We can think of businesses as going through four phases. As we progress, our focus evolves from managing the present to investing in the future.
Many entrepreneurs expect what worked in early stages to continue to be effective in later stages and are puzzled by their inability to sustain their initial success. The reality is, as the company grows its needs will change and so must our focus.
Phase 1: Viability
We find out if the business model is viable. Do customers want the product? Can we sell it? Will it be profitable? Viability is a time for discovering the variables that make or break our business. We make adjustments to make our product more attractive, to differentiate it from others, to make our sales pitch more effective. At this point, a handful of people are doing the work of many. We are investing in staying alive.
Phase 2: Stability
Can we reach the break-even point? Are sales replicable? Can we retain customers? Are we improving over time across the key areas of the company? In this phase, we become masters of our craft, see the potential for scalability, become experts on the values of our customers, and polish the authenticity of our brand. We are investing in a firm platform for growth.
Phase 3: Scaling
As much as we like growth, it can be disruptive and dangerous, particularly if we've skimped on the Stability phase. Growth puts strain on employees, financials, and customer relationships. If selling more hurts to the point where we lose money or customers, growth will be painful, discouraging, and unsustainable. We must stay alert to stress fractures in process, policy, and organizational cohesiveness, and focus on scalability for the long-term success of the company. This is where we will spend most of our time, question our motives, and be tempted to cut corners. We are investing in becoming a good company and staying true to our vision.
Phase 4: Sustainability
In Sustainability, we stay relevant in the market by consistently providing differentiable value to our customers. We make adjustments to add more value and be more relevant and authentic. We are investing in the longevity of our company and the legacy of our brand.
What gets us from Phase 1 to Phase 2 is not the same as what gets us from Phase 2 to Phase 3, and so on. As the phases progress, we're looking at longer times and larger horizons. Our focus turns from who we are to who we must become -- ultimately, a company that provides value to society and, as a result, can expect well-earned profits.
A strategic planner for the last 28 years, Rudy has held senior executive and C-level positions in fortune 500 and emerging growth companies. He is a sought-after executive coach and speaker at Vidal Consulting Group, developing innovative strategies and tools that allow companies to maximize operational efficiency and alignment to customer values.
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