The Six States of Existence in Business Growth

I’m writing about this today because it’s been a hot topic in conversations with both long-term and new clients recently. I know I’ve made many decisions in my business career that broke the formulas listed below… and I know it cost me dearly.

This info is really valuable for a couple of reasons. First of all, it will help you to categorise where your business is at right now. More importantly, every state of existence has a set of rules to follow in order to support development to the next state.

You could call each state a condition of business growth, and the what to do in that state is called the formula. You’ll see a series of graphs below that give a visual to each state. It helps to look at it from the bottom up, so if we list them like this: Succession, Success, Basic Stable Operation, Product Development, Promotion, Start Up.

Start Up

Every business starts in the Start Up state.

The formula for the Start Up condition is to make yourself known. Make sure that people know you, know you are in business to serve, and you are ready to help. Find out what is required or wanted by people around you, and deliver whatever that is.  This is how businesses are started.  You solve a problem that a large enough group of people have, and you have a business.

If you follow the formula for Start Up, you’ll move up into the Product Development condition.

Product Development

In the Product Development state, you are going from one disaster to the next (not sure if you can pay the rent next week, never mind the wages).  You don’t have well developed products that are valuable for your customer, and therefore easy to sell, and also inexpensive to deliver in terms of labour and cost. The formula for this is:

  • Recognise that things aren’t going great in your business yet. It’s not smooth sailing, and there is a bit of danger about. Once you’ve confronted this, start to ask questions of yourself and your customers. What do they want more of, or less of? How can you continue to help them? What combinations of products or services can you bring together to make you (your business) more valuable?
  • Do this yourself (don’t get someone else to do it).
  • Then organise the business (think of and create systems based solutions) so that the you and your clients know that your products are satisfying what they want. Make sure the solutions are documented and applied by everyone in the team. Get everyone in the team (if there is one) involved in documenting these solutions and procedures, and make sure that you are certain they have been documented correctly.
  • You’ll know you’re on the right path when you have lots of referrals and advocacy happening by people around you, including clients, friends, and family.
Product Development

Product Development

You will then move up to the Promotion condition

Promotion

By improving Product Development, you will move up to the Promotion condition.  Suddenly, there will be lots to do or change. It’s time to put your attention on increasing your marketing. Cashflow will not yet be abundant, and the way to increase it is to increase your investment in marketing and messaging.

  • Talk big, and make sure you deliver.
  • Economise, and get ready for more action, because it will come.
  • Prepare for production to grow. Make sure that you have your products organised with an ease of production, promotion, and delivery. 
  • If you are coming up from a lower state, keep operating the way you were, and pick up the pace.
  • If you are coming down from a higher condition, then find out what went wrong, and fix it.
  • This state is all about promoting, marketing, and making sure that more of your target market know you exist, and have an understanding of what you do.
Promotion State

Promotion State

Basic Stable Operation

If you follow the Promotion formula, you’ll move up to Basic Stable Operation.  This is a good indicator. In Basic Stable Operation, make sure you don’t change anything.

You’re doing alright and it isn’t the time to find a new way of doing things.  When results increase, make sure you understand exactly what caused this increase, document and then increase or strengthen this action.  Make it a part of the business culture. This is the time where you want to observe everything, and give yourself time to check that there is consistency. Marketing, Sales, and Production are particularly important to watch.

If results diminish, find out the cause of it and correct it.  Basic Stable Operation is a time to relax discipline a bit as statistical trends are rising.

This is where it can get exciting.

Success

Following the formula for Basic Stable Operation means that you will move up to the Success State. The formula for Success is to economise. There will be plenty of cashflow in this state, so…

  • Slow down spending. When in the Success State, do NOT create any future financial commitments for yourself or the business.
  • This is the biggest mistake that occurs in the state of Success – money starts coming in and the car gets upgraded or you buy a new house – which puts pressure on finances eventually, and you move back down to Basic Stable Operation or even Product Development.
  • Eliminate waste. Pay all your debts.
  • Find anyone you owe money to anywhere and pay it. Meet all prior obligations. Clear the deck for a huge amount of action.
  • With any remaining money, invest in the business to improve the ability to scale and deliver efficiently.
  • Find the exact action and people that caused the success and support them (invest in them, develop them further). Your people are you most important asset, so make sure that they are being supported and further develop their abilities and skills.

Now you’re cooking with gas – You’re moving toward the Succession State

Succession

Following this formula for Success will move you up to Succession.  In Succession the formula is to create procedures for everything.

  • Document everything you did on the way to getting into Succession.
  • Make a list of all your contacts that have had anything to do with you getting into Succession.
  • Make sure the person who is taking over your role has that list, and begins to build a relationship with every person on the list.
  • Expand your area of responsibility and control.  Make sure that you are available for the person that is going to be doing your job for you, and ensure that person gets every single bit of information necessary to keep things moving and growing. Support that person to continue to expand the business!

If you don’t follow the formula for each condition, you’ll find yourself (and your business) moving up and down, and you won’t trend toward Success and Succession.  The most common thing we’ve seen is organisations getting to Success, and then moving back down, usually because of poor financial decisions for that stage of business growth.

When you move up to Succession, you’ll see the graph look similar to the Basic Stable Operation Graph. It will just be at a higher range. This is a good thing! Your task now is to make sure that your people are following the same principles and formulas with their teams and their areas of responsibility.

There’s a lot of detail in this information, so reviewing this multiple times is going to be beneficial for you.

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