While it’s true that every business is different from the next – and every entrepreneur will go on his or her own unique journey – there are still a few constants that we know to be true.
The start-up phase, for example, is when you write a formal business plan. You secure financing, you select your business structure, and you do all the other work required to get your enterprise off the ground. On the other end of the spectrum, we have the maturity phase, which is when you do what it takes to remain both competitive and sustainable for as long as possible.
In between that, however, we have what is known as the growth phase – one that often catches a lot of new entrepreneurs in particular off-guard. Still, this is an exceptional opportunity to grow from the business you’re running into the one you hoped you’d be in charge of when you started, provided that you’re able to keep a few key things in mind.
As stated, the growth phase of any business is all about two things: expansion and innovation. The first is natural because as your company begins to grow larger, you need to adapt what you’re doing to accommodate for that and embrace it. You can’t necessarily get to that point without innovation, however. This is when you determine which of your current efforts are working, which ones aren’t, and make adjustments accordingly.
From the financial side of the spectrum, one of the major things that you’ll want to account for during the growth phase has to do with taxes. During growth, things like federal, state, and local taxes are subject to laws that can often change frequently without warning. Keep track of (or at least, hiring a professional to do so) these changes can help you better understand what choices you need to make in terms of structuring, what types of incentives you can offer to your employees to help empower innovation and more.
Along the same lines, there will also be certain considerations that you make regarding your accounting in general. During this stage of your business’ life, you’ll want to work hard to A) generate a consistent income, so that you can B) attract as many new customers as possible.
For the best results, use this as an opportunity to re-evaluate your current systems, with IT being chief among them. What do you need to be able to do to generate consistent income that you can’t do right now? What did you once need but don’t any longer? These are critical questions to answer to help make sure that your business’ value continues to grow with its size.
Slow and Steady Wins the Race
During the growth phase of your business, you’ll also at least need to acknowledge that you are more subject to certain economic considerations than ever – some of which will be beyond your control. Because of that, you’ll need to keep a close eye on factors like cash flow and make sure that you understand how much you have available to be used as leverage. You’ll need to start making decisions with all key stakeholders in mind. That includes but is not limited to not only customers but also any other owners and also regulatory bodies in mind.
Finally, understand that it is very likely that your personal finances will grow as your business does the same. That’s why, during this phase of your company, it’s equally important to focus your attention inward whenever possible.
If you haven’t already started to do so, now would be an excellent time to talk to a professional about factors like estate planning. You’ll also want to have frank discussions about the amount of taxes that you’ll be exposed to. Even though retiring may be years or even decades away in your mind, it’s never too early to start thinking about who your assets will eventually pass to moving forward.
In the end, know that every stage of your business’ life will be one that you must remain actively involved in for the best results. It’s just that the things you’re concerned about in the start-up phase will naturally change as you move into growth, maturity, and beyond. Regardless, you’ll always want to make decisions with an eye toward both short-term gains and long-term opportunities. The better you get at doing that, the more success you’ll be able to create for yourself in the future.
If you’d like to find out more information about how to effectively plan for and make the most of the business growth stage of your company, or if you’d just like to discuss your own needs with an expert in a bit more detail, please feel free to contact us today.
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