Objective: Create Customers and Drive Sales

The Early Growth stage builds on the company’s success in Stage 1. The company has established a perfect fit between its product and the needs of the market, developed a sales process, and identified a set of initial pilot customers that can serve as valuable references. Now it’s time to launch the company and focus on sales.

The primary objective of the Early Growth stage is to create customer demand and drive that demand into sales. This will require the company to begin scaling its sales and marketing efforts, as well as its ability to deliver the product or service.

It’s tempting to think that now that you’ve discovered a repeatable business model – one that predictably generates revenue – you can rapidly scale the business. However, a company entering this stage is still in a somewhat vulnerable position. It may have a handful of early customers, but broader market acceptance is still unproven. It has limited resources. The organization lacks scale. Its infrastructure is not developed. And it has other weaknesses that should be expected in a young company.

On the one hand, it’s time to begin to turn the crank on your business model and generate sales. On the other hand, the organization has not been built to support rapid scaling.

The challenges of growing and managing a business are fundamentally different from those of starting a new venture. As sales increase, so will the number of customers, number of employees, and so on. A young company can quickly become overwhelmed by it’s own growth and stumble or even fall.

Add Resources and Basic Operational Systems to Support Growth

The company must now begin to develop the ability to support growth. To support a growing number of customers, the company must now begin to add resources and develop basic operational capabilities and an initial infrastructure. If entrepreneurs want to make the successful transition from Stage 1 to Stage 2, they must force themselves to be concerned about the operational systems required for day-to-day performance. Early stage companies are allergic to process, but as the company grows, it needs more structure. The company’s survival depends on it.

This means adding the resources needed to grow, including money, people, technology, and space. It also means developing the day-to-day-operational systems needed to run the business. These include all the basic systems, like those used to support hiring, sales, marketing, accounting, operations, information, customer service, and all other basic operational systems.

Monitor Growing Pains

Even with the proper resources and operational systems, there comes a point where it is extremely difficult to continuously add more revenue, more customers, and more people without experiencing frequent and severe problems. These organizational growing pains are normal, but must not be ignored. They are warning signs that it is time to begin the transition to Stage 3, the Rapid Growth Stage.

Stage 2 Keys to Success

• Launch a differentiated product or service.
• Begin to scale sales and marketing efforts.
• Prove broader market acceptance of your product or service by attracting and selling to a larger base of customers.
• Develop basic operations and initial infrastructure, add key resources, and hire enough people to support a growing customer base.
• Gain visibility and credibility by winning a set of satisfied early “reference” customers to help attract additional customers.
• Demonstrate that adding more money and effort will result in predictable and profitable revenue growth.