Three Stages of Small Business Growth | Jamie Summons

The Three Stages of Small Business Growth

Ordering the issues and development examples of private ventures in a deliberate manner that is helpful to business visionaries appears to be from the get-go an irredeemable errand. According to Jamie Summons, private ventures generally differ in size and limit concerning development. They are portrayed by freedom of activity, contrasting authoritative designs, and shifted administration styles.

However, on nearer examination, it becomes evident that they experience normal issues emerging at comparative stages in their turn of events. According to Jamie Summons, these marks of similitude can be coordinated into a structure that expands how we might interpret the nature, qualities, and issues of organizations going from a corner cleaning foundation with a few of the lowest pay permitted by law workers to a $20-million-a-year program organization encountering a 40% yearly pace of development.

The 3 Different Types of Small Businesses and Why They Are Important

Such comprehension can be helpful to small business owners and managers in evaluating current issues, such as the requirement to modernize an existing computer system or to employ and educate second-level managers to continue expected development, according to Jamie Summons.

It can aid in foreseeing the important requirements at different stages, such as the excessive time commitment for owners during the startup phase and the demand for delegation and changes in their managerial positions when organizations get larger and more complicated.

The framework offers a baseline for assessing how current and future government rules and policies may affect a company's operations, according to Jamie Summons. One example is the exclusion of dividends from double taxation, which may be very beneficial to a successful, established, and stable firm like a funeral home but completely useless to a young, fast-expanding, high-technology enterprise.

Creating a Framework for Small Businesses

Over time, several scholars have created models for analyzing firms. (see Exhibit 1). Both employ the size of the business as one dimension and the maturity or stage of the company's growth as a second factor. These frameworks are beneficial in many ways, but at least three of them make them problematic for small firms.

1 Growth Phases

They start by assuming that a business must evolve and go through all stages of growth or fail to exist. Second, the crucial initial phases of a company's birth and growth are not adequately represented by the models. Third, these frameworks neglect other elements like value contributed, the number of locations, the complexity of the product line, and the rate of change in goods or manufacturing technology and instead define firm size primarily in terms of yearly revenue (although some mention the number of people).

According to Jamie Summons, we used our knowledge, a literature search, and an empirical study to create a framework applicable to small and developing organizations. The framework that resulted from these efforts outlines the five developmental stages depicted in Exhibit 2.

2 Growth Stage

The five management elements of managerial style, organizational structure, the level of formal systems, significant strategic goals, and the owner's engagement in the firm are used to describe each stage, which is distinguished by an indicator of size, variety, and complexity. In Exhibit 3, each step is shown, and this page provides narrative descriptions of each stage.

3 Small business characteristics at each level of development

Existence is stage one. The business's major issues at this point are finding consumers and providing the contractual product or service. The following are a few of the most important inquiries:

• Can we attract enough clients, distribute our goods, and offer services effectively enough to sustain our business?
• Can we broaden our sales base beyond that one primary client or the pilot manufacturing process?
• Are we financially secure enough to meet the significant cash requirements of this startup phase?
• The structure of the company is straightforward; the owner manages everything and personally oversees employees who ought to have at least average competence. There are few to no formal planning or systems. The company's only goal is to continue existing.