5 Stages of Business Development – What does “get to the next level” mean?

Before we go on to step 2 of “If you want to take your business to the next level do these 3 things”, let me take time to explain what “the next level” means.

The dictionary describes “the next level” to mean, “Significantly more advanced, better, or more extreme”. This gives us a basic idea of what the next level means, but it doesn’t give us something to actually achieve to say we’ve reached the next level.?

One solution might be to examine what is taking place in your business at a point in time, writing down the details, and then writing down how we want it to change to make it better or more advanced. That change could be “the next level” for us at that place in time. One example of this might be financially. If our business is making $1mil a year in revenue and we decide the next year we want to get it to $2mil and then we lay out all the things that must be achieved to get it there, then $2mil might be “the next level” in this case.

Another explanation of “the next level” can be derived from 5 different stages of business development.?

Stage 1: Survival –?feast or famine cycle – owner?is?the business

Stage 2:?Team building – business develops regular paying customers - owner becomes a manager of people

Stage 3:?Systemization – beginning a shift away from owner centricity - owner takes on a role of manager of managers

Stage 4:?Leadership – owner moves away from daily operations - owner becomes a leader of managers

Stage 5:?The business becomes an asset

Stage 1?-?Survival

The business is?immature?and?characterized by?the?battle cry of sell, sell, sell then make, make, make. It’s the?feast or famine cycle. It comprises of?finding work and then doing?the?work.? There is no consistency in the flow of leads or sales, so it’s very stressful and chaotic.?Some?businesses manage to survive?in?this stage?but very few break?through it and get to the next stage. (Statistics tell us that over 50% of all startups fail within 5 years.) We often find businesses 15 to 20 years in but still in this stage.?

This stage is characterized with challenges such as cash flow, sales, limited capital,?a faulty infrastructure or business model, and marketing initiatives?that don’t bring the results we hoped for.

Owner’ journey?- The owner is involved in all areas of the business and makes most of the decisions.?If your business is to move up the five stages of maturity, you?and your role will?have to change as well. You probably started off as?someone who is doing it all; that is, being the technician, doing the selling, doing the making, and scrambling to manage the day-to-day work.?Even though you’re probably working more than you’ve ever worked in your life you’ll have to make time to learn the “art of business”. This includes team building, time management, systemization, leadership development, management techniques, goal setting, and so on. Even though you want to stay active in your core profession and become a leader in the field, if you’re going to grow your business and build it into an asset, you’ll have to take on more and more entrepreneur skills. This is why a majority of businesses never leave this stage. The owner doesn’t want to grow as an entrepreneur and only wants to stay true to their core. There’s nothing wrong with that but it does limit the future of the enterprise.

Stage 2 – Team building

This level is achieved when the customers are willing to pay for what the business offers on a consistent basis. In this stage, the business?probably?still relies?on the owner working long and hard hours every day.

Hopefully, part of these long hours will include time for the owner to learn to delegate and narrow their scope of direct involvement by building teams and working with the teams and preferably leaders of the teams. The owner needs to make sure the teams have a solid understanding of the company vision, mission and culture. This will lead to a buy-in on the team member’s side, leading to better communication, performance and productivity.?

Owner’s journey:?At a certain point, you hired people, or maybe you already had some people, and you learned ? that you had to become a?“manager of people”, so you have to learn new skills. This means you can grow the business a little bit more.?The owner will need to develop their own alignment between artisan, owner duties, and leadership duties which is usually a challenge.?

Stage 3?- Systemization

The critical shift comes when the business has reached the stage of systemization. It no longer relies solely on the hard work of the owner because the systems are developed to the point where they can? start to take over and create value. This is the shift that most small businesses never make.

Some of the common challenges?that take place during this stage are:?the?owner?having difficulty?letting go?of the reigns,?training of staff,?development of executives,?internal?communications,?determining and defining the processes and procedures,?and a lack of?predictable financials.

Owner’ journey:?As the number of people increases, however, the natural limit of what you can do to manage all of them hits you in the face, and you have to learn a new set of skills,?to become a?“manager of managers”, and empower other people to step up and help do part of?the?management job.?To do this an owner needs to establish departments with managers to lead them.?It is important for the owner to establish priorities, refine the company vision, build company culture, set KPIs, and so on.

Stage 4:?Leadership

Once the systems are developed to a certain point, the next stage of maturity is characterized by the development of its people. They need to be educated, trained, coached, and developed so they can operate the systems at a higher level.

Eventually, you’ll reach a point where you have to learn yet another set of skills, and that is to become a?“leader of managers”. You will no longer manage day to day, but instead focus solely on leading and developing the managers.

Some common challenges?that take place during this stage are?expansion, culture, marketplace adaption,?and making sure your?exit?is planned.??

Owner’?journey:?The owner’s role becomes more?outward-facing. You’re concentrating on things such as bringing more business into the company, building networks, working with a?board,?investor relationships,?expansion,?refiningand?communicating vision, and?building culture.

Stage 5:?Asset

If a business matures through these stages successfully, the result is the creation of an asset; something of value. That is where you reach what is called optionality, which means you have choices about what comes next. You can sell the business, scale it, or lifestyle it.?

You can sell the business and go on to do whatever you want to do next. You can scale it, which is mainly taking what you have done and repeating it over and over again to multiply the results. A franchise is a good example of that approach. Or you can?lifestyle it. If you had a business that only required you to work two days a week, and it yielded a predictable profit, why would you? want to sell that? You could just keep it and enjoy your time for other things aside from business.

Now that you know what is meant by “get to the next level”, let’s go on to “If you want to take your business to the next level do these 3 things”.

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