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Stages of Business Growth

Stages of Business Growth

Written by Jim Skiera

Here’s an article ArboRisk published in the past that is a good refresher for business owners year after year. It helps answer the question: Is what we are working on today going to get us to the success we want in the future? Put simply, are we on course? With the challenges experienced the past few years, you may need to set a new direction for your business if growth is your goal. Understanding the stages of business growth will help you plan for the future business you want yours to become.

Whether you’re starting up a tree care business for the first time or growing the company you have been managing for years, understanding the stages of business growth can help you focus your planning for a profitable future.

This article presents a condensed overview of the Five Stages of Small Business Growth developed by Neil C. Churchill and Virginia Lewis for an article in the 1983 Harvard Business Review. The five stages are Existence, Survival, Success, Take-off, and Resource Maturity. Not all businesses go through every stage, but depending on your level of ambition it’s a quick read that may help you recognize where you are and how to get to the next level.

Existence

At this stage the business is an idea. The owner may or may not have a business plan at this stage, but it is a recommended first step. The owner is working hard to develop a product and or service that customers want. Success at this stage is measured by the development of a customer base that generates enough revenue to offset expenses. Consistent with the term existence, the business is likely doing just that existing. It may generate enough revenue to break even. The owner is experimenting with service offerings and pricing structure that will generate a profit. It is not uncommon in this stage for a business to run at a loss for a period of time. Keeping costs under control is paramount.

Customers at this point are your greatest asset. Customers that refer you to other customers are of even greater value. If you’re able to establish a client base that begins to get you past the break even point you may move on to the next stage; survival. If not, you likely will run out of capital and need to close the doors.

Survival

In this stage you have established a service a customer is willing to pay for and an adequate customer base to generate enough revenue to offset your expenses. Going forward the challenge will be to price your services appropriately and generate enough work to earn a profit, so revenue outpaces expenses. Businesses have good times and bad times. You’ll need to begin to develop a reserve during the good times to get you through the eventual bad times. You customer base and reputation has likely grown, and you may need to hire employees to keep up with the demands of a growing customer base.

New challenges come in the form of hiring, training and keeping employees, maintaining equipment, scheduling work, making payroll and managing cash flow. Businesses that eventually advance to the success stage develop systems to manage customer expectations and profitable production as the company grows. In addition, the business will need to find more customers to continue to grow revenue. If successful in this stage, the business begins to thrive, however, this is also where many businesses stall. Typically, the owner is very good at providing the service the customers want, but may not be good at managing a growing a business. Working harder may not be increasing profits, just the amount of time spent working. Moving past this requires the owner to develop business management skills or hire people who assist as needed with financial management, operations, hiring, legal issues, taxes and accounting, risk management, insurance, etc. to get to the next level; success.

Success

In this stage the business has begun to prosper. Systems and processes are in place that guide the business and the owner has been able to delegate control to qualified and trusted employees to run most of the day to day activities. This provides time for the owner to work on refining systems and processes to optimize business growth and profitability.

At this point the owner is receiving a good income from the business. They may choose to pour profits back into the growth of the company or allow the team in place to manage the business while the owner steps away to use profits for funding new ventures. Many entrepreneurs bring businesses to the success stage and then sell to start a new company.

Take-Off

If the goal is to reinvest profits back into the company, this stage opens the door to rapid growth. The success stage has allowed you to develop systems and processes that can be replicated to expand into new markets. The company can bring on and train additional team members and resources to grow the customer base profitably. At this point it is vital that the company has a well-defined business plan guiding growth. Strategies for growth will need to be monitored and refined as the company expands. What may have worked in the earlier stages, may not during rapid growth. Epic growth can become epic fail if it is not managed properly.

Systems may need to be decentralized as processes become more complex. The growth opportunities may require the company to find new funding sources such as venture capital partners or other forms of equity investment to keep up with demand. Your small business may begin to transform into a big company.

Resource Maturity

The expansion of the take off stage cannot last forever, eventually markets become saturated. The challenge here is to stabilize the company and remain profitable as growth slows. The energy of rapid growth will need to be replaced with new drivers to keep team members inspired. Customization of processes and systems will need to yet again be refined to meet the needs of this new stage for the company.

The company may begin to look at new services and or at purchasing new businesses to increase growth and revenues through different avenues. Departments may be formed to assist with budget development and management. The company will also need to keep fine tuning processes and products to keep up with changes in the industry and customer needs. As a large company you are always at risk from smaller nibbler companies like the one you were in during the success stage. One strategy is to purchase these companies to gain access to their innovations and manage competition.

The intent of the article is to inspire you to think about your current stage of growth and begin planning for your next. Recognizing the stage your business is in will help deal with the challenges and leverage opportunities that come with growth. For more help with developing your business, contact ArboRisk for more information on their Thrive Strategic Development Package! With this package, ArboRisk can help you identify who you are as a company today, what you want to become, and what strategic milestones will be needed to achieve your goals.

Career Paths for Arborists

Career Paths for Arborists

Written by Eric Petersen, CIC

I know you want to keep your best employees with your company for as long as possible, especially since you own a tree service and good team members are hard to come by. And you probably already know that one of the top reasons why talented employees quit is because they do not see a future with their employer. What is even more frustrating is that most of the time the advancement opportunities are there or could be created for those high performing employees, there was just a breakdown in communication and the employee went looking for a different job.

How do you easily inform your current and future employees of the advancement opportunities within your company? My simple answer is to build a career path! Construct an easy to follow diagram to show how an employee can progress through your company. Even if you are a small tree service and there are not be many positions available, set up different levels of their position based on skills and training so they have an idea how to develop their career.

To start creating your career path, ask yourself these four questions:

  • What are all of the different positions in your company today?
  • Will you be adding any new positions in the near future?
  • What is a logical career projection for an entry level employee?
  • What skills do you need at each position?

Use the answers to these questions to begin laying out the foundation of the career path.

When guiding some of my clients through this exercise, I’ve found it helpful to take a sheet of paper and turn it horizontally. Start with putting the entry level position on the far left side and move to the right adding the next level positions one at a time. In between each position draw a line to show the progression of the advancement. There may be a point where the employee could move into more than one position, like sales or plant health care; split the career path to show multiple ways for the employee to continue their career.

Pro Tip: Got job descriptions? Use those to develop your career paths! You probably already have your career path figured out within the different job descriptions for your company. These should list the skills required for each position.

Once you have the layout of the career path assembled, make notes based on what differentiates each level from the previous one. For instance, if you have a Climber I and Climber II positions, what training or skills must the Climber II employee possess? It could be a designation like the Certified Arborist or Aerial Lift Specialist or that they passed an in-house test to make the jump into the next level. Plotting these requirements out onto the diagram will quickly show any employee where they are in the career path and give them an easy visual of where they can go.

Your next step is to hand the piece of paper with your career path on it to someone in your office that can make the document look good. Making this document attractive and easy to understand is very important.

Lastly, communicate the career path with each individual on your team. Make it crystal clear to them that if they invest in themselves and their careers they will get rewarded by moving up in the organization.

If you’d like to see a sample career path that we created, click here to download our freebie of the month! If you need additional help with hiring and recruiting or leadership training, contact ArboRisk today! Our Hiring and Recruiting Thrive Package can help address pain points within your tree care company and take your hiring and recruiting practices to new heights!

Develop Your Employees, or They’ll Leave

Develop Your Employees, Or They’ll LEave

Of all of the factors relating to successful employee retention, one of the most important is employee development. An employee that feels secure and proud with how their career is developing will be a loyal employee. Unfortunately, this is an area in which a lot of business owner’s struggle. There are a vast array of reasons that employers do not help their employees achieve their goals. From not knowing what the employee really wants, to not having time to invest in their employee’s career growth, to not wanting their employees to get better and leave to start their own company. Each of these reasons prevent the business owner from conquering the employee retention debacle. In this article, I want to share with you a few ideas to consider when installing an intentional employee development program within your business.

 

Notice how I said intentional employee development program? The very first step is to commit to forming a definitive plan for your team members. Let go of the fear that your employees will get better than you and leave your organization. Sure this will happen with some, but even then, the former employee will be grateful for their start with your company and return the goodwill to you in unimaginable ways. You must tackle this issue head on and do it with your employee’s benefit in mind.

 

Individual Career Path – Of course we all know that not everyone in your company will be able to, or want to, progress upwards into management. For this simple reason, you must individualize the career opportunities to the employee’s goals and desires. Start by asking the employee what they want out of their career. What matters most to them? Don’t assume they want to make a lot of money or want to have ownership in the business. If they do, that is fine, but let them tell you that. More and more employees prioritize more time with their friends and families, as opposed to income. Next, look at the current positions within your company and show them how a particular position would satisfy their career desires. Also, share with them what qualities a person must have to be successful in that position. These conversations will lay the groundwork for training and experiences that the employee will need to obtain. With the employee, write down their goals and objectives and review them at each employee evaluation to see how they have progressed or, check to see if their goals have changed.

 

Support for Training – Once you have discussed where the employee wants to go with their career, it is necessary to engage and support that employee with training. Be as open and supportive as possible when getting a request from an employee to go to a training session. Training is expensive, especially when you take that employee out of production, but it is still a lot cheaper than the costs associated with employee turnover. Sending employees to ISA and TCIA conferences, or to CTSP or TRAQ classes, are all ways to help that employee better their skills and further their career. Make the TCIA Magazine and Reporter available for everyone to read and see what is happening in the industry. You will be surprised how often an employee will want to go to a class they find interesting when they know you will support their career education.

 

Communication then Creativity – Every employer needs to work on their communication skills. Being able to listen to their team members concerns and suggestions are pivotal in helping each employee reach their potential. Allowing the employees to openly discuss issues they are facing within the company and in their personal life will garner trust between both people. When the employee begins to trust that the employer is looking out for that individual above the company goals, then the magic happens. Creativity begins to grow. When an employee feels comfortable to share ideas on improving their daily work, whether it be exploring new climbing techniques or revising the sales process, that employee’s view on their importance within the company soars. Fostering an environment where the communication throughout the organization supports the development of every individual is the fastest way to organizational success.

 

Everyone wants to feel that they are part of the winning equation within your organization. Be the leader that your employees want you to be and help them achieve their career goals. If you don’t, they’ll be sure to walk out the door and find an employer that will support them.

Written by: Eric Petersen