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2 Small Business Growth Stages Where Entrepreneurs Get Stuck!

small business growth stages
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There are two small business growth stages where most entrepreneurs get stuck.  It’s crucial to know the signs, symptoms, and skills required to transcend the common stagnation dilemma.

The SBA has recorded that over three-quarters of small businesses were non employers–meaning they are self-employed without employees.  Businesses positively impact the economy by providing jobs, improving the skill level in the market, and by providing solutions to market demands.  When entrepreneurs don’t scale–because they don’t know how or because of bad experiences–it negatively impacts the economy.  Even worse, the stagnation in the business can contribute to their overall business failure.

There are problems that the market needs solved.  There are people on unemployment, and there are skills that could benefit local communities and the world, but all of these resources are stagnated when small businesses are stagnated in these two small business growth stages.

If you’re like to learn about the business growth stages in video, the full content of this article can be viewed in video format here:

How Knowing Growth Stages Compares to Parenting

When an excited young couple conceives, their usually very excited to know and understand each stage of the pregnancy.  They want to know:

  • When can we hear the heartbeat?
  • When can we know the gender?
  • and How can we track the growth?

These are proactive questions that enable them to know and understand what’s going on with their babies throughout the pregnancy.  Many parents go further to continue watching and learning about the growth stages of children even after their born, so they can know when to expect words, walking and so on.

Similarly, as a new business owner, you are inventing and raising an entity that you want to grow into an independent machine.  The process of inventing the machine and training it to operate independently from you is a demonstration of the business growth stages.

small business growth stagesThe Difference Between Businesses that Scale and Businesses that Stay Small

Every business starts out as a small business.  Some businesses stay small their entire lives, and others scale to become big businesses.  One major difference between the businesses that stay small and those that scale is the knowledge of the founder’s team.

The Challenges of Managing Business Growth

Going back to the example of parenting, can you imagine the challenge that would occur if you thought the baby was supposed to always stay in the infancy stage?

You’d worry yourself wondering why they’re growing taller, why they’re getting teeth, and why they’re beginning to say words.  Similarly, its’ important to know what to expect: the benefits and drawbacks in each stage of business, so you can know how to be prepared to shift and strategize in the midst of growth.

Many entrepreneurs will tell you “It’ll take something different to get from 1,000 to 100,000, something different to get from $100,000 to $1 million, and something different to get from $1 million to $1 billion”.  There are different skills that have to be developed to manage each stage of growth.  The leadership team that went with you to $100,000 may not be able to get you to $1 million, and as Entrepreneurs, we need to be conscious of the demands for the growing business.

As a baby goes from milk to solid food of different quantities, so also a business requires different skills, personnel, and technology to scale.

small business growth stagesThe Two Most Common Small Business Growth Stages Where Stagnation Occurs

In the E-Myth Revisited, Michael Gerber mentions the Infancy and Adolescence stages as the two most common growth stages for small businesses, and the stages where most businesses stop growing and die.  I’d like to share with you how to identify these two stages, the pros and drawbacks, and how to avoid stagnation in these stages, so you can go on to build a successful enterprise.

The Infancy Stage

When the business starts out, it is in the infancy stage.  This stage typically starts with alot of excitement because the entrepreneur sees the business as a vehicle for freedom.  They may be side hustling and looking for a way out of a dissatisfying job, they may be unemployed and are looking for a means to gain a stable cashflow, or they could be the risk-taker where they got “sick of working for someone else” and decided to jump into entrepreneurship.

Regardless of the way they got into it, the entrepreneur is required to balance a technical skill along with other skills, and often times, they don’t realize the necessity to balance several skills until they are in the business at this stage.  While they may be good cooks, cleaners, lawyers, doctors, or marketers, when they have their own business, their technical skill alone is not sufficient.  In fact, in business, the highest skilled is not always the one that is the most successful.

Gerber says in his book that entrepreneurs must balance being a technician, a manager, and an entrepreneur.  The Technician can do the job.  The manager can oversee and structure the job, and the entrepreneur can envision and strategize to scale the job and overall business.

Unfortunately, many small business owners get confined by the job they’ve created.  They are technicians and have not learned the other skills required to create a business rather than a job, and as a result, they either stay in the infancy stage until they’re burnt out, or they go into the adolescent stage.

small business growth stagesThe Adolescent Stage

The adolescent stage begins when the owner decides to get some help.  After being immersed in the workload, the owner has the “aha” moment where they realize if they hire they can scale and free themselves more.

Unfortunately, when they hire, they abdicate work rather than delegating work.  They hand off everything they don’t want to do, but don’t oversee, manage, teach, or guide.

In my previous article 10 Steps for How To Create a Job in your Company that doesn’t Exist, I wrote about how important it is to prototype the job, create training, make management metrics, then hire.  You don’t want to hire a person without metrics and direction in place to manage. Hiring is not a way to escape responsibility.

In his book, Michael Gerber gave the example of Sarah who hired her first employee named Harry.  She baked pies and opened a bakery because she loved to bake.  She learned in the infancy stage that she didn’t like the other entrepreneurial functions especially accounting and bookkeeping, so she hired Harry, a bookkeeper with 20 years of experience as her first employee.

Sounds like a perfect fit, right?

When Harry started working, she handed off her books to him, and the relationship developed.  When he wasn’t doing bookkeeping, he would help with baking, cleaning, and other things.  As time went on, Harry began hiring and growing the team.  Since Sarah was not giving direction, and in essence turned a blind eye to all of the entrepreneurial functions she didn’t want to do, the business became more and more chaotic.

People were not trained on how to perform to specific standards, customer service had gotten worse, customers were complaining, shipping and delivery qualities were not the same, and overall, Sarah felt like she lost control.  When she would see things being done wrong, rather than to teach (as a Manager would), she’d say “Let me fix this”, and so herself.

small business growth stagesThe Normal Escape from The Adolescent Stage

Unfortunately, most small businesses who go from the infancy stage into the adolescent stage either choose to:

  • Bear the chaos – Rather than firing the people, the entrepreneur chooses to simply keep the employees, but still intercepts them from working as much as they can.
  • Quit the business – They decide that starting or scaling a business just isn’t for them
  • They are forced to shut down – They run out of funds from poor management, not enough sales, or accounting oversight, so they are forced to shut down the business.
  • Or, scale back into the infancy stage – They decide that things were simpler when it was a team of one, so they get rid of their team and go back to being a solopreneur.

Since the infancy stages and the adolescent stages are so full of challenges, most small businesses don’t scale to their potential, and the solutions don’t reach the markets that needs them.

small business growth stages10 Steps For How Entrepreneurs can Transcend The Infancy and Adolescent Stages to Scale an Enterprise

 

Every entrepreneurs dream is to create more freedom in their lives.  Some people may also want to make impact or may have other reasons for becoming an entrepreneur, but no one wants to feel “stuck” in a job even if they’ve created it.

Freedom doesn’t come from creating a job for yourself or from creating a dependent team.  Freedom comes from creating jobs, creating systems that regulate the jobs, and training leaders.  Here are 10 recommended steps for scaling from infancy to adolescence and beyond.

1. Prototype from Startup and on

It’s important to think about job creation comparable to product creation because it’s very similar.  With product creation, you study the market, you find out the problems in the market, you create solutions to the market demands, you create instructions for using the product ,and you sell the product.  Similarly, with job prototyping, you want to study the market and your organization, decide what your company needs, create a clear and specific tasks, create an instruction manual, and sell (hire for) the job.

Prototyping suggests a fluidity that’s required in job creation.  With a prototype, you continue tweaking, updating, and improving the model until it is suitable for market.  In the same way, you have to continue tweaking the job, the training, and improve the model until it’s efficient for training others and scaling.

From the early phases of your business, you will want to begin prototyping jobs, creating training manuals, and conceptualizing how to make it easy for someone to come and perform the jobs you will need to have in your company.  Visualize an organization chart that would enable your business to operate at optimum levels, and begin prototyping to make filling the positions easier.

2. Create Training Manuals

Training systems are going to be vital for scaling.  You can create training using a membership site, a binder, Youtube videos, or however you wish.  It’s important to have a formal process that says, “Even if you’ve worked this job for 20 years, this is how we do it here…”.

3. Prepare to Become a Teacher before Hiring

When you hire, you are still responsible for the outcomes of the tasks you’ve delegated, therefore it’s important to provide instructions, to be clear about expected outcomes, to follow up, and to teach.  Even seasoned industry professionals who are hired into a new position should ask questions because they should want to perform work in a way that’s satisfactory to their new leader.  As a leader, you’ll be expected to be a teacher.

small business growth stages4. Read and Study from Great Leaders

There are great leaders to watch, whether from history or from our current day.  There are books by John Maxwell, Michael Hyatt, Youtubers channels like Patrick Bet David, or courses at Udemy that can help you learn leadership skills.  It’s important to learn leadership skills, study great leaders, and apply new leadership skills into your organization.

5. Practice Leadership in Various Circumstances

You’d be surprised at all of the ways you can practice leadership, so when you become a leader in your organization, it’s not such an uncomfortable experience.  You can pay closer to how your leading at home with your family.  Your family is the perfect classroom because it’s where most people regress into whatever habits they may have.

If you can change your habits when no one’s looking, it’s likely that you’ve actually redesigned your response to certain triggers.  Family is the best classroom for improving leadership, whether as an older sibling, a spouse, a parent, or even as a child, you can lead and encourage parents and others!

You can volunteer at a local church or charity to lead certain functions they may need help with.  You may have to dedicate time there before earning a leadership position, however, once the leadership position is earned, it can be great practice for how to lead other people.

There are so many opportunities to practice leadership if you simply keep your eyes open for them.  Leadership is earned authority, so as your relationships grow (with friends, potential customers, clients, etc.), you can earn leadership precedence even without a title.

small business growth stages6. Make Time For Technical Work, Training, and Management a Priority

Successful entrepreneurs are known for having away time to strategize.  In his book, 7 Habits of Highly Effective People, Stephen Covey calls strategizing and planning a quadrant two activity that successful people use to minimize abrupt life situations and to set the trajectory of their futures.

Consistent with what Stephen Covey said, if we want to be successful entrepreneurs, we need to balance out time with technical work and strategic work.  Training, management, and planning are all strategic activities that we need to do and lead our organizations to do.

7. Delegate rather than Abdicate

Delegating is sharing responsibility for a task with someone else whereas abdicating is renouncing or relinquishing the reign in certain areas.  Employees should be delegated tasks rather than abdicated tasks.

We need to maintain a role of accountability, training, and oversight even after hiring professionals.  As leaders are trained and understand the organization better, the requirement for oversight becomes less and less.

8. Mastermind and Network to Keep Fresh Ideas on Scaling

We are social beings, and we learn from the mistakes and wins of others.  As entrepreneurs (especially scaling entrepreneurs), we are the minority.  It’s nice to have other people who have similar situations to share what they may be doing that’s working, to exchange ideas with, and to grow together.  A mastermind could help you to overcome many situations where you may otherwise feel stuck alone.

small business growth stages9. Hire Slow and Fire Fast

Hiring is not a process that should be rushed–it’s like adopting family members.  Hiring is entering into a committed relationship that can greatly affect the growing organization in a positive or negative way.  When you hire, you want to take your time.

In contrast, when you notice that the person is not a good fit for the organization (even if they were at one point), you have to fire fast.  You don’t want bad vibes to permeate the culture, and you also don’t want to slow the growth of the company by keeping people who are not appropriate for the growth.

10. Be Patient and Set Realistic Goals for Performance

Training takes time.  Getting to know one another takes time.  Creating complimentary work collaborations takes time.  Make sure to be patient as the team merges and set realistic goals for performance.  Take a look at some training programs that are rendering great results and see the allowed length for acclimation.  Evaluate whether you can tweak training processes to improve efficiency.  Test and improve.

Final Words on Small Business Growth Stages

The goal of this article was to show two common small business growth stages where many people get stuck and ways you can transcend them. If you have questions or concerns about this, don’t hesistate to leave them in the comments section.  I’d love to help you out!

If you are ready to start or scale your business, check out my free e-course.  It’s a framework to help you grow from idea to enterprise (if you want to go that far). Check out the free e-course here.

Now, it’s Your Turn…

Are you in either of the two small business growth stages?  Have you had experiences that have made you think about staying in either of these stages?  What tips would you share with others to help them scale past the infancy or adolescent stages in business?  Leave your comments, questions, and feedback below.

small business growth stages
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