Every business starts from a humble beginning. As much as we’d like to think brands like Nike or Gatorade were overnight successes, it’s a pipe dream. In reality, many great businesses started with a single idea from a solopreneur who then took action. Thoughts became things, and from there hard work helps the business grow. Yet, there are many different stages of small business success. This feature will lay out these stages so you can understand each individual step and what it takes to get there.
In the early stage of a new business, many entrepreneurs try to do everything themselves — hence the term solopreneur. This brave entrepreneur is a team of one who manages all facets of his or her business (generally an LLC). A solopreneur takes care of customer service, sales, marketing, accounting, social media, meetings, sales calls, prospecting, deal structuring and many other pieces that make up a successful business. All of this falls on one individual’s lap. Sales for a solopreneur business are generally less than $100,000 per year.
The determining factor in business success for a solopreneur is time. We all have the same 24 hours in a day; time can be your greatest asset or your biggest drawback depending on how you manage it. Solopreneurs who wake up early and get hustling before the rooster crows can generally accomplish many things during the day — it’s all about time management and productivity.
Being a solopreneur puts you in the largest business classification in America with around 22 million other business owners. It can be an extremely stressful stage of your small business success, but it’s also a very important one. Some entrepreneurs decide to stay in this stage forever, while others continue through the stages mentioned below.
Sometimes, a business idea comes from a couple of people chatting about solving a problem who then decide to go into business to solve it: a partnership. However, a solopreneur business can also grow into a partnership if another individual shares the same passion and has a complementary set of skills. These entrepreneurs would then agree to become partners, with each having a fair share of the business ownership (whether it’s 50-50 or another agreed upon split).
A partnership is generally a business owned by two to three individuals. This form of business is the third largest in America, and the annual sales of a partnership will usually fall between $100,000 and $300,000.
The most important factors of a partnership are how well you can sell a product or service and how you work together with your partner(s). While having more employees (and owners) can be helpful, a partnership needs to divide and conquer responsibilities but still be sales driven to bring in revenue. Without sales for your product or service, there is a high probability the business will not survive.
3: Steady Operation
As a business grows, eventually, so should the number of employees it has. Once a business has around four to 10 employees, it has graduated to becoming a steady operation with annual sales between $300,000 to $1 million. At this stage, you are in the company of around 1.9 million other small businesses and part of the second-largest category (behind solopreneurs).
To continue down the path of small business success, you need to think about the pieces of your business that you could afford to gloss over as a solopreneur or partnership. What was missing in those stages that held you back? What can you add to your operation that will help propel further growth?
Generally, businesses in this stage focus on marketing. Before, you just needed sales to stay afloat and continue down the path to success. But at this stage, you need to be focused on getting the word out and showing exponential growth.
While many solopreneurs and partnerships grow slow and steadily, there comes a time where you may go from a sales flatline to a vertical explosion. This can be achieved through smart marketing and getting the word out about your brand. The more people who know about your products or services, the more people you can engage and potentially work with or sell to.
4: Local Success Story
At this stage, your small business success has gone viral locally, and your business is now bringing in around $1 million to $5 million annually. You may have 11 to 25 employees, and the marketing you focused on when you were a steady operation has helped increase your overall growth. Now what?
Now, it’s time to get laser focused on your vision. Where do you see the company in the next few years, and what will it take to get there? Now is the time to get all your ducks in a row and figure out what action you should take to become a top performer in your industry.
Locally, everyone around your business is already aware of who you are and what you sell. They are all engaged with your business and are repeat customers — hopefully, thanks to the marketing dollars you put behind your business. You are now faced with the task of taking your business to the next level.
In reality, not many businesses move on to the next step because they don’t have a clear and decisive vision for their business and its growth. Some might have never thought they would make it as far as they did. Truth be told, of the 900,000 businesses in America that make it to this step, only 200,000 will make it to the next.
5: Managed Organization
As a local success story, you needed to buckle down and switch your thinking from current obstacles to future planning. When you decide to become a managed organization, you need to think in terms of double. How can you double your sales? How can you double your employees to meet those sales goals? Who do you need to hire to achieve these results?
This stage of growth is where you really start to bring in the cavalry. To achieve your vision, you need to hire key performers and put them in positions that will help you get there.
A managed organization should have annual sales of between $5 million and $20 million, with anywhere from 26 to 100 employees. These employees should include a dedicated sales team, marketing team, accounting team and any other team you feel is necessary to help grow your business (such as a design team, perhaps). The key is to bring on high-level individuals who can help you succeed.
6: Mature Company
Becoming a mature company does not happen within the first year (or even first few years) of a business lifecycle. To get to this stage, it takes precise actions to build a company that now has more than 200 employees and annual sales of $20 million to $40 million.
By now, you have the business running like a well-oiled machine and firing on all cylinders. This stage is where you can move from growth planning to strategic planning. How can you grow further, and do you want to? Are there channels and markets you can expand into? Are there key customers or groups you aren’t focusing on, but that you should be? Are your sales and marketing strategies still effective, or do they need to be reworked?
This is the stage where you bring all of your teams together to get on the same page. Where is the business excelling, and what could be holding it back? Make the corresponding changes. Put together a plan of attack for each group within your company so each has a directive to follow. Continuously follow up with each team to ensure the strategy is not only being implemented, but that it is operative toward your goals. If not, you need to tweak these actions again and shape them around your vision.
7: Corporate Player
If you’ve made it to this stage, congratulations! You have arrived at the most difficult step to reach for small business success. Your vision as a solopreneur has achieved the highest level.
However, this doesn’t mean you can take your foot off the gas pedal. What it really means is you need to keep thinking strategically about your business. Who on your team can you develop into a leadership position? Who do you need to bring into your business? Do they already have experience similar to yours? An addition like this would give you multiple feet on the gas pedal to ensure your business never slows down.
By now your team should be made up of around 200 to 500 employees who are collectively helping your business bring in between $40 million and $100 million annually. Have employees who are great assets to your company? Try to move them into a leadership role and replace them with another competent individual.
You need to develop these high-performers so you can focus on other areas of your business while the leadership team manages and oversees their respective team members. At this point, the high-level leadership team should be the only people reporting directly to you. There’s no reason to have anyone else pulling you away from steering the ship.
What stage is your business in? Are you just starting as a solopreneur, or are you already on your way to becoming a corporate player? Regardless of the stage, Incfile can help you manage your business and get you to the next level. Contact them today to take some of the myriad responsibilities of business ownership off your plate, so you can take care of what matters: planning strategically for where your business will go next!