Stages of business growth
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Why is my business growth stuck? Natural barriers to growth in the business lifecycle.

Just like children, businesses grow through predictable phases. We start life as baby startups, then progress to raging growth companies, before settling into a more stable “adult” phase. But as we cross each of those growth stages things change — and if we don’t change with them our growth can get stuck.

Here’s my version of this story (based mainly on the growth of B2B service businesses).

Baby startup

Once upon a time, you had an idea. It wasn’t your first idea, you’ve had many business ideas, but this one came at a time when you were feeling particularly frustrated (or desperate) and needed a change. So you started working on your idea, and before you knew it, you were in business for yourself. (Whatever that means!)

Those first few years were hard. There was so much to do and so much to learn! You didn’t get much sleep. There were plenty of folks around to give you advice (most of it terrible, occasionally helpful) and somehow you survived. (Sounds like parenting a newborn, doesn’t it?)

In the startup phase, you spend all your time trying to acquire customers, because, without customers, you don’t have a business. In the middle of it, you constantly feel like you are failing, and like you are a fraud. (“Fake it ‘till you make it, right?”) However, if you are lucky, and work hard, and found a great niche, you get successful enough to start hiring people. Your baby is now a toddler!

Toddling along

Hiring and managing people is a whole new nightmare that I have to learn! I thought I had this thing down, and now this! I’m responsible not just for my failure, but now people are depending on me too. Surely the answer is more clients, more projects, more sales.

So when clients say, “Do you do…” you say “YES!” You take on more work. IT’S ALL HAPPENING. The business learns to walk and then run! Growth comes almost magically as clients bring you more projects, and word of mouth starts to kick in, and you are getting referrals. You are still working hard, but you aren’t as afraid of failing anymore. You’re starting to fear something else. What if I succeed?

Org Chart of early growth company
The organization chart of an early growth company centers around the business owner, who eventually becomes a bottleneck.

Adolescent Angst

It turns out that not all of that work that’s coming in is for things that you and your team are good at, it’s not all even things that you enjoy. However, the work keeps coming! You are getting referrals, and that’s great. However, the work that’s coming in, the work you are doing wasn’t the work you set out to do! You are working harder and harder, and even hiring more people, but the money you get to keep is still meager. Plus this whole thing seems less fun. Where’s the freedom? When do I get to make my mark?

The whole idea of growth starts to feel questionable. Maybe I should fire everyone and “get small” again! But being small kind of sucked, everything was so precarious. We were one project away from no work all the time…and who’s going to do all this stuff I don’t like doing?

This adolescent angst is a critical decision for every business owner. Everything that’s happened so far is telling you that the future looks like a lot more work, with uncertain outcomes, and you don’t yet have the money to make doing that work and living with that uncertainty “worth it.”

That’s because becoming an adult business means setting aside some of the childish behaviors you’ve been living with and embracing a whole new identity as a “grown-up” business. What got you to this point in your business’ growth isn’t going to get you past this point, you have to engage in a whole new learning journey. If you don’t, you get stuck!

Embracing stable growth

So if you are in that messy adolescent phase where your business is doing many things that customers are asking for, and you aren’t getting paid well for any of them, the road forward is counter-intuitive. For your whole business history to this point, you’ve focused on bringing in as much business as you can. But to grow past this point you have to focus on doing fewer things, but getting paid more for them. In other words, you have to specialize.

Specialization means that instead of relying on word of mouth and referrals to grow, you decide what kind of clients you can help the most. The clients who need your services and who will pay well for the transformation that your services can bring to them, and you focus on finding them and converting them into clients.

Specialization means that you do fewer things. You don’t need to learn a new process for every project, you develop consistent, scalable processes that can accommodate many (similar) clients.

Specialization means you know the value your services create, and you so can charge accordingly. Usually a LOT more.

Specialization means you know the skills that you need your team to have and you can hire seasoned, experience (and expensive) talent who can bring those skills enabling you to let go of more things.

Specialization is the key that unlocks stable growth for all businesses, but especially for B2B service businesses.

Unfortunately, just as it takes a long time for that pimply-faced pre-teen to evolve into an adult, this transition can take a while. Just as adults end up doing things that pre-teen you would think are gross and boring, your role needs to change to enable this to happen.

Stable adulthood

If you can find a specialization, build a lead generation machine that consistently brings in work that fits that specialization, and learn how to get paid well for it, then your whole business changes.

You can hire a team of experts who do things for you. You hire a VP of Marketing to develop and run the new business machine. You have a Controller who’s doing the books and helping you to make sound financial decisions, and you’ve got experienced team members who are meeting with clients and doing the thing that they are paying you to do.

The command-and-control org chart

You can transition to being the CEO instead of the player-coach. Just like the parent who gets to watch their adult children leave the nest and make their way, you can take more time off, make more money, (and then worry all the time about what they are doing when you aren’t there! Just keepin’ it real.)

Each these transitions, from startup to growth business, through adolescence, and into a more stable, profitable structure require you, the business owner, to learn new things, let go of things that were working, and embrace a new reality. There are business owners who get stuck at each transition and their business stalls out, sometimes for a few years, sometimes for good. I’ve tried to summarize these stages all on one page here.

Helping business owners to make that transition from the messy adolescent phase to the stable adult phase is my specialization. I’ve been doing it for more than 20 years.

Featured image  by Rennett Stowe

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