Editor’s note: This is Part 5 of the Small Business Life Cycle series. If you’d like to start from the beginning, check out the Aspirational stage.
You’ve arrived at Stage 4: the lauded Cruise stage. You’ve got your people, processes, systems, and positioning in place. You focus on the things you can do indefinitely that meet that sweet spot between market demand, your interest, and what you can do long-term. A business in Stage 4 is like a supersonic jet; it can move incredibly fast, but it has to turn slowly or else it’ll be torn apart.
Challenges of Stage 4
The first challenge of Stage 4 is that you switch from riding the rocket to playing the long, patient game. You’ve reached a level of business expertise and positioning where the only way you’re going to get better is to focus on the long game of increasing expertise and market share.
Another challenge is that you have a lot to lose to a competitor or a mishap. There are relationships you’ve spent years building, with the resulting social trust. There is your profitability and the ability to hire teammates and keep them thriving with you. There’s so much at stake in Stage 4 that it becomes too much for some entrepreneurs to bear, especially those who started a business to focus on doing whatever it was they were doing. If they started a pie shop, it was so they could bake pies, not so they could franchise pie shops or manage other people making pies.
Perhaps the biggest challenge of Stage 4 is Bright Shiny Object Syndrome. (Click to tweet – thanks!) At Stage 4, trying new things, doing a lot, and dramatically changing your business structure can send your supersonic jet crashing to the ground. However, the hyper-creative innovators in us always want to build something, and we’re lured by new potentials.
Generally, this temptation is what moves us from Stage 4 to an earlier stage. We do something crazy like write a book, form a new partnership, go public, or introduce offers to a new market. There are all sorts of things we can do that push us back down. Sometimes, though, what happens to get us out of Stage 4 is completely unanticipated; maybe there’s a death in the family or another dramatic life event, like a divorce, or maybe a key team member is hired away. What’s important about the volatility here is that it’s almost all internal because by now you’ve mastered the external conditions that would otherwise threaten your business.
Strengths of Stage 4
In the Cruise stage, the first main strength is that your business is a well-oiled machine. You’ve got your people, processes, systems, and positioning in place. As much as entrepreneurs hate to say and hear “That’s the way we do things,” there are few things better for a small business than for the entire team to know exactly how the team operates.
Another strength of Stage 4 is that you have leverage. You’re a known player, you’re a powerful player, and you have the resources you need to be able to extend in different ways. When your business needs more money, your team knows how to solve that problem. If your business needs more capacity, your team knows how to solve that problem, too. You know how to fix any external problem that comes up. (It’s the internal problems, like the temptation of bright shiny objects, that are hard for any small business owner to temper.)
The last strength, and this one’s really important and not talked about a lot, is that money and profit largely become secondary to the mission of your business. With enough success and sustainable command across the board, you’ve reached what I like to call your “sufficiency number” and you’re no longer motivated primarily by the money.
Now your business gets to do some risky and remarkable things because it doesn’t have to solve the basic problems of a growing business. When money becomes secondary, you can truly focus on your mission and the legacy of your business. Read Good to Great or It’s Not About the Coffee for more about how businesses move past the basic profitable stage or about executives who are focused on doing truly remarkable things.
The Inconvenient Truth
The inconvenient truth of Stage 4 is that you can move fast but you can’t turn quickly. That’s what makes this another “no”stage. In Stages 1 and 2, you can do a lot of swerving back and forth. The scale and scope of your business are such that you can still pivot. In Stage 4, by the time you get those people, processes, systems, and positioning in place, you can’t do much turning. You can’t do something different without creating confusion for the people and businesses around you.
As the person who’s been part of the business from its earliest stages all the way to its end stages, you might feel as if you’re not going anywhere even though you’re moving really fast. That can be frustrating.
The Way Ahead
The way ahead in Stage 4 is to play the long, patient game, leverage your success, and make slow, strategic decisions. The name of the game at Stage 4 is to decide slowly but act quickly. Because you’re making strategic decisions slowly, you can get your systems, processes, and people in place to be able to handle whatever strategic decision you make.
The Catalytic Moment
The catalytic moment that moves you from Stage 4 to lower stages of business occurs when you introduce a new brand or business dynamic. I mentioned some of them earlier: getting seduced by Bright Shiny Object Syndrome, dramatically changing your market, or losing a key member of the team.
Other Notes About the Small Business Life Cycle
I’m going to pause here and talk more about Stages 3 and 4. When you’re in Stage 3, there’s a lot of disequilibrium and seesawing back and forth between either Stage 2 or Stage 4. Largely, that’s because you get one piece of the puzzle taken care of, but another one pops up. For instance, you might get your revenue up, but don’t anticipate the tax implications of the new revenue. Or maybe out of exasperation, you try something new and it works, so you chase that down and it puts you in Stage 2, but you eventually get back to the same problem you tried to avoid in the first place.
People in Stage 3 often see this process as circular, but it’s actually more like a corkscrew. When you’re in Stage 4, it’s easy to experiment and move into Stage 1 and then back out as you try different things. What largely happens in that stage is that the business and its founders or executives are lured by the bright and shiny object into doing something and then get into that space where they’re no longer the powerful creatures they are in their own domain, so they retreat.
I wanted to mention again that this is a life cycle because you can vacillate between a couple of stages for a while before you move on from them. It’s easier to see in Stages 3 and 4 than it is in Stage 1 because normally when you have that home run, it’s clear that you’ve moved from the Entry stage to the Growth stage.
One of the reasons I wanted to talk about this is so you have a better idea of what happens and what to watch out for, so you can make better strategic choices about how to work your way through business. You know that if you’re in Stage 1, it’s going to be awkward and you’re not going to know everything that you need to do, but now you also know how to keep moving forward in the face of uncertainty and perhaps unfavorable market conditions.
Conversely, if you’re in Stage 4, you know that Bright Shiny Object Syndrome is going to pop up. It’s not that you can’t say yes to things; it’s that you need to say yes slowly and intelligently, making sure that the new things fit either your business’ strategy or your personal strategy. You don’t want to throw everything off just because Apple introduced a new gadget that you want to use.
The world of small business and microbusiness is very challenging. More and more businesses are entering this realm because things are changing; technology, social expectations, and the demands of life favor small businesses. Yet that means there will be more competition. Small business owners need to know more in order to be successful in this landscape.
Whatever stage of this journey you’re in, that’s okay. You know what you need to do to move forward, and you know that you’re not alone. Thank you for being in business.
I expand on this post in my best-selling book, The Small Business Life Cycle. In it, I discuss the steps that need to be taken at each stage. To learn more about how to transition and thrive in your small business or microbusiness, check out the book by clicking here.