“Growth” and “Profits” are the two major objectives any business of any type (B2B OR B2C) in any domain looks to achieve, but did you know that there are various stages in the growth of a business? We shall have a detailed look at them in this article.
The various stages in the growth of a business
Every mighty river once started as a small stream. Similarly, every Fortune 500 company you know today was once upon a time, a startup. Entrepreneurs will face challenges and stiff competition when they found and run their startup but if they believe in their business ideas and have sound marketing strategies to implement them, they will beat the odds and become successful.
These are the five stages of growth of a startup:
Having a business idea that is the need of the hour and practical
This is the “Eureka!” moment of any entrepreneur. Every business is based on a business idea. The idea can be something unique (like the brainchild of the entrepreneur) or it can be something that is already being implemented in the market by others.
It is advisable for entrepreneurs to come up with a unique idea for a product or service rather than offer the same products or services that other firms are offering. Copying other firms means that a startup is sure to face cut-throat competition and operational challenges that make its chance of succeeding, slim.
The product or service that an entrepreneur is about to offer should not be available in the market or at least not commonly available in the market. The product or service that an entrepreneur is about to offer should be the “need of the hour” in the market. If it is so then the sales of the product or service will skyrocket instantly.
For example, when Reliance introduced the first cell phones in India (in the late 1990s) with a call rate of only about 50 paise per minute, the sales of Reliance cell phones skyrocketed instantly. They replaced old landlines in many households. It was sensational news that was beamed in all the news channels.
The cost of one Reliance cell phone (one unit) was only Rs. 500/-. One could also send SMSs and play primitive mobile games in the then newly launched Reliance cell phones.
Reliance cell phones became so popular and commonplace that even the average beggar on the road began using them! It was so hilarious and figured in “Just Like That” sections of popular English newspapers.
Another example would be the food delivery service started by Swiggy in 2014. Swiggy was the first company of its kind and it offers a service convenient for people. As a result, Swiggy has grown from a startup to an MNC that is presently valued at US $3.6 billion in just six years!
Founding the startup
The startup that an entrepreneur founds should be 100% legal. It should have a Registration Certificate (RC), Company Index Number (CIN), Company Seal, Company Trademark, License to operate, Auditory Clearance amongst other required legal documents, and acceptable operating procedures.
If a firm does not have all the required legal documents or acceptable operating procedures (illegal operations like child labor), it can be put to shame (like reports in newspapers) and fined during audits.
Once a firm loses its reputation, it can seldom again be successful in the market. So entrepreneurs have to be very careful regarding their firms’ legality and the methods used in operations.
Entrepreneurs also have to carefully plan their advertising and operational budgets. Overspending without a sound business strategy in mind will cause the downfall of a startup. A startup’s top management has to treat its employees well to get the maximum benefit out of them.
The startup’s sales and marketing teams especially have to be in high spirits to achieve high levels of sales and profits. This does not mean that the production or technical support teams can be ill-treated. Every employee must be treated well and motivated satisfactorily for him or her to be the most productive.
The startup has to maintain its assets, liabilities, debentures, balance sheets, and operational database in the most correct and up-to-date conditions to clear audits.
Business expansion and growth
After obtaining all the legal documents and clearing audits, a startup should look to enhance its presence in the market. It should make its products or services available in every village, town, and city in the country it’s operating in. Only then brand awareness will be created and the startup’s business will improve.
MNCs like Airtel and Tata Sky boast that their services are available in every village, town, and city in India. It’s one reason they became popular. Before scaling, a startup should properly revise its business model and revenue model.
A startup’s business model should be adequate to accommodate the startup’s expansion. If a startup does not hire enough employees and does not revise its business model but expands throughout the country, its expansion will ‘burst like a bubble’.
The startup will encounter operational hurdles and will be forced to scale down its operations or even shut down entirely.
The startup’s entrepreneur need not brainstorm over designing an adequate business model for his expanding startup. He can hire qualified professionals to do the job or he can outsource the job to specialist firms like Accenture or MaRS.
Entrepreneurs need to streamline their business models and business processes once their startup grows to a certain extent to maximize operational efficiency and profits.
They need to identify which products or business tactics give them the most revenue and then look for a cost-effective way to grow them. Business tactics to outperform the startup’s competitors are usually planned out at the growth phase of the startup.
Maturity or maintenance stage
This is the stage when a firm (no longer a startup) looks to merge its business. It’s not enough just to grow your business, you must maintain it to derive sustained fat profits. This stage of a business is analogous to a goalkeeper defending a goal.
A lot of established firms and startups will look to re-capture their lost market share and customer base via any possible business tactics. You must not allow all that.
You can keep your subscribers happy by giving discounts on your service plans (like Reliance Jio) or you can keep your distributors and customers happy by giving them scheme benefits and loyalty bonuses respectively (like Starbucks, Amazon Prime, Reliance Jio, TOI, etcetera).
You must also look to constantly innovate and constantly improve your products or service to sustain your customers’ interests. For example, Cadbury, despite being the world’s most popular chocolate brand, constantly innovates and releases new flavors of Cadbury chocolate each year. There’s now a Cadbury chocolate for every type of person, budget, and occasion.
Ingenious business growth strategies employed by entrepreneurs
Expanding a startup requires the employment of sound business and marketing strategies. These are some common business strategies that entrepreneurs use to expand their startups.
Understanding their customers
Entrepreneurs make use of techniques like Data Mining, Data Warehousing, Database Marketing, Big Data Analysis, etcetera to generate sales reports and analyze their customers’ buying trends, tastes, and preferences.
Understanding the above parameters will enable firms to streamline their business strategies and generate more sales, leads, and profits. Customers are the focal point of any business. Without them, businesses cannot exist or function. Understanding your customers thoroughly is vital to run your business profitable.
Living up to their reputation/expectations
The only reason people become customers of a firm is to get some products or services from them. Naturally, people will have some expectations regarding the quality of products or services received.
As long as a firm maintains quality in its products or services, it will be a hit among the masses, but the moment it dips, the firm’s popularity and business volume will ebb away. People will not accept sub-standard products or services, even at cheap rates.
For example, Onida was quite a popular TV brand in the early 1990s, but the subsequent TV models produced by Onida were defective and burst. Hence, people lost trust in the brand, its reputation plummeted, and the company was shut down a few years later.
Maintaining their customer base and gaining new customers
In business, it’s equally important to maintain your customer base as it is to acquire new customers. You can keep your customers happy by giving them products or services at discounted rates, loyalty bonuses, wishing them on their birthdays, keeping in touch with them via e-mailed newsletters, and informing them about promotional events and product demo events.
Maintaining a strong social media presence
A social media page speaks volumes about a company’s status, current undertakings, quality of service, public image, etcetera. Having a well-constructed social media page is vital to maintain your firm’s reputation and social image.
You can get customer feedback on your social media page and address your customers’ complaints and queries. You can also join your competitors’ forums/groups and check what people are saying about your competitors.
If there is something good about your competitors, you can implement the same on your brands or services to improve their quality. As far as learning is concerned, one should never consider rivalry or competition.
Attending industry seminars and hosting product demos
In business, it’s important to stay up-to-date by attending industry seminars and webinars. There’s always a more talented and more experienced person out there willing to share his or her knowledge of your industry. So kindly attend seminars and webinars to gain an understanding of your industry’s trends and people’s demands.
Doing so will make you deliver exactly what your customers want and will thereby enhance your profits. Staying up-to-date with people’s tastes and preferences will also enhance the reputation and popularity of your company.
Have a flexible and adaptable business strategy
People’s tastes, demands, and preferences keep on changing every few years. The business strategy that worked for you when your firm was a startup need not work for you when your firm becomes an MNC.
Also, the products were in demand a few years back, may not be in demand a few years forth. Therefore, you must change your business models and strategies to suit the current trends and demands.
Refine your business models and strategies and don’t be afraid to experiment with them. Prior experiments that were conducted made the world’s greatest inventions.
What is the growth mindset of entrepreneurs these days?
Some entrepreneurs these days found a startup to sell it to an MNC later on. That mindset is a recipe for disaster. You can never run a startup successfully if you don’t believe in your idea and are not interested in your industry or domain.
Entrepreneurship should be treated as a once-in-a-lifetime venture and not just like a hobby or another job. Successful entrepreneurs have the following outstanding qualities and mindset in them:
- Entrepreneurs believe in their ideas and will not stop implementing them even in the wake of adversities or challenging business environments. Their ideas eventually grow to become revolutionary technologies or business services.
- Entrepreneurs always learn from their mistakes and come up with better business models and strategies the next time. They are also not afraid to experiment with existing business models and strategies., existing business models and strategies need to be modified to suit changing demands and trends.
- Entrepreneurs are hard workers. Being an entrepreneur is not about living a luxurious lifestyle or being intelligent. It’s about doing the hard work required to grow your startup. Remember, a genius is 99% sweat and only 1% brains.
If you think you have the above qualities, become an entrepreneur! There’s no better time to become an entrepreneur than now due to PM Modi’s ‘Startup India, Stand up India’ scheme.
Your startup can enjoy a lot of tax holidays and tax concessions among other benefits under the scheme if you found a company now.
Read other Article: Top 4 business growth strategies for business growth and development