandwidth for growth. And often, growth isn’t a skill they were hired for.

Stage III

It’s only after proving that they are a stable, profitable enterprise that businesses reach Stage III, “success,” and owners have to decide whether to disengage (Stage III-D) from the company and sustain it at current levels, or marshal resources to invest in growth (Stage III-G).

Stage III is where your partnership with a growth-minded agency will really pay off. All the planning initiated during Stage II will have already borne fruit. Stage III is now all about organization, branding, and finances.

Just as some marketing managers aren’t equipped to oversee major growth, many creative agencies aren’t able or, frankly, interested in buckling in for the rocket that’s about to take off. They may say they’re interested in your growth, but a pure creative agency is mostly invested in your advertising budget. They won’t help you plan that budget. They shouldn’t help you plan that budget. A pure creative agency is equipped to produce dazzling creative—which plays a role in growth—but they aren’t in a position to explain why you might want to scale back your media buys in this stage, or why you might want to invest in a new brand identity that’s independent of the founder.

Stage IV

Stage IV is “takeoff,” and is characterized by rapid growth. Stage IV issues often revolve around delegation, cash, and organizational division, with the owner still a large presence. Stage V is “maturity,” and a potential threat—sometimes called Stage VI—is rigidity or “ossification”.

A good agency understands these stages of business growth, and can help you plan your growth in a way that avoids the pitfalls that lead to rigidity. A good business growth agency can give you a strategic framework that defines your identity, your market, and your objectives, and aligns these in an elastic brand with a strong growth plan.

It’s marketing all the way down: business growth planning and strategic alignment

Most business owners learn by doing. So how do you go about creating a strategic growth plan? It helps to understand what is meant by strategic: even Ivy League-educated businesspeople disagree on the term, or worse, they misuse it. Let’s define our terms then, and discuss the concept of strategic alignment, before we dive into the how-tos of writing a growth plan.

Know your terms

The terms strategies and objectives are often conflated. And these in turn are sometimes confused with goals, tactics, and initiatives. And we’ll be honest: language is always relative, and in the business world, it can be appallingly nonspecific. Here are our definitions:

A goal is a broad, big-picture statement of achievable, observable, primary, desired outcomes: a destination; a description of what results will look like. Examples: build brand awareness; increase market share among 18-35 year olds; grow product sales by 10 percent

A strategy is a reasoned or evidence-based approach, area of focus, or position taken to achieve an objective or set of objectives. Example: position ourselves as an indispensable subject matter expert on political and cultural topics [in order to promote brand awareness]

An objective is a specific, measurable, achievable, relevant, and time-limited statement of an intended course of action based on goals or strategies. Examples: attend eight trade shows next year, exhibit at two, and grow prospect list by 50 percent; increase monthly website traffic by 200 percent and conversion rate by 20 percent.

An initiative is the specific project, program, or campaign undertaken to realize a strategy. Examples: develop a content marketing program to promote subject matter expertise; create and promote a user-generated video contest

A tactic is any procedure by which you execute a strategy. They may be part of an overarching initiative, or may be enacted individually. Examples: email drip campaigns; social media advertising; content marketing

The process of creating a strategic growth plan is recursive rather than linear. It starts out general (goals), then narrows to specific approaches (strategies), and narrows again as you home in on your KPIs (objectives). It then broadens as you determine the best tactics and initiatives to accomplish your goal(s).

Strategy alone is not enough

Even big companies sometimes make the mistake of assuming their business growth planning work is done once they’ve established their goals, strategies, objectives, and initiatives and delivered them to their department heads to execute. In fact, it happens at large companies more than you think.

That’s because of one missing ingredient: strategic alignment.

By itself, a growth strategy is a raft drifting in the ocean, subject only to the forces of currents and precipitation. And sharks … lots of circling sharks. They will devour you if you make a wrong move.

Your growth strategy isn’t really a plan until it’s aligned with both your core identity and your audience’s needs and values. That is, a strategy is just a raft. It’s a crude vehicle designed to keep you afloat, but whether it will get you to your destination depends on who you are, what tools you have, and where your destination is.

For example, say you’ve determined that in order to grow your business, you need to develop new products (and here by “products” we mean services, too). Your customers just aren’t responding to your existing product the way you’d anticipated, and you’ve gotten comments on social media asking why you don’t offer x, y, or z.

But are these comments truly indicative of your customers’ sentiment? Are new products your best strategy for growth? Is there a way to know, and be sure?

Product development is a valid growth strategy, but not for everyone. Growth strategy isn’t supposed to be chosen like candy from a vending machine. Like we said, strategy is a raft: you still need oars and a compass at the very least in order to get where you want to go.

Specifically, that means your growth strategy needs to thoroughly and intrinsically reflect who you are and how you’re organized as a business. It also needs to reflect your customers’ personalities and behaviors. This is what we mean by strategic alignment: making sure that your strategy adequately accounts for the needs and values of all of your organization’s stakeholders, both internal and external.

In a sense, this means your strategy needs to be on brand.

All business is marketing

Historically, only enterprise-level businesses would conduct this sort of analysis and develop strategic growth plans. They brought in marketing agencies to do their advertising and their logos.

Small- and mid-sized business owners tended to be entrepreneurs with a lot of grit, energy, and resourcefulness. They historically tackled growth-related problems as they arose. If there wasn’t a fire to put out, it wasn’t a pressing problem; if there wasn’t a pressing problem, then the growth was good.

In the last generation—since the advent of the world wide web, really—there’s been a sea change in how businesses grow. Thousands of blogs and dissertations have been written on this; suffice it to say, new modes of communication have made growth—and contraction—a more volatile process. It requires more attention, and more management. Simply put, business owners today have to plan for growth. It’s not something that can be left just to Fortune 500 companies.

The thing is, during the same time, marketing changed too. Agencies still do advertising, but advertising is no longer the central tactic in marketing. It hasn’t been for a long time.

There are marketing agencies, creative agencies, branding agencies, digital agencies, content agencies, experiential agencies, industry-specific agencies, and probably ten more descriptors that just got invented while you’ve been reading this. It’s not that marketing has become more specialized; it’s that marketing itself has grown in scope and relevance as a function of business operations, such that specialization has been a natural outgrowth.

In larger, more competitive markets, these agencies may specialize out of necessity. In smaller markets you tend to find more traditional “one-stop-shop” marketing and advertising agencies. (And in a nice, mid-sized city like Tacoma, Washington, you find agencies like Sands Costner, which cover a broad range of services but which are still able to promote specialties like business growth planning.)

Marketing has become a critical perspective in every facet of the 21st century business, from operations to finance to sales to human resources. It’s not controversial to suggest that marketing has—or ought to have—a voice in every meeting and a seat at every table.

Most business managers and C-suite executives understand this. It’s our assertion, however, that not every marketing agency knows this: many of them are still selling their services as advertisers, brand “storytellers,” and social media experts.

Some, however, do offer business consulting and strategic growth planning as a service. These are the agencies who provide marketing as a perspective in addition to an activity with material deliverables.

What do you call it? What do they do?

Account-based marketing agency

Branding agency

Content marketing agency

Creative agency

Destination marketing organization

Digital agency

Experiential marketing agency

Marketing and advertising agency

Print and promo agency

Public relations agency

Social media agency

Design thinking and your business growth strategy

Growing your business begins, middles, and ends with marketing. But what specifically can a third party agency do to help with your business growth planning?

What is design thinking?

Design thinking was a buzzy word a few years back. Maybe it still is. We like to think it’s here to stay. It represents the creative approach to problem-solving demonstrated by designers in all industries, from fashion design to architectural design to biomedical engineering to user experience (UX) design to graphic design, and so on.

Design thinking is a nonlinear, iterative process—like the strategic planning we described earlier—that requires first empathizing or understanding your audience, then defining the problem, then inventing the methods by which you’ll solve the problem. You test your solution, then revise your solution—or your initial assumptions—in order to perfect your approach.

  • Design thinking is naturally a system of strategic alignment
  • Design thinking is naturally a perspective shared by most creatives and many account managers at marketing agencies
  • Design thinking is another way of saying strategic thinking

A good marketing agency is well-equipped to help most business succeed in their goals because a good marketing agency already thinks strategically about business. The trick then is to find an agency that has real-world experience in developing business growth plans that are strategically aligned with your core identity and that of your customer.

How marketing agencies can help you plan for growth

A marketing agency that specializes in business growth planning can help you achieve a number of different goals and objectives, depending on your needs. They also have the added benefit of learning from other companies’ mistakes.

  • Clarify and sharpen differentiators and brand identity
  • Define and target customer personas
  • Approaches to market penetration and/or saturation
  • New product development
  • Diversification
  • Overcoming growth plateaus
  • Expansion into new markets
  • Reshaping brand identity to reflect founder disengagement and/or rapid scaling

These are all high-level strategic management issues, and all are relevant to the growing business.

Where traditionally these issues have been the concern of large corporations, the small business owner likewise needs to be aware of and plan for growth. And while large corporations can stock their boardrooms with MBAs and can hire large outside consulting firms, many small businesses are turning to specialized marketing agencies who offer the same services, often with a better sense of how small businesses grow.

Usually these specialized services are provided in addition to a core set of proficiencies in traditional marketing and advertising areas. These agencies can help you understand where you are in the business life cycle, and to plan ahead for growth, maturity, and sustainability.

If you’re interested in learning more about the business growth planning services that Sands Costner has to offer, please contact us.

About us

Sands Costner is a marketing and advertising agency that specializes in preparing small businesses for—and guiding them through—stages of major growth. We exist to help companies meet their objectives year after year through strategic planning and effective branding.

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