Navigating the four stages of company growth: A guide for business owners

Can you name the four stages of a company’s growth? If you’re an ambitious entrepreneur and want to become the best CEO you can be, you need to familiarise yourself with them.

I see many business owners immersed in the day-to-day operations of their companies, focused on immediate challenges and opportunities. Too few understand that there are distinct stages of company growth, each with its own leadership requirements. One key to growth is recognising which stage your company is in and adapting your leadership accordingly.

Start-up stage: Do-er and decision-maker

The first stage is easy. In the nascent stages of a company, the CEO is akin to a jack-of-all-trades, making every decision and wearing multiple hats. This phase, aptly termed start-up, is characterised by the founder's hands-on involvement in every aspect of the business, from product development to customer acquisition.

While this approach may seem effective initially, it quickly becomes unsustainable as the company grows. The start-up stage is very seductive because everyone comes to the you for information and decisions because you know more. Then, one day, you realise that everyone is waiting for you to tell them what to do. Nothing is written down; it’s all in your head. 

“I thought my job was to be able to do everything and tell every employee what to do.  But when I looked out my door one morning and saw eight people in line, waiting for me to tell them what to do, I knew we were in trouble; we could never grow if it all depended on me. So, when they asked me what they should do, I began saying, “I don’t know. What do you think?” When my employees began thinking for themselves, we began to grow more quickly.”  - CEO of a manufacturing company in the USA.

Initial growth stage: Delegator and direction setter

When employees come to you and ask, “What should I do about (fill in the blank)” stop telling them what to do and say, “What do you think we should do?” This is difficult to do, especially when you know the answer, but if you don't signal to your employees that you want them to come up with answers, they will be forever reliant on you, and work will slow or halt if you aren’t there.

You need to learn to delegate – the right way. It is unfair to delegate something to someone with no warning, no preparation, and no resources. Train staff and give them the resources to train their staff. Get everyone comfortable with the idea of taking on more responsibility and accountability.

The other role you have is direction-setter. In start-up you experimented with which products/services customers would buy, in which markets, at what price, using various marketing strategies. You identified the competitors and figured out how to position your company.

If your company is ready for the next step, but you're the only one making the decisions, that can create a bottleneck to company growth.

So, begin to delegate, communicate the direction, and take time to put processes and systems in place. When done right, you’ll gain something very valuable: Time.

Rapid Growth: Team builder, coach, planner, and communicator

If a company enters Rapid Growth before you have thought through the risks, opportunities or developed a plan to deal with the externalities, any small tailspin can quickly become a death spiral.

Just when you think you know what works, customers change, new competitors appear, and your world changes – sometimes with very little advance notice. The CEO's role evolves into team builder and coach, meaning you need to hire people who know more than you do.

Success in this phase hinges on assembling a talented executive team, delegating responsibilities, and fostering effective communication channels. Planning becomes paramount; no more developing a plan over the weekend, then announcing it on Monday morning. Instead, you need to lead your exec team through the process of developing a three-year strategic plan and a one-year operational plan – which they are responsible for executing.

The CEO from a US manufacturing company recently shared his growth lesson: “When we started, I did the books, then I hired a bookkeeper.  We were growing so quickly that what we actually needed was an accountant. By the time I hired an accountant, we needed a controller.  I hired a VP Finance who was a bean-counter when I really needed a VP who could help me find money for growth. I was always a click behind in hiring the financial acumen we needed, and that hurt us, big time.” 

Continuous Growth: Strategic innovator, change manager, organisation builder, and chief of culture

This stage demands forward-thinking and active scanning for emerging opportunities and threats. You also need to manage the changes that growth requires – in people, systems, products, customers, and strategy - and nurture a resilient organisational culture based on the company's values and long-term vision.

Your mission, values, and long-term vision are the bedrock on which you company is built. You need to protect them and always monitor adherence.

Being a CEO is not easy. You must perform the appropriate roles for the current stage of growth at the same time you are preparing for the next stage. But if you want your company to grow, you must be willing to relinquish old habits and embrace new leadership roles in each of the four stages of growth.

Dr Jana Matthews, Growth Expert and Founding Director, Australian Centre for Business Growth

To learn more about your company and the next level of growth through the stories of over 500 successful entrepreneurs, read Dr Mathews book Leading at the Speed of Growth.