The 4 Key Stages of Business Growth
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Daniel Marcos is the CEO and co-founder of Gazelles Growth Institute as well as a certified coach of Gazelles International Coaches. Daniel has coached individuals all over the world and works with a wide range of businesses from the million-billion dollar range.
Today, Daniel and I discuss the 4 key stages of growth in a business. Let’s dive in.
What are the 4 Stages of Growth?
After 16 years as an entrepreneur, Daniel Marcos has realized that the decisions you have to make at each growth stage are completely different and this is where CEOs seem to face the most trouble. CEOs often want to execute the same decision for each stage and they often encounter a substantial amount of pain points along the way.
If you want to grow your company, the first bottleneck is you, the leader. Companies need to evolve the leader from an entrepreneur to a CEO and turn their startup into a well-run organization.
Daniel defines each stage of growth by the quantity of employees on payroll instead of the amount of sales that are generated. His reasoning for this, he says, is that as the company gets larger, people find it more and more difficult to communicate throughout the organization.
The first stage is a startup and everyone is wearing different hats in the company. The most important part during this stage is product development and understanding what it is you are selling and to whom you’re selling the product to.
Stage two is the small business. The company size ranges between 6-15 employees. The entrepreneur now has to be a leader. Once a leader, he/she has to do two very important things to keep this status – learn how to give directions to your team and delegate tasks. Daniel believes stage two is the hardest stage for the entrepreneur, because both your clients and employees expect more of you.
Stage three means you’re a leader of leaders. You have between 16-250 employees and now the most critical role is you building up team leaders. You have to develop talent and teach people how to lead others.
The problem during stage three is communication, because communication gets broken as the chain of command goes further down. It’s almost like you’re playing the Telephone Game. At the end of the day, you have to respect the position of your leaders. As an entrepreneur, you get so used to fixing everything, but at this stage you need to give up some control and trust in the people you’ve trained. You have to begin to shine the spotlight on them instead of you.
This is why most CEOs are stuck at stage three and are not able to move on to stage four. To get to stage four, you have to be humble and really let go. Your role is to have a great first layer of executives. If you have a great sales manager, for example, you will never have a sales problem. Though, as Daniel points out, we secretly don’t want a great sales manager, because then we know we won’t be needed anymore.
What does stage four look like? The operation runs flawlessly without you. You leave for vacation and everything is absolutely fine when you come back. The entrepreneur, turned leader, turned leader of leaders – is now an innovator, change catalyst, and chief of culture in the organization. Your duty is to design a culture that’s respected all through the organization and to change what’s currently not working within the company.
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Scaling Up is the best-selling book, by Verne Harnish and the team at Gazelles, on how the fastest growing companies succeed where so many others fail. My name is Bill Gallagher with Humanisteq Coaching and I’m one of the Gazelles business coaches. We help leadership teams to get the 4 Decisions around People, Strategy, Execution, and Cash right so that they can Scale Up successfully and beat the odds of business growth success. Our 4 Decisions are all part of the Rockefeller Habits 2.0 (from the original best-selling business book, Mastering the Rockefeller Habits).