small business growth

5 Stages of Small Businesses growth.

Small businesses vary widely in size and capacity for growth. They are characterized by independence of action, differing organizational structures, and varied management styles. Even during the best of times, starting a small business is tough. During the Covid-19 pandemic, it became an act for survival. While some businesses were closed amid the lockdowns, many have reopened their doors as consumer demand comes back.

Stages of growth

1. Existence– In the beginning, small business owners are most concerned about finding and signing up customers and being able to deliver their products and services. They are struggling with the question of whether they will get enough customers and deliver enough products and services to become a viable business, whether they can move from a test to be able to scale and whether they have the financial resources, cash, to meet all start-up requirements.

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2. Survival. Once you have a plan in place, it’s time to put it into action. During this time, you will test the viability of your big ideas as well as the effectiveness of your capabilities. This stage can represent a series of make-or-break moments for many small business owners. At this stage, businesses have proven their basic business plan and have an operating concern. The important point at this stage then is the relationship between revenues and expenses. Business owners are evaluating whether they can generate enough cash to break even and cover the repair or replacement of basic assets and whether they are able to finance growth in order to earn an economic return on assets and labor.

3. Success. Before you fully lean into a successful stage, take time to review and reset your existing business plan to match your new reality. Doing so can help you more easily determine what is necessary from both a financial and interpersonal perspective. This practice can also provide you with a better understanding of what you’ve achieved while helping you identify specific areas for improvement in your business model. The decision facing owners at this stage is whether to exploit the company’s accomplishments and   expand or keep the company stable and profitable, providing a base for alternative owner activities

4. Take-off. At this point in the life of your business, finding ways to increase your market share or revenue streams requires a very detailed understanding of your company’s strengths and what they’re worth on the open market. With that understanding in place, you can begin your evaluation of potential expansion routes and chart a course into new markets to reach new customers. Knowing that they are composed for growth, what owners face at this stage is how to grow quickly and how to finance their growth. Both operational and strategic planning is being actively done, with managers having responsibilities. In terms of cash, the owner is often faced with having to tolerate a high debt-equity ratio as well as aggressively manage cash flow and expense controls.


5. Resource Maturity. When your company reaches the maturity stage, it’s the result of a lot of hard work and perseverance, along with a business idea. Through strategic planning, you and your team created the perfect climate for success which helped you to evolve from start-up to industry standard. At this point, the company has the staff and financial resources to engage in detailed operational and strategic planning. It has a decentralized management structure with experienced, senior staff and all necessary systems are in place. It’s now for mature businesses that the importance of growth merges with the need for retention and other business interests.

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Although maturity is considered a final stage for business growth, it is not a finish line or a time to sit back, put the evolving strategies and planning aside, and coast along for years to come.

Mombasa, Kenya.

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