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 3 of the Business Lifecycle series. If you’d like to start from the beginning, check out the Aspirational stage of the Business Lifecycle.
Stage 2, as you remember, is the growth stage. This is where you’ve hit that first home-run, things are going well, you start to see your profits go high into the right, or at least your revenue is high and to the right, and it is the fun stage of entrepreneurship and small business. This is the stage so many entrepreneurs and business builders love to stay in, because it’s exciting. This is what I call riding the rocket of entrepreneurship. The reason I call it that is because it’s like you’re holding onto this rocket, you’re throwing in as much fuel as possible, and you’re going faster and faster and faster – and it’s fun.
Challenges of Stage 2
Now, let’s talk about some of the challenges of Stage 2. The first challenge is it’s hard to ride a rocket. The faster the rocket goes, the tighter you have to hang on to it. The higher it goes, the harder it is to stay on it. And unfortunately, rockets aren’t meant for long-term flying.
The second major challenge is there are too many ideas. Because you’ve had a home-run in one area, you start trying to replicate that all over the place. Ideas are streaming, your confidence is up, your excitement is up, and there is too much going on. A lot of Stage 2 entrepreneurs get overwhelmed and have a hard time figuring out what to do, because they simply have too many ideas. This is fundamentally different than when they reach Stage 3 because in Stage 3, they’ve figured out how to manage too many ideas, but they generally have too much work.
Another challenge is you’re not “there” yet. You’re not quite playing with the big dogs yet, they’re maybe not paying attention to you yet. You don’t have the partners, you don’t really have the audience or tribe formed around what you do. You’re having great success but you’re still just not quite there, and you kind of know it. If only such-and-such would pay attention, if only this happened, if only that happened. There are a few things, you might say to yourself, “If only this happened, I would be there,” wherever “there” is.
Strengths of Stage 2
Let’s talk about the strengths of Stage 2. The biggest strength is it’s fun. It’s fun to have an idea and to have it get picked up and accepted and validated by the market. It’s fun to have people interested in what you do. It’s fun to be able to provide a solution for people who didn’t have one, and all of that is a blast. Again, it’s why so many entrepreneurs want to stay in Stage 2.
The second strength is there are a lot of possibilities. Your business still has a lot of room to grow, there’s still a lot of possible friendships and partnerships that you can make, and there’s still a lot of capacity for new things you can try because you’re not at full capacity. Now, the faster that rocket goes, the fewer possibilities you have.
Another strength is you’re no longer sitting there wishing about your past life and you don’t have those pseudo-entrepreneurial-existential-crises about what you should be doing. You’re in the moment, you’re rocking it, and there’s a feeling in Stage 2 that there’s nothing on earth that you were meant to do other than this. Stage two is pretty infectious.
The Inconvenient Truth
The inconvenient truth at Stage 2 is you can’t keep going like this. You can’t continue to just keep throwing more and more fuel on the rocket and going faster and faster – at a certain point, you’re going to fall off that rocket.
The Way Ahead
The way ahead is to start focusing on your market niche or specialty. In other words, start saying no to the different possibilities and figure out what it is you’re doing, with whom, and for what.
The catalytic moment that moves you from stage two to stage three is market demand exceeds your ability to deliver. Whatever you’re doing is working, you can’t do any more than you’re currently doing, and there are so many opportunities available for your business that you don’t have the systems, people, and processes in place to handle long-term. When this happens, you move into the stage of business that every entrepreneur loathes to the core of their being.
Editor’s note: This is part three in a 5-part series on The Business Lifecycle. Continue in the series by reading about the Crucible stage of the Business Lifecycle.