Business growth: the 5 stages of business growth

Business growth is a popular topic among business owners and academics. Whether the growth is unexpected or the business owner actively pursues it, it can often lead to problems.

5 growth stages

Businesses grow in stages. If your business is expanding to the next stage, its structure, culture, and profitability will change accordingly. This is often coupled with growing pains: profits might be down, growth might slow down or stop. Business owners are putting in a lot of hard work, but feel they have lost control. All owners of growing businesses experience this phenomenon when their businesses start expanding. Greiner’s Growth Model shows how your business is changing , including your role as a business owner. The 5 stages of business growth:

1. Pioneer stage (fewer than 8 employees)

During the startup or pioneer stage, the business owner acts as a team lead and there are few formal arrangements in place. Market focus and product focus play a significant role at this stage, and the business is bursting with creativity and energy. The team is involved mainly in strategy and positioning; the purpose is the company’s raison d’etre.

2. Organisational stage (8-25 employees)

After hiring around 8 employees, the business owner feels the need to build an organisation. This is often still done as a sideline business, as they are too busy focusing on various other areas. The owner is required to launch more management processes and document issues, and their role is changing into that of ‘manager’. Many business owners perceive this as a tricky stage, as they would rather spend their time bringing creative ideas to fruition. Management requires a different set of skills from the business owner.

3. Management stage (25-50 employees)

During the management stage, the business owner is no longer on their own. Managers are hired, often starting with financial and IT managers, as well as marketing and HR professionals. What the business owner used to do on their own is now a full-time job for a manager. This is not an easy stage: more work, rising expenses, greater complexity, and a strain on margins.

4. Delegating stage (50-150 employees)

The management team is often considered to be complete when the company has about 50 employees and higher. The company now finds itself at the delegating stage. This presents the next challenge: The business owner must leave most decisions to their team. Now more than ever, the business owner must be a leader rather than a manager.

5. Standardisation stage (more than 150 employees)

The standardisation stage is the optimum stage for business growth. In order to experience this growth, the business must start standardising. The challenge at this stage is: scalability and standardisation, without bureaucracy. Business owners devote themselves mainly to the future of the organisation.

Business owner is a bottleneck

At the end of a growth stage, the business owner themself tends to be the bottleneck. During the pioneering stage, everything revolves around them, and there is little formalisation. In order to get to the next stages, the business owner will need to start delegating more and leave duties to others. They then change from a team lead to a manager or leader. The business owner will then have plenty of room to experiment and develop new growth paths. 

Personal development process

Each stage of the process requires a different skillset from the business owner. The company’s growth process doubles as a development process for the business owner. In order to be able to grow, business owners must invest not only in their business, but also in themselves as people and entrepreneurs. Your character, skills and competencies, and personal goals: every business owner responds differently to the company’s growth. You should therefore occasionally take a critical look at yourself. Check whether the company and the direction in which it is heading still aligns with your goals and protect the balance between your personal interest and the company's interest. You can use these insights to take action for any issues that must change. This is how you improve your entrepreneurial skills along with your business.

Employees from day one

Many owners of fast-growing businesses tend to favour workers who have been with them from the start. They are given a growing number of responsibilities and are essentially punching above their weight. New employees also tend to have more knowledge and skills, and a desire to change the internal organisation. It is difficult, but often you will need to let go of your most longstanding employees in order not to obstruct your company’s growth.

Tools and other resources

• The OKR method

The OKR method is a method for growth or innovation. OKR enables you to work towards your goals in a methodical way. In addition, you can respond flexibly to changes such as growth within your company and to external developments. 

• Easier and more efficient growth with ERP

It is a frustrating experience to keep manual control over all data and information circulating in your company. Enterprise Resource Planning (ERP) helps you to link information about customers, employees, stocks, and distribution and keep them up to date.

• Learning from a mentor

Growth is something you learn in practice. You can also benefit from support from experienced business owners who know what you are going through while a business is growing. The nlgroeit (in Dutch) programme has more than 300 experienced business owners as members. They share their practical experiences in a mentorship role without charging a fee for their services. Nlgroeit also provides information, events, and tools related to growth and skills and will help you to take the next step towards growth. The nlgroeit programme is a public-private partnership launched by the Ministry of Economic Affairs, KVK, and Nlevator NL2025.