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 5 of the Business Lifecycle series. If you’d like to start from the beginning, check out the Aspirational stage of the Business Lifecycle.
You’ve arrived at the lauded Stage 4: the Cruise stage in business. The cruise stage is another “no” stage. I like to liken the cruise stage to being in a supersonic jet; you can go really fast, but you can’t turn. In Stage 1 and 2, you can do a lot of swerving back and forth. The scale and scope of your business is such that you can still pivot. At 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 causing the people and businesses around you confusion.
Challenges of Stage 4
The first challenge of Stage 4 is you switch from riding the rocket to playing the long patient game. You’ve reached a level of business expertise and positioning such that the only way you’re going to get better is to focus on the long game of expertise and market share.
Another challenge is you have a lot to lose. You have a lot to lose when it comes to another competitor coming in, losing the social trust and relationships you’ve spent years building, and losing your ability to remain profitable and get those teammates hired and thriving with you. There’s so much at stake when you’re at 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. (These are the people who started the pie shop because they actually want to bake pies. They don’t want to franchise pie shops, they don’t want to manage other people making pies – they just want to bake the pies themselves.)
Perhaps the biggest challenge of Stage 4 is the bright-and-shiny-object syndrome. At stage four, 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 the bright and shiny object.
Generally, this is how we move from Stage 4 to an earlier stage. We do something crazy like write a book, introduce a new partner, go public, or introduce offers to a new market. There are all sorts of things we can do that push us back down. Sometimes, what happens to get us out of Stage 4 though is completely unanticipated, like maybe the founder dies, maybe the person who starts the business goes through a dramatic thing like divorce and that process ties up the resources of the business, maybe key members of the team die or get hired away. What’s important about the volatility here is that it’s almost all internal since 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 you are a well-oiled machine. You’ve got those people, systems, processes, and position 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 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. 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. The internal problems like the shiny objects are hard for any small business owners 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. Because you have success across the board with enough sustainable command and you’ve reached what I like to call your sufficiency number, you’re no longer motivated just by the money.
Your business, in an odd way, gets to do some truly 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 if you’d like to see more about how businesses move past the basic profitable stage or the stages executives are really focused on and do truly remarkable things.
The Inconvenient Truth
The inconvenient truth of Stage 4 is you can move fast but you can’t turn quickly. As the person that’s been part of the business from it’s earliest stages all the way to its end stages, it can feel as if you’re not going anywhere even though you’re moving really fast. From the inside, it feels like you’re going nowhere and it’s really 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 that moves people from Stage 4 to lower stages of business is a new brand or business dynamic. I mentioned some of them earlier: the bright-and-shiny-object syndrome, dramatically changing your market, or losing a key member of the team.
Other notes about the Business Lifecycle
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. Stage 4 is one in which it’s easy to experiment in and move into Stage 1 and then back out as you try different things. What largely happens in that stage is the business and its founders or executives within the business 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 backwards.
I wanted to mention again this is a lifecycle because you can vacillate between a couple stages for a while before you escape out of them. It’s easier to see in Stage 3 and 4 than it is in Stage 1 because normally when you have that home run, it’s clear you’ve moved from entry stage to growth stage.
One of the reasons I wanted to talk about this is so you have a better idea of what happens in these businesses, so you can make better strategic choices about how to work your way through business. You know if you’re in Stage 1 it’s going to be awkward, you’re not going to know everything that you need to do, and you 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 the bright and shiny object syndrome is going to be something you’re going to have to contend with. So it’s not that you can’t say yes to things – it’s the things that you say yes to, you need to say yes to slowly and intelligently – making sure that they either fit your business’ strategy or your personal strategy so you don’t throw everything off just because Apple introduced a new gadget you want to use.
The world of small and microbusiness is very challenging. More and more businesses will be in this realm because things are changing; technology, social expectations, and the demands of life favor small businesses of these types. Another reason they will continue to be challenging, though, is because more people will be starting businesses, which makes more competition. At the same time, small businesses need to know more to be able to successfully operate them.
All this is to say it’s ok if you’re at any stage of this journey. You know what you need to do to move forward, and you know that you’re not alone. Thank you for being in business.