Business growth: the 5 stages of business growth

When your business grows, its structure, culture, and financial situation will develop. This may bring changes such as higher costs, more or less profit, and extra or fewer employees. You may go through all the phases of growth – but you do not have to. For example, because you do not want to take on more staff, or you want to continue simply in an implementation role. 

The Greiner Growth Model 

American Academic Larry Greiner’s Organizational Growth Model identifies 5 stages of business growth 

1. Pioneer stage (fewer than 8 employees)

You are starting out as an entrepreneur and you work in your business yourself, perhaps together with a few staff members. Or your business has been running for a few years and growth is steady. You focus is on your product or service. You keep a close eye on developments in the market. What is your competition doing? Who is your customer and how much are they willing to pay? You constantly adjust your approach so that your business stands out from competitors and customers choose you. 

Tips

• Just starting out as an entrepreneur? Sign up for the KVK Starters programme and get your business off to a successful start.
• Grow your business and get more clients and orders. Find advice and inspiration with our Acquiring customers tool
• Check out what you need to if you are going to hire staff for the first time.

2. Organisational stage (8-25 employees)

After hiring around 8 employees you and also your staff will feel the need for a clear organisational structure. Your role as entrpreneur changes from team leader to that of manager. Time spent on practical matters shifts to more time spent on management processes and issues, 

Tips

• If your business grows and you take on more staff, you will need to deal with more HR matters. Use the KVK Staff adviser to find out what you need to do.
• Think about what kind of organisation and employer you want to be. Then set up processes such as a staff policy, a staff handbook and other administrative matters.
• Consider leadership training in your sector.
• Would you like advice or guidance from experienced entrepreneurs on your next step? Then sign up for a coaching programme at the Entrepreneurs Soundboard.

3. Management stage (25-50 employees)

In the management stage, as an entrepreneur, you start leaving more and more responsibilities to others. For example, by hiring or appointing managers. In the areas of finance, IT, marketing, and HR, the work and the need for knowledge and strategy grows. The workload increases, as do the costs due to managers' salaries. However, this is an opportunity to professionalise your business and ultimately save costs by working more efficiently. 

Tips

• Think about what activities you want to keep doing yourself, and what you want to find managers for.
• Explore options for automation, such as payroll or invoicing. 

4. Delegating stage (50-150 employees)

From 50 and more staff a business usually has several managers. You now enter the delegation phase, meaning you have to leave most decisions to your team. More than ever, you will be leading, rather than managing.

Tips

• Know what pitfalls you have as a manager and work to improve these.
• Spar with a business coach about changes and what you want as your business grows. 

5. Standardisation stage (>150 employees)

The standardisation stage is the final stage of business growth. The challenge in this phase is to scale and standardise without bureaucracy. You work mainly on the future of the organisation.

Tip

• Learn from a mentor. You can benefit from support from experienced entrepreneurs who know what you are going through while growing a business. Through the nlgroeit (in Dutch) programme. experienced entrepreneurs share their practical experiences as mentors.