Deseret News Archives,
Sunday, April 7, 2002

Edition: All
Section: Money
Page: M01
Length: 73 lines

Like kids, business develops in stages

Understanding the problems inherent in each stage will help the entrepreneur recognize symptoms and diagnose which challenges are like "childhood diseases," part of the natural growth process, and which are life--threatening to the enterprise.

The first stage, as in the human model, is planning and conception. In the world of entrepreneurship, this stage is often overlooked and neglected, yet adequate preparation provides a foundation for solid development as your "baby" grows.

A written business plan is a great tool to help in this critical process, yet many won't take the time to put their thoughts down on paper. So they wear themselves out "doing" but upon review have accomplished little. Even a rough plan that follows no particular format but covers vital areas such as finance, marketing, cash flow, personnel needs and operations will greatly help get the business ready to launch.

The defining act signaling that the start-up or infancy stage has begun is when money is at risk. This stage of business is so painful and laborious for some that they never actually do anything but crawl from one day to the next. More often, the business gets stuck in the start-up stage and never grows out of it. It's like having a "terrible 2--year--old" for the life of the business.

Growth is the third stage and is often like adolescence. The pressures on the entrepreneur are tremendous. Demands for cash, personnel, time, equipment, inventory and product are everywhere. Promises are made and not kept. Delivery dates are missed. Chaos can prevail. Many entrepreneurs either fold the tent or downsize -- sometimes foolishly. Like a teenager, the company appears to be fully mature one minute and infantile the next.

By the time you reach the growth stage, however, alliances and management teams ought to be well established and take some of the pressure off the entrepreneur, who may feel overwhelmed. Adolescence is no time for single parenthood. Get and keep those teams working together. Reports are vital. Measurement is critical. Monitoring is essential.

When you get through the growth stage and move into maturity, the fourth stage, relief is in sight. But with maturity can come obsolescence and a lack of imagination. Rigidity, a lack of innovation or bureaucracy can all raise their ugly heads. People who work for mature companies are often more concerned with maintaining the status quo and keeping their jobs than with developing new products, markets or expanding distribution channels.

The maturity stage can also be tragic for the classic entrepreneur. Few have the ability to originate a company and see it through to the finish line. Managing a mature company requires a very different set of tools or competencies than the first three stages. Many entrepreneurs in this stage either leave, get booted out or hire professional managers to run the company while they return to more challenging and more interesting entrepreneurial endeavors.

Other entrepreneurs sell or harvest the enterprise so they can begin the cycle again with a new start-up. Harvesting is the final stage and includes such intriguing possibilities as selling the business, going public, merging or liquidating.

So there you have it -- the five stages of business growth. Knowing these stages is vital so you can identify possible symptoms and react appropriately. Prescribing chemotherapy for company "childhood diseases" is just as dangerous as treating a tumor with baby aspirin.

Stephen W. Gibson is associated with the BYU Center for Entrepreneurship. He can be reached via e-mail at cfe@byu.edu.

© 2001 Deseret News Publishing Co.