FCB #018: You Will Change As Your Buisness Grows

Introduction

Just as every child grows up and goes through stages of growth and development through their life, so does every business. Every successful business goes through five stages of growth, described as follows:

1. Infancy (Startup): The stage characterized by the birth of the business, laying the foundation, securing initial customers, and establishing a viable product or service.
2. Childhood (Early Growth): A phase of significant expansion, refining operations, building a competent team, and implementing systems and processes to support growth.
3. Adolescence (Rapid Growth): The stage of rapid expansion, scaling operations, strengthening market position, and implementing advanced strategies to capture a larger market share.
4. Maturity (Stability and Growth): The stage of stable growth, solid market presence, optimization of operations, and strategic focus on sustained profitability and innovation.
5. Legacy (Exit or Transition): The final stage where the business owner considers options for exit, succession planning, or transitioning to new leadership, while leaving a lasting impact and fulfilling personal and philanthropic aspirations.

It is your duty and responsibility, as the founder and business owner, to guide your business successfully through each of these five phases. As your business grows and develops, so will your roles, responsibilities, and areas of focus.

The following is a summary of a business owner's journey and metamorphosis through the five stages of their business's life cycle.

Stage 1: Infancy (Startup)

Owner's Roles and Responsibilities:

1. Visionary and Strategist: Set the overall vision, mission, and long-term goals for the business. Develop a solid business plan and define the strategic direction.

2. Chief Decision Maker: Make critical decisions regarding product/service development, target market, and initial business setup.

3. Resource Acquirer: Secure funding, resources, and necessary permits/licenses for the startup phase.

4. Chief Marketer: Develop initial marketing strategies and establish the brand's positioning in the market.

5. Chief Salesperson: Engage directly in sales efforts, acquiring initial customers, and building relationships.

6. Generalist: Wear multiple hats and be involved in all aspects of the business, from operations to finance.

Owner's Focus:

• Market validation and early customer acquisition.
• Building a solid foundation and establishing basic systems and processes.
• Defining the brand identity and establishing an online presence.
• Securing funding and managing initial cash flow.
• Developing a viable product or service and achieving initial profitability.

In this startup phase of a business, the owner typically wears mutliple hats and is consumed with ensuring the survival and profitability of the firm, often as one of its key producers.

Stage 2: Childhood (Early Growth)

Owner's Roles and Responsibilities:

1. Manager and Team Builder: Build a competent team and delegate responsibilities to support growth.

2. Strategic Planner: Develop growth strategies, identify new market opportunities, and expand product/service offerings.

3. Sales and Marketing Leader: Develop and refine marketing strategies to reach a broader audience and drive sales growth.

4. Relationship Builder: Foster relationships with strategic partners, suppliers, and key customers.

5. HR Manager: Develop HR policies, recruit and train employees, and foster a positive work culture.

6. Financial Monitor: Oversee financial management, monitor cash flow, and implement basic financial controls.

Owner's Focus:

• Driving sales growth and expanding the customer base.
• Building a strong team and delegating responsibilities.
• Refining operations and implementing efficient systems and processes.
• Strengthening the brand and establishing a competitive market position.
• Enhancing financial management practices and maintaining financial stability.

As the business finally experiences some stability and sustained growth, the owner starts to shift roles from generalist and key producer to manager: hiring, building teams and effective business systems, and learning how to effectively delegate and manage.

Stage 3: Adolescence (Rapid Growth)

Owner's Roles and Responsibilities:

1. Strategic Leader: Develop and execute growth strategies, including expansion into new markets and product diversification.

2. Sales Director: Oversee sales efforts, establish sales targets, and ensure the team's performance.

3. Marketing Director: Lead marketing initiatives to enhance brand awareness, develop campaigns, and refine target audience.

4. Financial Strategist: Develop financial forecasts, analyze key performance indicators, and make strategic financial decisions.

5. Risk Manager: Assess potential risks and vulnerabilities, develop risk mitigation strategies, and ensure compliance.

6. Talent Manager: Nurture and develop talent, provide training and advancement opportunities, and foster a high-performance culture.

Owner's Focus:

• Managing rapid growth and scaling operations effectively.
• Driving sales expansion and exploring new market opportunities.
• Strengthening the brand and refining marketing strategies for increased market share.
• Implementing advanced financial management practices for sustainable growth.
• Enhancing risk management practices and ensuring business continuity.
• Building a strong organizational structure and developing talent.

As the business enters this rapid growth phase, the owner has left production completely, built a management team, and starts growing into the full strategic leadership role for the company.

Stage 4: Maturity (Stability and Growth)

Owner's Roles and Responsibilities:

1. Strategic Visionary: Lead long-term strategic planning, identify new growth avenues, and maintain a competitive edge.

2. Industry Leader: Establish thought leadership and become a recognized authority in the industry.

3. Relationship Cultivator: Maintain key relationships with stakeholders, strategic partners, and industry influencers.

4. Financial Steward: Oversee financial performance, manage profitability, and ensure long-term financial stability.

5. Governance and Compliance: Ensure legal and regulatory compliance, monitor industry trends, and adapt to changes.

6. Succession Planner: Plan for exit strategies, succession, or leadership transition.

Owner's Focus:

• Sustaining market leadership and continued growth in a mature industry.
• Innovating and adapting to evolving market trends and customer needs.
• Enhancing financial performance and maximizing profitability.
• Nurturing strategic relationships and exploring new partnership opportunities.
• Ensuring compliance with legal and industry requirements.
• Planning for future succession or business transition.

As the company finally reaches stability and dominance, the owner continues to elevate out of management to being the strategic visionary for the company, and starts the critical work of exit and succession planning.

Stage 5: Legacy (Exit or Transition)

Owner's Roles and Responsibilities:

1. Transition Planner: Plan for the exit strategy, whether it involves selling the business, transitioning to new ownership, or other strategic options.

2. Mentor and Advisor: Provide guidance and support to the incoming leadership team or successor.

3. Philanthropist or Community Leader: Consider and initiate philanthropic activities or community engagements aligned with personal values and business legacy.

Owner's Focus:

• Preparing for and executing the chosen exit or transition strategy.
• Facilitating a smooth transition of leadership and knowledge transfer.
• Ensuring the business legacy aligns with personal goals and values.
• Contributing to the community or philanthropic causes.

By this phase, the business can run independently of the owner, is valuable and sellable, with a full management team, including C-suite executives (CEO, COO, CMO, and CFO). The owner has the ability to sell the business, scale it, or continue to own it, but passively.

Summary

Remember that these roles and responsibilities are not set in stone and can vary based on the nature of your business, your personal preferences, and the specific circumstances you will face along your journey.

As the founder and business owner, it's essential to continually assess your own strengths, delegate responsibilities effectively, and adapt your role to the changing needs of your business at each stage of growth.

In order to be successful, you will likely go through three phases yourself as the business owner: from technician, to manager, and finally to a true leader and entrepreneur.

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