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The Five Stages of a Business

Guest post by Ed Falkowitz, Certified Mentor, SCORE – Washington DC

Creating an outstanding business is not a goal but a fascinating journey. Like most journeys, it follows a defined path. If you don’t respect where you are in your journey, you get lost.

I find there are five stages in the journey. Follow your roadmap. DON’T GET LOST.

Stage 1: Formulation

In this stage, you do all your thinking and planning about your business. You put together business plans, budgets, marketing plans, recruiting plans, economic forecasts, etc.

You commit to paper everything that you can possibly think of about your business. You basically do a brain dump.

Stage 2: Concentration

Concentration is characterized by lots of energy and activity going out, but very little coming in. Stage 2 involves expending a lot of energy with very little to show for it.

For every ten actions you take, only one produces a result. You’re not spinning your wheels because all your actions are on purpose and designed to get your business up and running.

Stage 3: Momentum

You are still applying energy and effort and now you’re beginning to see results. The business is starting to move. It’s picking up steam.

The business is moving faster and faster, and it’s getting easier and easier. Instead of ten actions to produce one result, it’s 7 to 1, then 5 to 1, then 3 to 1, and so on.

You’re making phone calls and more of them are returned. You’re putting out advertising and more people are responding. You’re going on sales calls and closing more sales. You can feel the momentum building.

Stage 4: Stability

Next, your business becomes fairly stable and predictable. You know that if you do certain things, customers will show up. Ads produce a steady stream of clients, cold calling or prospecting gets so much business, etc.

Your conversion rates are steady and predictable. It’s one action out, one result in.

Stage 5: Breakthrough

If you reach this stage (and I say if because in my experience few businesses ever get here) then your business takes off, often in unpredictable ways. The phone is ringing off the hook and you’ve got so many client appointments you can’t keep track of them.

You have to generate new structures and systems to handle and manage it all. It’s almost like going back into formulation again, because your business is now very different than the one you conceived back in Stage 1.

Generally speaking, these stages are sequential. If you skip over one, you usually pay the price somewhere down the road. If you don’t formulate and go right into concentration, you’ve got a lot of activity with no direction or purpose. If you don’t do the legwork of concentration, you’ll miss out on valuable learning experiences and insights that only come from hard work and perseverance.

I’ve seen clients go from momentum to breakthrough and they get so wrapped up in servicing those clients that they stop prospecting and lead generating. When things calm down, there’s no business and they have to go back to concentration again and it takes them 2-3 months to get back to building a stable business.

Follow the model one stage at a time and your journey will be successful.

About the Author

Ed Falkowitz  is an executive leader with over 40 years’ experience committed to supporting your business vision. Ed centers on performance and efficiency through strategic financial analysis and developing business and cash management solutions that capitalize on your competitive advantage.  He specializes in establishing alliances to deliver defined goals.  Startups and turnarounds are a particular passion as is working with committed and dedicated entrepreneurs.

Ed currently provides volunteer support for the Smithsonian Institution and serves as a business mentor with SCORE. Request an appointment with Ed.