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A Simpler Business Growth Model

Monday, November 9th, 2020

Whilst preparing a client proposal recently I referenced an HBR paper on the stages of business growth (The Five Stages of Small Business Growth by Neil C. Churchill and Virginia L. Lewis link).

It’s rather old but remains, like all good management models, relevant today. It provides a useful tool for gaining insight into an individual business, its stage of development, strategy and challenges.

It also remains somewhat inaccessible to the owners of small businesses, who might see it as theoretical or even corporate. Their small businesses are not big enough to afford the shamens required to think about and apply these frameworks. From the practical, over-worked perspective of a business owner, the theories don’t look like their business. They must be talking about someone else.

That led me to wondering about what a model that they would find useful might look like. I came up with a three-stage model:

  • Stage 1: The business owner does everything
  • Stage 2: The business owner controls everything
  • Stage 3: Employees control and do everything

In terms of employees, Stage 1 has of course only one; Stage 2 has anything up to, in my experience, fifty (although five to twenty is more typical) and Stage 3 is unlimited – it is a scalable business.

Research from the DBEIS in 2019 (link) suggests that 76% of businesses in the UK are in Stage 1; and fewer than 1% are in Stage 3.

To put it another way, fewer than 1% of businesses are scalable and almost all businesss that employ people have their growth limited, actually or potentially, to what the owner can directly control.

Now of course many business owners will be comfortable with their business as it is and distinctly uncomfortable with the idea of giving up control. But I know from my day job that many are not; instead they are frustrated at their apparent inability to grow their business past a certain point.

The model (let’s call it The Three-Stage Business Growth Model©) won’t solve this problem but it does I hope make the solution pretty clear:

In scalable businesses , employees do and decide everything. To make a business scalable, achieving this must be the primary objective of the owner.

If you want to learn more about making your business scalable then register for one of these webinars.

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