How Businesses Evolve

There is a saying that goes that it is what you knew that brought you to this level, to get to the next level, you need a new set of knowledge. So do not rest on your oars because you may need to deliberately unlearn what you knew about business management and gain fresh knowledge on how to navigate your way to the next level. Here are the stages of business growth, many small businesses either die or get stuck at the first or second stage.

  1. Cash flow Creation
  2. Cash flow Sustenance
  3. Cash flow Growth

Stage One: Cash Flow Generation

In the first stage, you have this amazing idea of how you are going to make a lot of money. Note all business plans show a positive cash flow. No founder has ever declared from the start that, “my business will not make money.” So the entrepreneur must strive to live up to his business plan of making profit. Unfortunately many are unable to make money or enough money so they either die off at this phase or change their business plan.

Stage Two: Cash Flow Sustenance

The entrepreneur at this phase has bills to pay, rent, salaries, debts and suppliers. Figuring out how to settle these bills when the need arises can keep the entrepreneur stuck in this phase if growth is not taken seriously. Many business leaders are preoccupied with keeping costs low in order to be profitable rather than on expanding the business and improving the systems. Most businesses either shut down, grow or remain at this phase where they are struggling to cover their costs, this is also known as the break even phase.

Stage Three: Cash Flow Growth  

The business has gone from struggling to survive to real growth. A business can only get to this phase if it used its resources effectively and devoted enough attention to marketing, branding and advertising. Remember that the focus should not be survival but on becoming a market leader for the product or services you are offering. This separates a stage two from a stage three entrepreneur.

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