Do You Know What Phase Your Business Is In?

Every business or organization goes through rather predictable stages of growth based on size (regardless of whether you’re using money or people as the gauge). Not knowing which stage you’re in can make for a number of bad decisions. But, more importantly, on the other hand, knowing which stage you’re in (as well as what the next stage is) can make a huge difference in your business or organization’s growth (both in speed and potential).

But before I explain this in business terms, let me give you an example from when I first learned this principle two decades ago. At the time, I was pastoring a church that was two or three years old and averaging 119 people per week in average attendance. Wanting to grow faster, I went to a conference on how to break the 200 barrier and found it rather fascinating that regardless of denomination (read different kinds of “industries”), churches of various sizes have more in common with other churches their size than they do with other churches in their own denomination.

In the church world, the 200 barrier is the pastor barrier. In small churches (just like in small businesses) the pastor does just about everything and is involved in just about every decision. To break the 200 barrier, the pastor has to give up responsibilities and the people of the church have to step up and take on responsibilities (again, this sure sounds like a small business, doesn’t it?)

Being fascinated with this idea that size matters, I did some research to find out what the next barrier was. What I discovered was that the next barrier was the 400 barrier and the major problem at 400 was the board barrier. In other words, in small churches, board members are often like unpaid staff. So they often have functional duties and roles (i.e. a board member may be the head of the children’s ministry or the person the head of children’s miniseries reports to). However, at 400 people per week in attendance, decisions need to be made faster and often by full-time staff not unpaid boards that meet once a month.

So, the big battle at 400 is over boards giving up power to the staff and the staff taking on responsibilities that used to belong to the board (i.e. boards at 400 and above need to be policy making boards, not decision-making boards). Knowing that these two barriers had similar features, I decided to make the board changes AT THE SAME TIME (when we were averaging 119 people per week) as I was transitioning out of being the person who “did it all.”

Now, to appreciate what happened next you need to know that 85% of churches never make it past the 200 barrier and 95% never make it past the 400 barrier (note: the phrase “barrier” is a range so the 400 barrier is synonymous with churches that have between 350-475 in attendance). Yet, here are our attendance figures during those years as we sought to break through the 400 barrier.

  • 1994 = 257
  • 1995 = 317
  • 1996 = 428
  • 1997 = 548
  • 1998 = 749

Notice how we blew past the 400 barrier? Why was that? I’m convinced it was because I was paying attention to both the stage my “business” was in—as well as the next. And by making the changes that I was going to need to make BEFORE I needed to make them, we were able to blow past the natural barriers that other churches (read “businesses”) normally get stuck at.

So, now that you understand the principle, let me share with you the five natural phases of business growth. Note: I’m only going to briefly state the phase and its major barrier in this post so you can identify which stage you’re in and then I’ll create a series of posts outlining the major problems, challenges and key skills required at each stage.

Stage 1: The Survival Stage ($0 – $250K in revenue)

Major Barrier: Predictable Sales

Stage 2: The Growth Stage ($250K – $1M in revenue)

Major Barriers: Marketing and Systems

Stage 3: The Success Stage ($1M – $10M in revenue)

Major Barriers: Speed of Execution, Innovation, and Infrastructure

Stage 4: The Expansion Stage ($10M – $50M in revenue)

Major Barriers: Execution Excellence, Professional Management, New Growth Opportunities

Stage 5: The Mature Stage (over $50M in revenue)

Major Barriers: Efficiency and Continuous Innovation

So, which stage are you in? Are you addressing the major barriers for your stage? And are you looking ahead to the next stage’s barriers?

If you want to keep growing you have to be clear on what stage you’re in and what issues you need to be addressing, while, at the same time, keeping your eye on the next stage (and how you can address those issues before they become issues). Until next time …

To your accelerated success,

P.S. Stay tuned for a series of posts on the Five Phases of Business Growth.

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