Stage 5: It’s Time to Get Emotional

Welcome to Stage 5 of Business Success

In The 7 Stages of Business Success , I map out the stages a firm needs to go through to become a large, sustainable, and profitable enterprise. In Stage 1, it’s time to create a strategic plan. In Stage 2, the owner begins running the organization and becomes an expert in their field. In Stage 3, it’s time to start delegating essential tasks to senior people, and in Stage 4, systems are created that allow the owner to scale their workforce.

By Stage 5, some owners get a little bored. If you’re an entrepreneur who has moved past the startup stage, you may want to see major changes. Perhaps you are looking for the next big idea to catapult your business into the big leagues. You may be looking for “game changers” or “revolutionary” concepts that might drive the kind of sales that allow you to create your dream company.

My advice is, “Don’t.” Don’t risk losing the things that made you successful in the first place. Don’t disrupt a reliable revenue stream. Don’t sacrifice dependability.

Instead, lean into Stage 5. This is the time to build on success by creating a?franchise-type system. In this stage, you’ll develop an authentic brand that has meaning and value that goes well beyond the scope of your product or service. So, how do you do that?

It’s Time to Get Emotional

When you reach Stage 5 of Business Success, it’s time to focus on meeting your customers'?emotional and psychological needs. As a result, your business will need to evolve in ways that go beyond what you make or what you do.

You’ll need to create emotional equity, and once you do that, you’ll be able to transition into a franchise-type system?that replicates an experience, again and again, no matter who is leading the company, no matter who is selling the product, and, for many companies, no matter where you do business.

Franchise-Type Business Successes

There is a long list of companies that added emotional equity to their offerings and were able to expand as a result. The stronger the emotional equity is, the further that equity can be stretched or applied to other divisions.

Whole Foods gained most of its value in Stage 5. The first location in Austin, TX, employed just 19 people when it opened in 1980. Fast forward to 2017, and Amazon purchased Whole Foods for $13.7 billion. They grew by creating a Whole Foods story and living a green, all-natural mission statement. Whole Foods developed an experience that they could recreate in location after location. Their emotional equity turned out to be worth billions.

Starbucks didn’t move into Stage 5 until Howard Schulz came on board in 1986 (to manage all 17 Starbucks locations). Schultz systematically developed a coffee culture designed to attract both hipsters and wannabes. They didn’t stop making coffee or abandon the Seattle culture. Instead, they applied it to store after store. That emotional equity catapulted Starbucks from a regional chain to a global brand with over 34,000 locations.

What about stores that don’t have retail outlets? The same principles apply to airlines (Southwest), hotels (Ritz Carlton), exercise equipment (Peloton), entertainment (Disney), packages (FedEx), personal care (Dollar Shave Club), and the list goes on.

Why Owners Love Stage 5

While it may sound like a lot of work to scale up in this way, one of the most magical aspects of Stage 5 is that the owner no longer needs to steer the ship every minute. At this stage, an owner can leave for a day (or a month) and find the business continues to run successfully without them at the helm.

I often use the example of a grocery store owner. Running one grocery store is a lot of work. The owner is usually on site all the time, putting out fires. But does the owner of 100 grocery stores work 100 times harder or 100 times longer? Absolutely not. In order to own 100 stores, owners must first create systems, put senior staff in place, and develop processes. They have created a brand that people like. They have customer loyalty. This means that the owner of 100 stores can work fewer hours than the owner of a single store.

Stage 5 also offers the chance for better margins. Once you create a business with incremental value, you no longer have to match the competition's low prices. And as you sell more and more, you’ll eventually have access to economies of scale.

Finally, Stage 5 allows your business to grow exponentially. With solid systems in place, a strong leadership staff, and well-defined incremental value, it's possible to expand distribution quickly, open new locations, or even bring in other owners.?How fast and how high is up to you.

Want to Learn More?

Want to find out more about The? 7 Stages of Small Business Success ? Take a look at my best-selling?book , listen to my?podcasts , or watch for me as a featured speaker at your next big business event. And if you want personalized coaching from an industry leader, contact?7 Stage Advisors ?for personal assessments, coaching, and recommendations.