Every business is unique and will follow different growth journeys with periods of rapid expansion, consolidation and, possibly, decline. No one journey is the same but most businesses will go through some typical stages as they move from start-up to maturity.
Here, we plot a typical business growth journey and consider the funding options that could help to support each stage.
Not every brilliant idea even makes it into production let alone becomes the basis for a successful enterprise but plenty do and the start-up phase is crucial.
The focus will be on product development and taking an idea into commercialisation.
There will be strategic business planning choices to make. For a start-up manufacturer, one of the most important decisions to make is that of location – taking into account everything from access to skills to distribution channels. Also ensure access to raw materials and a strong network of suppliers.Challenges
The excitement of the start-up phase is followed by the challenge of managing growth. Many entrepreneurs may be looking to run the business in a more formal fashion to deal with increased sales and customers.
The balance of getting production capacity to meet demand can be crucial. Some businesses may have too much capacity, while others may lack the capacity that would enable them to grow.Challenges
Businesses at this stage will have found their place in the market and grown a loyal customer base. However, they may also be exposed to greater competition and changing customer tastes.
The focus will be on improvement and increasing productivity. That may involve investment in new machinery, automating processes or putting production planning software in place.Challenges
This can be the stage where a business achieves a real step-change in growth but it can be like going back to the start-up stage as the business looks at new markets, product lines or distribution channels.
For some businesses this may be the time when they look to overseas markets, accessing a new customer base and potentially exposing the business to new ideas and ways of working.Challenges
Businesses at this stage may face the challenge of dropping sales and profits as well as negative cash flow and growth plateaux following an expansion phase. Cutting costs and finding ways to sustain healthy cash flow are vital at the mature stage.
For many businesses this stage will present difficult decisions such as whether to consider further expansion, possibly through acquisition, or whether to consider a sale and exit.Challenges
This is the stage where the emotional investment in a business can be challenged. Having built a successful enterprise from the initial spark of an idea, the entrepreneur may look to cash in on all the effort and years of hard work.
The challenge for many people is to get an accurate valuation of a business they have invested so much time in, while some buyers may wish to see the owner stay involved at least for a period of time.Challenges
Find out which source of finance would be most suitable as you grow your business with our online Business Finance Guide.