Business Article

How Evolved Is Your Business?
(The Seven Stages of a Business)

By Pam Butterfield

Stage Four: Building Structures that Last

The “Structures” Stage is about creating a business that goes well beyond the personality of the founder.

Founder’s mindset: The “adrenaline rush” fades as the business settles into a groove. This may take a toll on owners who are addicted to the pace of earlier Stages. In fact, the owner’s attention may start to wander, in search of new challenges. The founder may also resist the company’s need for institutionalized management systems and formalized teams.

Management practices: Companies by this time may have more formalized roles and responsibilities, with key tasks assigned to operating managers and employees. Teams are also taking shape nicely, but they may or may not have strong internal dynamics.

Planning mechanisms: At this stage, companies often adopt formal business planning, along with processes for tracking progress, comparing actual performance against projected performance, and revising plans when variances occur.

Financial considerations: Growing a business is expensive and thus management tries to balance the rate of growth with the supply of cash. Outsourcing manufacturing or service delivery may become an option at this stage.

Products and services: Companies now become more sophisticated about market research. They conduct formal research to identify new products and markets, extend current offerings, develop new delivery channels, analyze the competition, form strategic alliances, and retire current aspects of the business that no longer support success.

Key challenges at the boundary: To move into the next Stage, business owners must look upward and outward. They must look beyond their own four walls at what is happening with their customers, competition, and industry. Today’s strengths and success does not ensure tomorrow’s viability.

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