The five stages of startup growth

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noorina55
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The five stages of startup growth

Сообщение noorina55 » 16 янв 2020, 01:53

1. The stage of existence
 Phase of existence

The success of startups at this stage is related to two basic things, namely the company's ability to provide the required product and its ability to attract customers to buy it. It is necessary to answer basic questions at this stage:

Is it possible to obtain a sufficient number of clients? Can products be brought to light? Can the products be at a quality level that guarantees the company the continuity of the activity?
Is it possible to achieve expansion in both production and customer base, which increases the volume of sales?
Is there enough capital required for this startup stage?
The administrative factors previously mentioned in the existence stage are as follows:

Administrative style: direct supervision from the owner.
Organizational structure: at the minimum levels.
Existence of formal systems: at minimum levels or not present.
Company strategy: survive.
The role of the owner in the company: Simply the owner is the company, it finances, supervises and performs all management tasks.
If the company fails at this stage (point 1) it will be doomed to either closing when the working capital runs out, or selling the company to the value of its assets without loss, or declaring bankruptcy, which represents the worst case scenario.

And if the company succeeds in achieving existence at this stage, it will move to the next stage.

The startup stages of progress

2. The stay stage
Stay stage

After the company has proven a real success on the ground, it must at this stage manage all of the income and expenses in the best possible way. And provide answers to the following two questions:

Is it possible to obtain sufficient financing to replace or repair the company's assets while it is eroding during operations?
Is it possible to obtain sufficient financing to expand production, by moving the company from the production phase without losses to the stage of achieving profits?
The stay stage is characterized by the following five administrative factors:
تأسيس شركة في دبي
Administrative style: indirect supervision.
Organizational structure: a complex where there is a sales manager or general manager.
Existence of formal systems: There is a system for forecasting revenue and expenses.
Company strategy: survive.
The role of the owner in a company: the owner and the company are still one entity.
Some startups survive for some time at this point and make marginal profits (Point 2). It may fail and end up selling it at a slight loss, or closing permanently and disappearing out of sight.

But if the company succeeds in achieving the goals of this stage, which is the large size of the company and increasing its profits, it will move to the third stage.

3. The stage of success
The stage of success

At this stage, it is the responsibility of the startup management to choose between two strategic decisions, either achieving the independence of the company by its separation from the owner (success - separation), or directing the resources in favor of achieving additional growth and obtaining a greater share of the market (success-growth).

The following are the features of each sub-stage separately:
فتح شركة في دبي
A-success-separation
In the previous stage, the company achieved satisfactory economic success and became profitable medium or above average. Consequently, it has achieved the stability that guarantees the continuation of this situation indefinitely, provided that this stability does not get external environmental variables or administrative failure that leads to a decrease in the competitiveness of the products.

With the company's continued success and stable workflow, the owner begins to gradually separate from the company, whether the reason is that it established business activities elsewhere, or because of the participation of others in decision-making.

The separation stage is characterized by the following five administrative factors:

Administrative style: job delegation.
Organizational structure: is growing.
Existence of formal systems: basic financial, marketing and production systems.
Company strategy: Maintaining the status quo.
The role of the owner in the company: the owner's separation from the company.
Many startups may remain in this sub-stage without moving to the next (point 3); this is due to the nature of the market that does not allow growth or to the small size of the society in which the company operates.

Decision makers may decide to sell it in a profitable deal or merge it with a larger entity.

If the company fails to adapt to the new “separation” situation (point 4), the costs will be reduced and the previous stage of survival will be closed or closed.

And if the company succeeds in adapting to the internal and external changes, then in this case the strategy may be changed towards rapid growth and jumping to the fourth stage (starting).

B- Success - Growth
In this sub-stage, the owner of the company decides to sharpen all available resources towards achieving growth and obtaining a larger market share.

Attention should be paid at this stage to two elements, the first is to ensure the continued ability of the primary activity of the company to generate profits at rates higher than financing requirements, and the second is to pay attention to developing the managerial capabilities of managers in line with the expansion of the company's activities.

The growth stage is characterized by the following five administrative factors:

Administrative style: job delegation.
Organizational structure: is growing.
Existence of formal systems: it is growing.
Company strategy: channeling resources for growth.
The role of the owner in the company: The owner is the largest activist in the practice of the company's business.
If the company fails to achieve the goal of growth at this stage, the causes may be discovered in a timely manner, and then the direction is corrected, and the decision to separate from the owner is taken (the success phase - the separation). Or it may be too late for the company to retreat to the previous stage (stay), before things get worse and go bankrupt, or resort to lowering the prices of products to sell them urgently (Distress sale).

If the company succeeds in its first growth attempts during this phase, then this "attempt" will mature and transform into a "growth strategy" in the next stage.

4. Starting stage
The focus at this stage is to accelerate the company's growth, as well as to provide funding sources to meet its requirements. The most powerful questions are:

Can the owner successfully delegate tasks to others in light of the rapid and complex growth of the company, while committing to setting performance controls and the ability to detect errors?
Are there sufficient sources of financing to meet the growing requirements of growth, and for that does the owner have a willingness to borrow at a higher rate than his share in the company?
The starting stage is characterized by the following five administrative factors:

Administrative style: division of labor.
Organizational structure: is growing.
Existence of formal systems: mature and thorough and comprehensive.
Company strategy: growth.
The role of the owner in the company: A reasonable degree of separation between the owner and the company.
If the company cannot achieve rapid growth at this stage, it can be offered for sale in a profitable deal, and that should happen at the appropriate time.

In many cases, start-up companies that reach the starting stage fail to achieve the growth required for this stage, either because they fall into the trap of faster growth than necessary, and thus runs out of funding sources, or the owner fails to delegate his duties effectively.

This failure compels her to reduce her expenses, and then she is on a date with one of two scenarios: The first: She corrects the failure, restores her balance, and maintains the continuity of success (point 7). The second: It retracts to the stage of success - separation to reorganize the work and then try to grow again (point 6). But if the situation is very bad, and the company achieved a failure after reducing the expenses, it will retreat to more than that (point 5) is back to the stage of survival or be closed.

In the event that the company successfully passes the launch phase at the administrative and financial level, which may happen in the absence of the original management and its replacement with a new one, the launch phase will constitute a pivotal stage in the life of the company, after which it will be on the outskirts of its transformation into a large company.

5. Maturity stage
Maturity

The main concern of the company at this stage is to consolidate and control the profits from growth, in addition to preserving the advantages of startups such as the flexibility to respond to any variables that may occur, and to maintain the spirit of initiative.

Decision makers at this stage should accelerate the development of the administrative system to keep pace with the growth that has occurred, as well as the use of more professional management methods such as budgets, strategic planning and management with goals.

The five management factors at maturity are as follows:

Administrative style: executive and consultant.
Organizational structure: is growing.
The presence of formal systems: comprehensive and advanced.
Company strategy: reinvestment.
The role of the owner in the company: a complete separation between the owner and the company.
At this stage, the company has achieved its ultimate goal, and all the required elements of success are available from adequate financing sources, efficient management, and the small size advantages of the company.

At this point, a company can become a tremendous force in the market, if it maintains its entrepreneurial spirit.

But if you do not preserve it, it will enter into a sixth, benign stage, which is the "stage of stagnation", where management tends to avoid risks and avoid creative decisions.

These large companies usually enter the stage of stalemate, which helps the stability of the external environment and the absence of major changes in it, to maintain its large market share, purchasing power and financial resources. However, other competitors who boarded the fast growth train usually notice these changes before.

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