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The Stages of Business Growth: Scaling & Culture
As a bank founded on the entrepreneurial spirit, women business owners are a group that City National Bank is especially passionate about supporting. Breaking down the barriers that limit women's ability to prosper as independent business owners is critical to our collective economic future. That's why we undertook a research initiative to better understand the experiences of women entrepreneurs.
This article is adapted from a portion of that report. Download the complete report or read more articles based on it here.
What does it mean for a business to be mature? It means that an owner has managed to navigate their business through the ups and downs of the inception and startup stages, found their path to growth—and so has their business.
In the maturity stage, businesses are stable and profitable. They serve a large and loyal customer base that understands and values their products and services. They have a seasoned team of employees who work well together.
These companies may not be growing as fast as in the past, but they've reached a point where they satisfy an owner's goals for size, profitability, market share and reputation. Now the business owner must maintain that business at this larger scale while building and reinforcing company culture.
Stability Not Stasis
Mature companies may have reached the size and level of success that the founder envisioned but that doesn't mean they can't continue to evolve. Even at this stage of growth, women business owners need to be able to react to new opportunities and risks.
Many mature companies continue to expand by adding employees, locations and business lines. A few reinvent themselves with new products or services that take them to the next level.
Whether women business owners are growing their companies or keeping them stable, this is a good time to review processes to make sure they still support the business.
Improving Internal Processes
For instance, if you set up human resources as a startup with three employees and now have 100 staff members, you may need to upgrade your capabilities. In the same way, the ad hoc solutions for legal, accounting, IT and other services that got a company off the ground may not work for a mature enterprise. A thorough review can turn up opportunities to improve operations.
This is also an opportunity to review a company's finances, including cash management systems, debt and equity capital. Entrepreneurs who funded early growth with their personal credit cards will now have an opportunity to borrow on more favorable terms.
Companies with a multiyear history of profitability and growth may attract venture or private equity capital. Sophisticated cash management can balance a company's needs for liquidity with the potential for higher yields.
At this stage, an experienced banker or financial advisor can help women business owners create a sound foundation for their companies. By the same token, this is also a time in the business owner's journey where personal wealth planning advice is important, setting things in place now to ensure long-term financial health in the future.
Defining Company Culture
Business owners who reach this stage are justifiably proud of their success, and they look for ways to share that pride with their teams. They have settled into a groove as a business owner, and continued to refine their leadership style over time.
While this is a stage in the business journey where many business owners are focused on continuing growth, potential M&A opportunities or even a public listing, this is also an incredibly important time to consider company culture.
How do you want your employees to feel about working for you? What kind of office culture do you want to cultivate? The answers to these questions will differ with every business owner, but they remain crucial elements to the sustainability of the business – a happy workforce makes for a happy business. Likewise, a toxic workplace environment can encourage even your best employees to go elsewhere.
Reinforcing Culture with Benefits
Early-stage entrepreneurs typically can't afford to provide full benefits such as paid time off or health insurance. Many women business owners we spoke to in our research said that, early on, they offered flexible environments and worked to facilitate a sense of camaraderie and accommodate employee needs, in the absence of a well-defined benefits package.
However, as a business grows, benefits can become more important. They help attract and retain the high-quality employees that business owners need, while reinforcing a culture that values individual effort.
“When you find employees who think out of the box and have a can-do attitude, that is a slam dunk," commented Dolly, the owner of a travel consulting business we interviewed. "I found some really great people who didn't actually have a lot of experience, but they had a phenomenal attitude and were upbeat, enthusiastic and creative."
Business owners may require outside expertise to structure a benefits package that meets employee needs – especially when it comes to core benefits like health coverage, life insurance and pensions.
Taking Pride & Looking Forward
In the maturity phase, women business owners come into their own. The company that started with an idea at a kitchen table or cubicle has now turned into a profitable enterprise. These dynamic entrepreneurs now have customers who value them, employees who believe in them, and, in some cases, financiers who want to invest in them. They are feeling justifiably confident, empowered and supported.
For women business owners who have reached this stage, it's time to celebrate what has been accomplished and acknowledge how far they've come. But as more people depend on their success, it's also an opportunity to seek out support, advice and guidance, for both the owner and their employees. Check in with valued staff. Connect with other entrepreneurs. Reach out to vendors and customers.
At this stage, having found success of their own, women entrepreneurs can serve as great resources for other founders who are just now starting their own journey. Joining industry associations or networking groups, taking on mentorship roles or even public speaking engagements about their experience are all ways for successful founders to share their knowledge with the next generation of women-owned businesses.
These are opportunities to potentially make the path for future founders easier than it was for them, as well as forge relationships with up-and-coming businesses who may be future partners, resources or acquisition opportunities.
Reaching the maturity stage will take a different period of time for each business – there's no hard and fast rule for when you have to get there. Regardless of how you got here, or when, this is also an important time to start looking forward to the future – for you and your business.
What's next? The Succession Stage.
Download the full report, From Inception to Succession: The Six Stages of Women's Business Ownership, here.
The Stages of Business Growth
This article is for general information and education only. It is provided as a courtesy to the clients and friends of City National Bank (City National). City National does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors or persons quoted as of the date of the article with no obligation to update or notify of inaccuracy or change. This article may not be reproduced, distributed or further published by any person without the written consent of City National. Please cite source when quoting.