The 4 Critical Rules for the 7 Stages of Growth

Is It Possible to Predict Your Company’s Future?

You are no different from the many hundreds of CEOs and/or executive leaders I have talked to across the country. The fact is, as you encounter the demanding issues associated with your company’s expansion or contraction there is a huge percentage of the guesswork going on. The question is: “If there were a way to predict those challenging issues before they occur, wouldn’t your decision-making improve? Wouldn’t you ultimately be a more effective leader for your company, now and into the future?” I believe you would be. Keep reading. I’ll show you why.

The Best of Us Dodge Bullets, Every Day

Whether you are a start-up or a business that’s been around a while, the unvarnished truth is: we all dodge bullets of uncertainty on a day-to-day basis. Anyone who tells you otherwise, they are either deluded or not running a company. The very best of us wrestle with our company’s obstacles in order to survive and grow our enterprises.

The Buck Stops Here

Remember. Whether your company is struggling or flourishing, it doesn’t matter. The issues don’t go away. You have to continue to manage resources, expand sales, struggle with improving financial performance and continue to crack the code to improving employee performance. And all of this, every single decision made and every mistake or success logged, has one person to look to each and every time: You. The CEO. The Business Owner. The Gatekeeper.

Growth Research Uncovers Why Companies Fail

In an ongoing national research study focused on attempting to understand and decipher the patterns, behavior and characteristics of growth in entrepreneurial enterprises, it became apparent that most organizations struggle and fail with the challenges of growth as a result of three issues:

  1. They don’t have a sustainable profit model.
  2. They aren’t able to create a healthy work community that produces the level of enthusiasm, focus and intensity required for extraordinary staff performance
  3. They don’t have a model for which they can understand and predict the growth of their organization

Most companies in the study were operating in a state of ‘figuring it out as they go’. But the facts about entrepreneurial enterprises are still shocking:

  1. Why is it that after five years only 20 out of 100 companies are still in business?
  2. Or why, after 10 years, there are only four companies left from the original 100?
  3. All this framed inside the fact that 92% of the workforce in this country is employed by small businesses.
  4. And why do the companies that do survive their first three years of business often go out of business within the following two years as a result of growing their businesses beyond their capabilities?

Walking the Line Between Chaos and Organizational Equilibrium

Unless the individual running the company has been down this road numerous times before, the research points to the fact that without a clear model for understanding the growth of a company most entrepreneurs don’t have the level of predictability necessary to survive the game.

And even if one has been down the road before, each new company venture produces its own patterns and personality that create unique challenges very likely not seen before by the operator.

Role of Complexity in Your Company

Why are some companies able to successfully navigate the severe challenges associated with growing an enterprise and some aren’t? Born from the understanding of the role complexity plays in the growth of an enterprise, James Fischer, a researcher and growth consultant, discovered that every company goes through very specific stages of growth determined by the complexity of the organization. One of the greatest contributors to that complexity is the human being.

Fischer discovered a unique phenomenon present in all companies and it’s the path in which an organization walks, however imperfectly, balanced between utter chaos and organizational equilibrium. In a research study, 7 Stages of Growth were identified that entrepreneurial companies move through while shifting and adjusting to the various rules and regulations that go along with these different Stages of Growth.

The 7 Stages of Growth

Your company, if it continues onward and succeeds and flourishes, will very likely have started at Stage 1 and eventually will go through Stage 7 in this Growth Model.
The 7 Stages of Growth are defined as the following:

In this model, you determine the Stage of Growth you are in by counting the number of employees you have. By using the 7 Stages of Growth, a business model that has helped many companies understand and predict the effect growth has on a business, a business owner can create a sustainable profit model, create a work community that produces a high level of staff satisfaction and understands and predict the growth of their organization. This is a tool that will help you become one of the 20 companies that survive those first five years!

The 4 Rules that Govern the 7 Stages of Growth

Laurie Taylor, president of FlashPoint! has spent the last 16 years helping CEOs understand the challenges associated with their specific stage of growth. As a business owner navigates their own growth curve, there are 4 critical rules that are helpful in walking that fine line between chaos and equilibrium.

 

  1. The movement from one stage of growth to another begins as soon as you land in any stage of growth
  2. What you don’t get done in a specific stage of growth does not go away
  3. Time will make a difference
  4. If you aren’t growing, you are dying

Rule #1:

The movement from one stage of growth to another begins as soon as you land in any stage of growth.

 

You don’t simply BECOME a Stage 2 company overnight. You begin to be a Stage 2 company as soon as you enter Stage 1.

Think of the Stages of Growth as a Continuum. You are moving along this continuum based on your strategic plan.

If you are a Stage 1 company today and in 18 months plan to have 18 employees on board, NOW is the time to plan to become a Stage 2 company.

This is what sets the 7 Stages of Growth apart from other models. A CEO can actually PREDICT when they will move into another stage of growth and be able to adjust to the needs of that stage of growth BEFORE they arrive.

Rule #2:

What you don’t get done in a specific stage of growth DOES NOT GO AWAY.

 

The challenges for each stage of growth need to get your attention at some level while in that stage of growth.

Sometimes you can blow through a stage of growth very quickly. Either outside funding is acquired or you acquire another company which adds more employees immediately to your overall company.

You still need to make sure you are paying attention to the needs of your current stage of growth.

NOT getting specific People, Process and Profit/Revenue challenges accomplished during your current stage of growth will simply put harder demands on you as a leader in the next stage of growth.

Remember the complexity of an organization will always extract its due.

Never be fooled. There is always a price to pay for rapid growth.

Rule #3:

Time will make a difference.

 

If you are a Stage 2 company, with 18 employees and you have been a Stage 2 company with 18 employees for 15 years, your challenges may be the challenges of a Stage 3, 4 or 5 company.

Many companies choose to stay at a certain size. They prefer to grow in other dimensions, not in employees. This happens much more frequently in Stages 1 and 2.

But a company can get to be a Stage 5 company and maintain 58 – 95 employees with little effort depending upon their strategic focus and their ability to manage expectations.

The thinking is that if you have been a Stage 5 company for 10 to 15 years, Improving Sales MAY NOT be one of your current challenges.

(Note: One of the 5 top challenges for a Stage 5 company is Improving Sales)

The 7 Stages of Growth model identifies 27 specific business challenges a company will encounter as it grows. The model identifies the top 5 challenges critical to pay attention to in each stage of growth. A company that has been in one stage of growth for 5 years or more, should look ahead to the challenges of the stages of growth AHEAD of them to continue to manage growth in a proactive way.

In other words, you can’t necessarily rest on your laurels.

And you do need to check in to make sure your current challenges have been addressed before you assume they have.

Time can make a difference because slower growth is easier to manage. But simply assuming that you have ‘taken care of business’ isn’t the same thing as walking through the exercise for each of your current challenges.

Rule #4:

If you aren’t growing, you are dying.

 

To the point above, something has to continue to grow and change in your organization to keep it fresh.

The concept behind the stages of growth is similar to growth in Nature.

Nature has its own mechanisms to stir up the pot. A static condition in Nature, just as in a business enterprise, more likely communicates a form of imminent death or change.

As human beings, we have a tendency to gravitate toward a state of equilibrium because it is safe and understandable.

But in reality, if we stay in that state too long it actually begins to result in slowly causing a dying away, just as it does in Nature.

So, the answer to the question, Do We Need to Grow is YES.

Even in a downturn economy when revenues are shrinking and profits melting away, there are always areas of improvement a company can focus on and improvement can be defined as growth. The challenge for business owners in any stage of growth is to make sure you are defining growth for your company and not letting growth define you.

Clarity and Intention through the 7 Stages of Growth

When you begin to understand what your company needs in its current stage of growth and calibrate the impact the hidden forces influencing its performance have, you step into what we call the Growth Curve zone. This is the place where the business owner is prepared to better meet the issues they confront on a day-to-day basis. This is the place where clarity and intention exist outside traditional business thinking.