What are the Five Stages of Small Business Growth? 

Whether you’re still toying with business ideas or have already taken the plunge into entrepreneurship, understanding the different stages of business growth can help you plot where you stand and devise the appropriate growth strategies to overcome challenges. Is your business thriving already? If yes, don’t rest on your laurels just yet. Every small business goes through several stages of development, and what works right now may not work later. Read this guide to know the different stages of small business growth according to Churchill and Lewis and plan accordingly.

Five stages of small business growth


Businesses in this stage are typically small organisations with one or two founders or owners and are run with minimal business systems in place, if any. They are primarily struggling to find a fit between the business idea and the market fit and boost customer acquisition. Small businesses at this stage aim to discover whether the market wants what they are offering and generate enough cash flow before their capital runs out.


A business in the survival stage is still small and tightly run with minimal business systems. Such businesses now have a customer base which is not just willing to pay for their products and services but is also making repeat purchases. The biggest challenge here is to build a stable business model that hits the break-even point both in the short-term and long term. While most small businesses stay here for a major chunk of their life cycle, some successfully generate enough revenue and become profitable.


Most business owners when faced with the choice of what to do with these profits, either – 

  • Utilise it to fund other things (personal or business)
  • Reinvest to grow further

Small businesses which fail at this business growth stage revert to the second stage as their profitability crumbles. Investing the profit to fund other things reflects an external market shift. However if the business fails despite choosing a business growth track, it shows the inability to develop and nourish a sustainable system and staff.


Businesses at this stage are “rattling rocket ships”, which means they are growing at such an exponential pace that they may collapse altogether if they are not well managed. As crafting the right growth strategies for management becomes the top priority, these businesses often decentralise and face unique challenges, such as – 

  • Hiring the right people to keep up with the rising demands
  • Managing the rapid business growth internally
  • Funding further business growth
  • Avoiding growing too rapidly and overextending themselves. 

Due to the increasing complexity and the rapid growth of such organisations, the owners can no longer be involved in everything and need to delegate smartly. Finding talented management staff to carry the torch is key. 

Resource maturity

The main focus of businesses at this stage is the proper management of the financial gains from the last phase and longevity. It involves careful and consistent reviews of processes and systems to resolve any inefficiency issues that may have crept in during the rapid business growth. Businesses need a rock-solid system to thrive at this stage for stability and yet need to stay nimble to adhere to market changes. They must find ways to innovate and stay hungry like small businesses but at scale.

Small businesses are like snowflakes – each is unique in how it runs and serves its audience. Yet, all of them have similarities in their stages of business growth. We hope that we were able to help you understand where your business falls right now and how you can devise growth strategies further with this guide. Don’t sleep on scalable tools as you work on your business idea. Get your finances in order, and scale your business with Tide. We aim to help small businesses and freelancers save time and money and focus on what they do best.  

Darshim Saxena

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