Stages of Businesses for the Solopreneur:
When running a business as a solo entrepreneur, it is useful to be able to categorize where your business is at with its growth. By becoming aware of the stages of growth of business, you can avoid common pitfalls that many people make at each of the various stages of development.
Please note that these are the phases of solopreneurs (or small partnerships). Bigger startups that involve money from venture capitalist will have different stages as they have funding to hire a team faster than solopreneurs.
10 Stages of Businesses:
The ten stages of business for a solopreneur are as follows. Please read on for more thorough explanation.
1) Alarm stage: You can’t pay bills. More money is going out than is coming in.
2) Hat Stage: You are wearing every “hat” possible as things start to grow.
3) Overwhelm Stage: Time becomes an even bigger commodity than money.
4) Staffing Stage: Try to solve the overwhelm by hiring and training.
5) Systems Stages: Realize that people come and go and need systems to train them faster.
6) The Who Stage: Begin to be able to hire better “whos’ to get out of your hats.
7) The Culture Stage: Corporate culture helps with longevity of staff.
8) Scaling Stage: Systems and people are in place for quick growth.
9) Removal Stage: You can MOSTLY remove yourself from your business.
10) What’s Next Stage: Your business operates completely without you.
Alarm Phase: You have more bills going out then money is coming in. Your business is operating at a loss. Just about every decision you are making is about getting a new customer. At this stage, it is easy to compromise ideals and to even take less money than your product is worth because of the “survival instinct” kicking in. One of the worst habits at this stage is to undervalue what you offer. The tendency may be to offer a discount to get a sale. The problem with this is, when you do great work and your customers refer their friends/family, they will tell them “what to say to get the deal.” Offering a promotion for a limited window of time is often a fine thing to do, but do not let your potential customers try to negotiate a better price on a case-by-case basis. This type of behavior will keep you in alarm stage.
Hat Stage: In this stage, your business is growing. You are now making a small profit and can actually pay yourself something. This stage is typically where we begin to realize that in order to make money, we have to wear a lot of hats in order to be able to fully deliver our services. We either cannot afford to hire help or can only hire help on a limited basis, as we do not have the revenue to hire out and pay ourselves. We are basically doing it all.
Overwhelm Stage: At this stage you are often filled with overwhelm. Some people are even filled with dread, simply due to the large number of tasks they are responsible. At this point, most people begin to hire someone(s) part time if they have not already. Income is coming in, but it feels scary to reduce your paycheck to pay someone, as there has been so much time you have taken pay sacrifices to get things up and going. At this point there is often a mental struggle. There is a sense of needing more time, so needing to hire jobs out, but also nervousness due to spending more money on the overhead for staff than one feels like they can afford. Many times, people get stuck here for a long time because of the mental game associated with this.
Staffing Phase: At this point, one realizes that they are not able to grow anymore without help. This phase is spent hiring and training people to do certain jobs. There is sometimes frequent overturn at this stage, as this is where learning how to manage people becomes a focus for the business owner. Often, lack of understanding on how to be a good manager and how to create a great corporate culture can lead to high turnover. One of the biggest mistakes owners do at this phase is to decide that it is too hard to hire someone, and that no one will do as good of job as them. They then will sink back into the overwhelm stage and frequently will oscillate between stage 3 and 4 indefinitely.
Systems Phase: The way out of the stage 3/stage 4 oscillation is through systems and better management. When you realize that staff does inevitably come and go and stop trying to fight that, you can become more oriented on a solution: better systems that require less training, which will ultimately lead to less mistakes being made by staff. In this phase, people also explore how to manage in different ways, including how to give feedback and appreciation to support motivation and productivity.
Who Phase: Systems are in place and there are less problems with staffing. Your time begins to get more freed up from the less money-making tasks, and now you can become more laser focused with your time doing the things that make you money. When this happens, you will see your revenue increase and you can start moving away from hiring “generalists.” “Generalists” are people that have a wide variety of tasks that they do, but are often not specialized in a certain area. In the who phase we can hire a chief operations officer, a chief financial officer, etc. We can fill certain areas of development of the business with people that are highly specialized in those areas, as we have the money to do those things. At this phase you are really looking for high-level people that can fill specific needs in your company.
The culture phase: At this phase, you will have learned from hiring the wrong staff how impactful this is to the corporation. Making sure that the right staff is working in all of their positions is super important. A good “who” from step 6 will help ensure that the right people are working for the company. You will have the time/energy to put into developing the corporate culture. Really focusing on the corporate vision/mission and values can help to motivate the team as to why their contribution to the company is invaluable. In this phase, the team of people that are working with you increases in value. Staff may change around a lot at this phase, but when you rebuild with a team that Is more in alignment with the corporate values, business will increase.
Scaling Phase: At this point, your systems are in place and your team is in place. You understand your business and your goals. With your team to help you, you are putting more money into marketing and to growing your brand. Business increases and you either have the infrastructure to support it or the team to support the growth so that as things come up, the infrastructure can be built on the spot.
Removal Phase: In this phase you have a choice. What is the single most important role you want to be doing for the company? You can now hire for the other roles and remove yourself from most of the jobs. In this phase you can pay yourself a great salary working less than 15 hours a week because the company now has a life of its own.
What’s Next Phase: In this phase you are either getting your books inline to help with the sale of your business, or you are thinking about what else you want to create or do. You can step away at any time and the business runs itself fully without you.