Fact: only 50% of small businesses survive beyond five years.1
Also fact: you’re reading this because you’re determined to avoid that fate and succeed where other small business owners haven’t.
Trust us, we get it. As a company that regularly partners with small- and medium-sized businesses, our team greatly understands the challenges you face on a daily basis.
As a small business owner, every little problem is yours to solve, every failure is your fault, and every success gives everyone but you an excuse to celebrate. The bottom line is, when you decide to start and grow your business, it’s a 24/7/365 commitment that requires an enormous amount of physical, mental, and emotional effort.
But effort alone won’t reap the reward of business growth. You know that just as much as we do. Your small business growth relies on a multitude of things working efficiently and effectively—not only on their own, but also together in unison. It’s not as easy as some business blogs like to make it seem.
Additionally, what those blogs don’t tell you is that generating awareness and demand for your product or service is a complicated marketing task. They don’t tell you that effectively prospecting, qualifying, and closing leads takes strategic salespeople with market and audience knowledge. And they certainly don’t tell you how appropriately handling customer inquiries, complaints, and communications is a balancing act that takes a poised and patient team backed by high-performing communications technology.
Well, some blogs may tell you these things. But none of them give you actionable ways to go about achieving them.
And that’s what we set out to do differently here in this post. We’re not just going to list the various business growth stages and how to reach and surpass them—we’re going to give you specific action items to start working on so you can experience true, long-lasting business growth.
In this post, we’ll dig into:
- Understanding company growth stages and the business life cycle
- How long it takes to grow a business
- How to grow your small business through sales
- How to grow your small business through marketing
- How to grow your small business through customer service
According to the Harvard Business Review, there are five distinct stages in the life cycle of a small business:2
- Resource maturity
Right now, you’re probably experiencing things specific to the growth stage your business is currently in. At least we hope that’s the case. Let’s dive into each stage of growth to learn more about what they are and the different challenges you may run into during each one.
1. The existence stage: Generating customers and fulfilling their orders
If you’ve just launched your small business, then first of all—bravo! We admire your courageous and entrepreneurial spirit, and we wish you the best of luck.
Unfortunately, luck won’t help you conquer the two most challenging aspects of starting a new business: getting customers and fulfilling their orders.3
It doesn’t matter if you’ve just opened up a new gym or a new ice cream parlor, if you’re operating under a subscription or non-subscription plan, or if you’re providing a service or product—finding that first customer and successfully giving them what they paid you for is always the hardest part of the existence stage in business.
But why? How can that be so difficult?
Well, if you’ve never experienced the existence stage before—which is when you’re just beginning to service customers and receive money for it—it’s hard to imagine the difficulty of winning your first paying customers and successfully fulfilling their orders or contracts.
The truth is, it’s incredibly hard to do.
Part of that has to do with the fact that, at the outset of most small businesses’ life cycles, there’s only one or two people running the whole show. Most of the time—at least in true small businesses—it’s a founder or two co-founders doing everything in the existence stage. This puts an incredible amount of pressure on them because they’re not only in charge of marketing and selling the business offering, but they’re also in charge of handling the logistics of the product/service delivery, as well as any customer service needs (should they arise).
Not to mention, most people don’t have a huge runway of capital to fund their new small businesses, so the longer it takes to acquire those first paying customers, the more money a business loses early on in its life. In these cases, small businesses can either take on debt, raise money in exchange for stake in the company, or accept failure without ever reaching the next stage of growth: survival.
2. The survival stage: Breaking even and generating cash flow
You’ll know you’ve moved beyond the existence stage when you have a consistent flow of customers and are successfully delivering your agreed-upon products or services without any problems.
Soon after, you’ll begin looking at sales versus expenses a bit more carefully and start considering how to maximize the profitability of your company. After all, that’s the only way to grow your company in a healthy way.
Yet, here is where many businesses get stuck.
The reasons are vast and varied. Some business owners over-hire while some under-hire. Some spend too much money; some don’t spend enough on what matters. Whatever it is, many small business owners in the survival stage struggle to maximize margins and generate enough cash flow to effectively invest back into their companies.4
This is the stage where the need to communicate effectively really becomes apparent. You have to be able to communicate with not only your own team (typically your staff, contractors, or freelancers) but also your clients or customers, and prospects.
You’ll need a phone, sure, but that’s just the bare minimum. Will you need to be able to make video calls with a contractor or clients who are located in another country? Would you prefer texting with clients instead? What about instant messaging? Depending on your industry and how your customers like to operate, you might need other communication channels beyond the phone.
If you’re in this situation, our advice would be to look for a solution that gives you all those different channels in one app or software. This not only streamlines the number of tools you’re using (and paying for), it also makes life easier for you overall because you won’t have to manage a bunch of disparate tools. For instance, RingCentral’s desktop and mobile app gives you messaging, video conferencing, and a phone service, all in the same app:
Remember, starting in this stage and going forward as you get into the success and take-off stages, this will become more and more important because, well, you’ll be communicating with drastically more people. A lack of communication is one of those “silent killers” that can really hurt a business—you won’t notice it being a problem until it’s too late.
By the time a client leaves because you’re not responsive enough, or your teammate gets frustrated because they can’t do their work, the damage will have been done.
However, one thing’s for sure: if you know how to grow your business during the survival stage, you’ll be introduced to a stage within the business life cycle that many owners never quite reach, and one that can be significantly more comfortable and lucrative for you.
Yup… what we’re talking about is the success stage.
3. The success stage: To continue growing or to enjoy stable profitability… the choice is yours
At this point in your company’s life cycle, you’ve established operating procedures and customer retention strategies that have your margins in a consistently healthy place.
In other words, your small business is on cruise control.
What do you do from here?
Well, that all depends on what you want your business to be.
At the success stage, you can decide to push for further growth (a high-risk, high-reward option), or you can let your business enjoy stable profitability (a low-risk, low-reward option). Further growth requires you to invest everything you have back into the company—a move that could catapult your small business into the stratosphere… or bankrupt it.
On the other hand, enjoying stable profitability allows you to step away from some of your founder duties to engage in other ventures, but your absence could jeopardize your company’s success. That being said, there’s always the option for you to enjoy stable profitability while remaining heavily involved in the day-to-day operations of your business.
Like we said before, it all comes down to your preferences and what you want your business to be.
4. The take-off stage: Growing fast and how to finance it
Let’s pretend for a moment that at the success stage, you decided to go for it.
You took all of your profits and additional company resources and invested them back into the company to take a shot at extreme growth.
And it worked!
Your small business is now in the take-off stage, which occurs when you experience rapid growth in a short period of time. This stage is equal parts fun and frightening, as massive growth requires massive amounts of cash to continue paying overhead (e.g., employees, rent, vendors, etc).
At this stage, it becomes vitally important for you to begin developing a pitch deck and connecting with investors—because if you don’t start raising money fast, you’re on the accelerated path—to bankruptcy.5
Last but not least, to round out our stages of business growth, we have something called “resource maturity.”
5. The resource maturity stage: Taking control and remaining entrepreneurial
This stage’s name, like the rest of the stages’ names, is fairly self-explanatory.
When you reach the resource maturity stage, your business will have immense financial freedom and market control. You’ll have predictable plans and practices with predictable outcomes and results. It’s now up to you and your teams to harness your cash flow and refine your strategic plans, business models, and growth initiatives to maintain the business success you’ve had leading up to this stage.
But it’s also imperative you don’t lose sight of the gritty, entrepreneurial soil you’ve grown from. Because here, during the resource maturity stage, it becomes easy for small business founders to implement business practices and company policies that hinder innovation, limit collaboration, and deteriorate culture.6 For whatever reason, as small businesses become medium- and large-sized companies, many founders lose sight of what got them there in the first place, and they turn their beloved businesses into regressive companies doomed for failure.
So, as you may have guessed, finding the balance between buttoned-up process and entrepreneurial chaos is integral to staying successful during this final stage of the small business lifecycle.
We hope you’re not starting a small business on a whim thinking it’s going to generate massive gains in year one.
Or year two.
And maybe even year three.
That’s because it typically takes about a year or two for small business owners to nail down the fundamentals of their company.7 Not make money or even break even. Just nailing down the fundamentals.
Not only do you have to find and lease a piece of property, procure vendors, and hire staff, but you also have to legally register your company, decide on a name and brand, and set up any integrated communications tools you may need.
And as for growth? We’re talking about reaching profitability maybe during year two or three.8 And that’s on average.
But you don’t want to be an average small business owner, do you?
If not, then keep reading, because the next three sections are dedicated to you and your small company’s accelerated growth timeline.
Sales has changed a lot in the past decade. Among many other things, gone are the days of solely relying on sales teams and business development reps to bring in all your company’s revenue.
In fact, the same is true for your small business: your salesperson or people can’t be the only ones working to sell your product or service anymore.
Nowadays, growing your small business through sales is a team effort—led by you, the owner, and made possible by starting with these three oft-overlooked tasks:
Hire competitive self-starters to your staff
This might seem like a silly thing to lead with when talking about sales, but at the end of the day, the only people who sell well are those who are willing to persevere through challenges and grind it out until they become successful.
That’s because prospecting, sales funnel tactics, and cold call scripts are only as good as the person you give them to. In other words, focus on who you hire before you focus on other things like where they went to school and their qualifications.
Oh, and once you’ve hired a great salesperson or team, make sure you’ve given them the tools to succeed too. Are they going to be making a ton of calls and doing cold outreach? Then you might want to look at an outbound contact center solution that logs scripts for them and records all their past conversations with prospects so that anyone on the team can pick up that thread if needed.
For example, here’s a quick look at how RingCentral’s outbound contact center works:
Know your target audience and their pain points
First, you need to observe competitors and small businesses that look like you to see what your target audience physically looks like, how they act, what they dress like, what they do for a living, so on and so forth.
From there, it’s time to uncover your target audience’s pain points. It doesn’t matter if you’re selling pizzas or massages, your clients and customers have pain points that need to be relieved.
Now, what these pain points are and figuring out what it is about your product or service that makes them feel better—in other words, knowing why people get pizzas or massages at a given time—can give you all the ammunition you need to begin tapping into people’s emotions with strategic sales messaging.
🕹️ Get a hands-on look at how RingCentral is designed for fast-growing small businesses by booking a product tour:
💰 You can also use this calculator to see roughly how much your business could save by using RingCentral to support your team’s communication with each other—and clients.
Set realistic yearly and quarterly goals
Goals are great because goals are actionable. They help you see where your company is today and where it could be three, six, nine, and 12 months from now.
Setting goals grounds you and gives you a singular target—something you can zero in on and put all of your small company’s energy and resources towards.9 At the same time, goals will inspire you to constantly measure sales efforts to discover what is and isn’t working for your team. This can be hugely helpful in coming up with new techniques and strategies, or even uncovering a new audience segment that you hadn’t yet considered.
Of course, you’ll be setting goals at all company growth stages, but getting them down on paper during the early stages of business development sets the tone for you and your team and serves as something for you to live up to.
Working in tandem with your sales strategy should be your marketing strategy.
Effective marketing comes in many forms, but it always has the same goals: generate awareness, produce leads, and ultimately, make closing deals easier for salespeople.
One of the great things about modern-day marketing is it doesn’t require a big budget—or, in some cases, any budget—to bring people closer to your brand. With the rapid adoption and growth of the internet over the course of the past 25 years, particularly with the rise of search engines, small businesses are starting to take advantage and reap the rewards of search engine optimization (SEO), social media, and influencer marketing.
So, without further ado, here are three actionable ways to start growing your small business through marketing:
Optimize your website for SEO and start writing a blog
It’s simple and sounds way easier than it is, but investing in your small business’s website and writing blog articles regularly can be the difference in major revenue growth over the course of your company’s life cycle.
That’s because the more SEO-friendly content you create on your site, the more search engines like Google are going to favor your website when internet users search for things related to your business. The more Google favors your site, the more people will see your brand, click on your website, and consume your content.
And the more people consume your informative and helpful content, the more likely they are to buy from you. That’s what your website and blog are ultimately designed to do: inform and help your customers. If you do that successfully, you’ll be busier than you could imagine.
Build a social media following on Facebook, Instagram, and LinkedIn
Say what you will about social media—it can absolutely help your small business grow.10 In fact, it’s another no- or low-cost way of marketing your company and spreading the word about your products or services.
We suggest setting up pages on Facebook, Instagram, and LinkedIn. This way, your company has a presence on three of the major social media platforms.
But it’s not merely enough to have social media profiles—you need to post, too! Early on, do your best to educate yourself on each of the social media channels, the types of content you should post on them, and how often you should post in order to gain followers, drive engagement, and maximize your efficiency on the platforms.
If you’re on three or four different social media channels, then you should have some kind of social CRM or tool that consolidates all these conversations into one handy place so you don’t have to constantly toggle between different windows and tabs.
Create a unique, memorable experience around your product or service
One way to grow your small business through marketing is to create something unique about your brand experience.
Whether you offer a product or a service, attaching an unexpected, never-before-seen element to it can be effective in planting a memory of your company into the hearts and minds of consumers. Not only that, but customers and clients who are delighted by a unique experience you provided them will begin to tell your brand story to their friends and community, building awareness and intrigue for your small business.11
Although there are plenty of ways to create a unique and memorable experience to help your small business grow, a few quick and easy ones are:
- Give random coupons and deals to customers
- Get space on a local billboard and design a humorous ad
- Gamify the shopping experience at your store or restaurant
- Implement a standard way of doing things for all employees that customers and clients will notice and admire
- Give your place of business a specific look and feel (e.g., 60s design, 60s music, 60s television)
How to grow your small business through customer service
To experience growth and success through all stages of a business, one thing should always be operating at a top-notch level, and that’s your customer service.
Customer service is the make it or break it factor for many small businesses. Yes, big corporations can get away with shoddy customer service, but as a small business owner, you simply cannot.
These days, it only takes one bad experience for a customer to write a horrible review online that could jeopardize the livelihood of your company. It’s sad but true. That’s why it’s important to look at customer service—not as an annoying thing you have to do, but as a business-building asset you want to do.
At the end of the day, that’s the way you have to look at it because customer service can be transformative for your small business. Seriously, it can!
Don’t believe us? Well then, check out these ways you can use customer service to grow your small business:
Make a specific aspect of customer service your point of pride
At the end of the day, customer service is many things and comes in many forms. Yet one thing is true: great customer service is memorable and can help your small business experience significant growth.
One way to narrow your customer service focus and really generate some attention is to make just one aspect of it your focus.
Do you want to be known as the most responsive small business in your area? The fastest to respond? The friendliest with their responses?
Whichever route you choose, it’s important that you and your team agree upon one singular goal and start doing everything in your power to accomplish that. Before long, you’ll have five-star reviews online and people all around town talking about your customer service, which will only mean good things for your business.
Equip your employees with the best communications technology
If your small business relies on a more traditional customer service setup, then it’s imperative that your team is well-equipped with the best software and communication tools.
The last thing you or your customer service team needs to deal with are bandwidth issues and faulty tech when handling a customer call. Those moments are vital for showing your customers that you prioritize them—after all, they’re paying you, so they better be your top priority.
Having high-performing and reliable technological solutions in place gives your customer service reps the confidence to simply do what they do best: handle customer inquiries and complaints with patience and genuine care. If they’re able to do that, then your customers will be happy, and your small business will be another step ahead of the competition.
If you receive a lot of messages from customers over the phone, email, and digitally on social media—but still want to keep your tools streamlined—RingCentral has an Engage Digital platform that can merge these conversations:
For instance, if someone messages you on Facebook, then Tweets at you and/or messages you on Instagram, you can see all of those in one convenient thread:
Use proactive customer service to drive customer loyalty
If you can afford to do it, we recommend implementing a proactive customer service strategy.
With this, you’ll be doing things like actively reaching out to existing customers to get feedback on their experiences with your company (as opposed to waiting for them to come to you when they have problems). To encourage their responses, you can always offer these customers coupons or deals on their next purchase.
The key here is the “proactive” part—you have to reach out before problems arise. This way, you can build more positive moments into your customer experience.
By doing this, you’re also accomplishing a few different things:
- Showing customers you care about them
- Getting valuable feedback on your product, service, and brand
- Guaranteeing repeat purchases from at least some of these customers
- Likely inspiring some of these customers to tell their friends and family about your business
- Empowering your customer service agents to look at their jobs differently
It’s a totally transformative way of doing customer service and one that could prove decisively effective in growing your small business.
Ready to start growing your small business today?
We’re confident that if you take these actionable tips and start doing these things at your company, you’ll discover a new level of growth that you haven’t yet experienced at your small business.
Whether you begin with sales, marketing, or customer service, growth is always possible—it all comes down to you investing the time and effort into the things we’ve written about in this blog to move your company to the next growth stage of business.
And when you do, let us know. We’d love to hear about your success story.
2, 3, 5hbr.org/1983/05/the-five-stages-of-small-business-growth