The stages of the business growth cycle

1. Startup Stage

• Focus: Developing the product or service, establishing a market presence.
• Key Characteristics:
  • • High investment with little or no revenue initially.
    • Rapid growth potential if the product/service meets market demand.
    • Heavy reliance on external funding.
• Challenges: Market entry, customer acquisition, and securing funding.

*A high-growth company (growth phase: startups or high growth) typically has revenues of +25%.

2. Growth Stage

• Focus: Expanding market share, increasing revenues, and scaling operations.
• Key Characteristics:
  • • Revenue growth.
    • Increasing customer base and geographical reach.
    • Investments in infrastructure, marketing, and workforce.
• Challenges: Managing growth efficiently, maintaining product/service quality, and handling competition

*A profitable company with healthy growth (profitability phase or maximizing it) grows between 15%-22%.

3. Maturity Stage

• Focus: Maximizing profitability and maintaining a stable market position.
• Key Characteristics:
  • • Revenue growth moderates.
    • Focus shifts to operational efficiency and optimizing profit margins.
    • Established brand and loyal customer base.
• Challenges: Market saturation and the need for innovation to sustain competitiveness.

*A profitable company with low growth (capital return phase) grows between 5%-12%.

4. Decline Stage

• Focus: Addressing shrinking revenues or preparing for exit strategies.
• Key Characteristics:
  • • Revenue growth slows significantly.
    • Reduced market share and profitability.
    • Potential divestment or downsizing to cut costs.
• Challenges: Revitalizing the business or navigating through an orderly decline.

*A company on the path to disappearance (decline phase) grows below inflation, under 3%, or even experiences negative growth.

5. Renewal (Optional)

• Some businesses undergo transformation to avoid decline, entering a renewal phase.
• Focus: Innovation, diversification, and re-strategizing.
• Key Characteristics:
  • • Introduction of new products/services.
    • Targeting new markets or audiences.
    • Embracing technological advancements.

Visualizing the Cycle

The stages are often visualized as a loop or curve:

Startup → Growth → Maturity → Decline → Renewal/Exit.

Source: @BrianFeroldi (X), https://brianferoldi.kit.com/99