I have tried out several business startups since 2011. A few of them have failed while the rest have become established today. Starting and sustaining a business is not such a difficult thing because the small tips and lessons you learn come in handy.
Starting a small business and sustaining it to maturity requires a lot of capital, from financial to knowledge input. In this post, I will seek to use my own business experience and other experts to show you simple ways to build your small business from startup to maturity.
My first business model was the selling of airtime recharge cards in Nigeria. I have sold other things since then. I once ventured into the agriculture business when I planted apples in Southern Nigeria. It was a revolutionary move because apples were not generally known to grow in that region.
A few months later, I lost all my apple seedlings and all the money I spent to import them from Kenya, including other expenses. But I learnt a lot of lessons from this experience and other of my failed business ventures.
If you are reading this post before you have started your business, the first thing you need to learn to overcome is the fear of starting, the fear of failing. One thing starting up my businesses has helped me achieve is the courage to start without delay.
Stages of Business Growth
According to G&A Partners, there are five stages of business growth. From conception or development to the maturity stage. These stages describe the general trend startup businesses would go through in the course of their growth and establishment.
1. Development stage
This is the initial stage where you assess the business idea if it is worth it or not. This is when you formulate your business plan and determine how you want it to be.
Common questions you want to ask in the development stage include; “Does this business meet a need”, “If yes, what need does it meet”, “Will it be acceptable”, or “Is it lucrative”. The questions you ask during the development stage will help you know if to proceed with the business plan or not.
From my own experience, every business idea is potentially lucrative. Avoid killing your business idea before it is born. You should always remember that if you are passionate about it, it can become bigger than you ever imagined.
2. Start-up stage
This is one of the most challenging business phases of any business person. It is where you begin your business and try out your proposed ideas and plans.
The startup stage comes with huge requirements and responsibilities and is often where most entrepreneurs back down from the venture. Some common challenges in the startup stage include; how to raise capital, how to handle financial accounts, how to establish a customer base and market presence, and the hiring of staff and manpower.
3. Growth stage
This is the stage when the business has had some roots. It is no longer staggering or struggling to survive as in the startup phase but it has not attained its biggest breakthrough yet.
Important characteristics of the growth stage include the following. The business model is more stable, profits have increased significantly, and the client base is rising gradually but it is still at the same level with many competing businesses.
The business owner is often caught thinking about how to deal with the increasing customers and revenue, as well as market competition, and how to increase profit volume and streamline operations.
To succeed through this stage, you not only need to answer those questions but also have to focus on strategic ways to upscale your business operational efficiency to improve profitability. Adverts and promotions will come in extremely useful.
4. Expansion stage
This is the stage where the business, which started as a mere idea, has metamorphosed into something stable and formidable. It is now capable of independent existence and can comfortably sustain itself and its staff.
During the expansion stage, the business experiences massive expansion, profits and client turnovers, thus conferring more stability to the business. However, there is still some considerable competition in the market.
The aims here include sustainability (that is, being able to keep up with your business activities) and increasing your profits to meet up with those of higher-earning companies.
In the expansion stage, the business has gotten on its feet but needs to be scaled higher to prevent a progressive decline or bankruptcy. The same strategies like marketing, advertisements, and promotion, can also be employed to keep a business viable through the expansion stage.
5. Maturity stage
The business is also self-sustaining and independent, profits are stable or declining, and the client base is also declining.
The best way to know if your business is approaching the maturity stage is when you notice that your profits are not increasing much compared to them in the growth and expansion stages. Even though the business is still self-sustaining, its viability is on the line as it can easily fold up or disintegrate.
The maturity stage is the last stage for most businesses but that is not the best stage to leave a business. Better still, you should hand over the business when it is still in the expansion stage and let the new owner upscale to a new expansion stage beginning from where you stopped.
However, one’s aim should be to steer the business from the maturity stage back into the expansion. Thus, there is no actual lifespan for a business venture, it depends on the expertise and knowledge of the entrepreneur. Doing the right things and doing them right can guarantee your business an ever-green course.
Maintaining or veering back into the expansion stage involves activities like innovation, product/service diversification, and re-strategizing. One may need to go back to the drawing board to see what has changed and what needs to be changed at this point.
To avoid a potential business demise, carry out actions to prevent entering the maturity stage, and when you eventually do, don’t stay too long in that stage.
Essentials of Starting a Business
To start and sustain a business, you need to know the essential requirements every business has.
1. Capital
Raising capital is one of the most difficult challenges most startups face. Many people make their business plans on huge capital they cannot afford. This might lead to a delay in starting up or not being able to start up at all.
There are many sources you can get your business capital from. These include borrowed or gift money from friends and family, bank loans, government grants, business angels/angel investors, venture capitalists, or profits from your pre-existing business.
While having colossal capital is important to give your business a good headstart, there is no evidence that all successful business ventures start with very colossal capital. Most successful businesses you see today started with little capital, a great idea and a determination to succeed.
2. A good business plan
A good business plan/idea is required to sustain your business from startup to growth stage and to keep maintaining it. If your business plan is not concrete enough, your business model can easily be swept off by any new wave of innovation or changes.
Not only is a good business plan required for your business success, but it also helps you secure funds for your growing startup. Many investors consider having a good business plan more important than startup capital, and they are more willing to put in their money when you have a solid or viable business plan instead of throwing away money in the name of helping an innocent startup.
Aside from helping to secure funding from venture capitalists, some sources of business funding like bank loans require you to submit your business plan or proposal, alongside collateral if necessary, to see if offering you the loan will be worth it.
3. Business Registration
Registering your business under the Corporate Affairs Commission (CAC) or a related body is not compulsory for all business startups in many developing countries. However, that can give your new business more credibility and authenticity.
Also, doing your business registration is a pre-requisite to securing grants and loans from the government and other public grant organizations.
If you are a Nigerian or your business is based in Nigeria and surrounding African countries, some available grants from small and medium-scale businesses include Bank of Agriculture Grants for Africans Nigeria, PRIMA, Bank of Industry, and private NGOs like the Tony Elumelu Foundation.
4. Location
Choosing a good location is another essential for your new business. You need to site your business in a very strategic location to attract new customers.
However, location is not so important these days when online business is the order of the day. You can start your business just about anywhere, thus, you should not allow getting a location to be a deterrent in starting up and establishing your new business.
The Secret Ingredients In Growing Your Business
I learnt more about business success the more I ventured into business. Some of these things come through hands-on experience but I am willing to share some secrets in growing and sustaining your business for maximum success.
1. Understand that startups can be difficult
To think that a business startup does not face any challenges is like failing even before you start. This is because if you think it is going to be all rosy, you will not anticipate and prepare for the sad reality.
Starting a new business comes with its own set of challenges. While you are grappling with how to gather clients and promote your brand, you are also faced with the task of raising money and managing your finances.
I will talk more about how to overcome some of the common challenges in this section, but it is important to bear in mind that business is not as easy as you might think. Only people who are motivated to grow from square one can succeed in it.
2. Managing your finances
This is one of the business lessons I learnt the hard way. In one of my businesses, I started with some small money I raised from a service I rendered to a client. In this business, I sell medical books to medical students and doctors.
Earlier after making my first sales, I decided to restock and this time, stock higher book copies for my growing clientele. Shortly again, I sold off the new copies and made profits but during this period, I had some emergency needs that made me eat up my capital and profit. It was not an easy business experience ever.
But that is a story many business persons can relate to. If you have never experienced that, this should encourage you to stay strong enough to overcome dipping your hand into your business money. Your business money is not your money. That is the first thing you need to know.
However, sometimes you may need some urgent money for something very important. It will not be advisable to borrow money from others when you have some funds in the background even though it is for your business. What I do in this case is to borrow from my business and pay back once I have the money.
Remember that your business money is not your money. Once you have this mindset, you will find yourself handling your business money with all discipline and respect when you borrow from it.
3. Keep records
Good financial records and inventory are very important for your business. They help you understand your cash flow, profits, sales, and other important parameters to help you monitor your business activities.
Good financial records help you know how your money is moving in the business. Without this, you might have funds that are unaccounted for.
For example, misplacing some money without knowing does not excuse it from being a loss. You are only not able to account for it. But when you can account for it, you can know what to do to replace it in your business to grow it to a higher level.
4. Do not feed from your business initially
The primary aim of business is to build a cycle of income for your personal and family needs eventually. Even still, you need to discipline yourself not to rely on your business money, especially during the initial time. Again, business money is not personal money.
When you make your first profits, this is not the time to squander your profits. Instead, reinvest your profits into the business to upscale it until it is viable enough to pay you and/or other staff without going bankrupt. Beyond what you will gain from the business, sustain your passion for it even when you are not eating from it yet.
If you look carefully at the four tips above, you will discover the important role of financial management in sustaining your business from startup to expansion. You should be motivated to learn financial management tips from other experienced business persons.
5. Focus on quality and customer satisfaction
The beautiful thing about business is that the same things you do to sustain and build your business at startup are the same things you will still do when your business has become established later. Focusing on quality and customer satisfaction is one of such.
You continually need to focus on providing good quality and favourable customer experience to gain more client base and patronage. The more people perceive your service as a quality service, the more your customers will love patronizing you.
6. Innovation
Times are changing, everything is changing, and you should too. Innovation is one’s willingness to do things differently, better and more efficiently.
Instead of sticking to conventional offline business strategies, include digital marketing strategies in your business as well.
7. Diversify
The biggest enemy of sustainable business is not diversifying. As your business grows, the goal is not only to grow it but also to raise new seed capital from it to start another line of business related to or different from your current business.
I started by selling short guide medical texts, then later included larger textbooks, this could go on and on depending on my interests and ability.
Diversification protects you in case of any unforeseen market fluctuations in one market area. It increases your profit at a minimal risk. This is why you must constantly think about a new business idea you can add to your current business.
