Editor’s note: This post is adapted from my new book The Small Business Life Cycle: A Guide for Taking the Right Steps at the Right Time to Grow Your Small Business. To find out more about the 5 stages of business and what you can do to grow your business from one stage to the next, check out the book. This is part 4 of the Business Lifecycle Series. If you’d like to start from the beginning, check out the Aspirational stage of the Business Lifecycle.
Stage 3 is the first “no” stage. It’s the first stage of business you finally have to start practicing saying no because you’re already at capacity.
If you’ve ever been in Stage 3, you know it. It’s frustrating and disheartening. You spend a while trying to figure out what small tweaks you have to make in order for your business to move forward. Basically, this is when business gets really hard because you’ve got enough going for you that it’s hard to quit, but you don’t have enough in place that you can continue to do this indefinitely. Stage 3, to use Seth Godin’s term, is the dip stage of business.
Challenges of Stage 3
The first challenge of Stage 3 is you’re tired. You’ve been on the road for awhile, you’ve thrown as much fuel as you can into the rocket, you’ve been hanging on to it, and you’ve taken the business about as far as you can on grit, spirit, and spunk.
The second challenge is there’s not really a business under the business. There’s a business name, but when it comes to the processes that support a business like administrative help, legal and tax implications, and everything it takes to make your business tick, there’s not much in place.
The third challenge is people are watching now. You’re not in that safe stage nobody is paying attention to anymore. Maybe the big dogs are starting to promote you, maybe they’re starting to put you in front of their people. Now, you have to be much more careful of the social game and the social expectations of your business. You’re no longer that rogue business anymore; you’re no longer the up-and-coming.
Strengths of Stage 3
The first strength of Stage 3 is you are a small giant. In whatever realm you’re in, you are big enough to be a known player, but not so big that you’re overextending or that people want to take you down. You can call upon a trusted group of friends or your network to get things done, you have some impact, and you have leverage you extend in this stage.
Another strength of Stage 3 is you’re over that part-existential, part-entrepreneurial crisis you’ve been working through in stage one and two. You’re sort of matured, you know this is right for you. It becomes part of your being in a way, so you no longer have to question it, and you no longer have to spend a lot of energy explaining it. On a personal note, this is normally where your family has finally stopped trying to convince you to do something else.
The last major strength is you know what’s working. You have your positioning, your marketing is pretty clear, you’ve figured out the repeatable elements of your business that make it tick, and you have a pretty good idea of what’s working and what’s not.
The Inconvenient Truth
The inconvenient truth of Stage 3 is “the Stage 3 catch-22.” You need some type of resources to grow, but to get those resources you need to grow. You need more people to help in your business, but to have more people you need more revenue. You need to get better systems in place, but if you had better systems in place then you’d be able to deliver more, and if you had to deliver more, then you could get better systems in place, etc.
The Way Ahead
Here’s the way ahead for Stage 3: focus on your core and shed the rest. One of the major things you’ll have to say no to are the types of offers you’re putting out there and the types of activities you’re doing. This is the time you see businesses starting to cull their earlier product list. You’ll notice them contracting their audience and network of people they’re trying to work with. You’ll see them focusing on certain audiences, niches, or specialties and saying no to the rest. The only way you can continue to grow is to focus on a few areas.
The catalytic moment of Stage 3 is when your business backbone gels. You get the systems, processes, people, and positioning in place. Whatever your business does, how it does it, and who it does it with, is done in such a way that it can be done efficiently, effectively, and indefinitely.
Editor’s Note: This is part four in a 5-part series on The Business Lifecycle. To continue the series, read about the Cruise stage of the Business Lifecycle.