Question

Q1- discuss Stages of small business growth:

• Existence stage:
• Survival stage:
• Success disengagement.
• Takeoff stage.
• Resource maturity stage.

Answer 1

Following are the stages of small business growth:

Stage I: Existence:- During this stage, the main issue concerning the business is to acquire customers and delivering the value to them. The organisational structure remains simple and all the decision-making is done by the owner. Systems and formal planning are nowhere in sight. The strategy here is to keep the boat sailing and exist. Those companies that pass through the challenges of the first stage of survival become Stage 2 enterprises.

Stage II: Survival:- The businesses that reach this stage only enmeshes and exhibit that the idea of the business is workable. At this stage, the business acquires enough customers and delivers them value to retain them. The challenge, therefore, shifts from simple existence to the relationship and correlation between revenues and operating expenses. The firm moves in size and generates enough revenues which make it go the Stage III.

Stage III: Success and Success disengagement:- The main issues here is whether to exploit the growth and therefore expand or to maintain the status quo to ensure stability. The main question concerning the enterprise is whether to use the present growth to stimulate additional growth which gives rise to another sub-stage called a Substage III-G Company (Growth) or maintain the current status quo to ensure stability and profitability leading to another sub-stage called Substage III-D company(Disengagement). If the company successful attains the Substage III-G, then it will proceed and march towards the stage IV.

Stage IV: Take-Off:- The main issues at this stage is how to grow and expand rapidly and what are the sources to support that growth. The owner delves into the cash-flow which is needed to support the growth and the level of delegation needed.

Stage V: Resource Maturity:- The main issues concerning the enterprise is how to consolidate and stabilise the gains and cash flow thanks to the rapid growth and how to retain the identity of small enterprises offering flexibility, agility, and that of entrepreneurial spirit. The aim is to eliminate redundancies and inefficiencies. The enterprise engages in strategic planning. The management style remains highly decentralised and adequately staffed by the right personnel. There is a huge influx of systems and processes. The owner and enterprise are treated as separate entities.