Business Growth Stage 2: Early Growth
The primary objective of the Early Growth Stage is to create customer demand and drive that demand into sales. This will require the company to begin scaling its sales and marketing efforts, as well as its ability to deliver the product or service.
The challenges of growing and managing a business are fundamentally different from those of starting a new venture. To support a growing number of customers, the company must begin to add key resources and develop basic operational capabilities and an initial infrastructure.
This means adding the resources needed for growth, including financial, people, materials, technology, equipment, information, suppliers, distribution channels, partnerships and facilities. It also means developing the day-to-day-functional systems needed to run the business. These include all the basic systems, like those used to support hiring, sales, marketing, accounting, operations, information, customer service, and all other basic functional systems.
Early Growth stage companies are all about creating customer demand and driving that demand into sales.
This requires the company to begin scaling its sales and marketing efforts, as well as its ability to deliver the product or service.
But, a company entering this stage is still in a somewhat vulnerable position. It may have a handful of early customers, but broader market acceptance is still unproven. The organization lacks scale. Its infrastructure is not developed. And it has other weaknesses that are normal for a young company.
The challenges of growing and managing a business are fundamentally different from those of starting a new venture. Growth creates its own and unique problems.
As sales increase, so will the number of customers, number of employees, and so on. A young company can quickly become overwhelmed by it’s own growth and stumble.
Adding lots of sales revenue is great. But, you have to also be able to manage the organizational issues that come up as the company begins to grow.
As sales increase, you have to build the infrastructure necessary to support a growing customer base. This means adding the resources needed to grow, including money, people, technology, and space.
It also means developing the day-to-day-operational systems needed to run the business. These include all the basic systems, like hiring, sales, marketing, accounting, information, customer service and all other basic operational systems.
Even if all of this is done well, there comes a point where it is extremely difficult to continuously add more revenue, more customers and more people without experiencing more frequent and severe problems.
These organizational growing pains are normal, but can’t be ignored.
When you begin to experience increasing organizational problems you need to recognize that they are warning signs that it is time to begin the transition to Stage 3, the Rapid Growth Stage.