Guide to S-Curves: Definition, Stages and Inflection Points

Donna Weidinger

Updated July 28, 2022

Published June 8, 2021

Donna Weidinger has been a freelance writer for 15-plus years, specializing in business development. Her writing experience includes career guides, corporate strategic and marketing plans, business development, software and technology, financial services, web content and consumer products.


The growth of a business follows a specific curve,  which many professionals call an S-curve. They use this graphical tool when implementing projects or product launches because it helps measure the progress of their life cycle. Understanding how this concept can help a business adapt to unexpected events and stay relevant in its market can benefit you in your career. 

In this article, we discuss what an S-curve is for businesses, the four stages of an S-curve, common causes for changes from one stage to another and tips to maintain momentum along the curve.

What is an S-curve in business?

An S-curve graph helps describe, visualize and predict a business’ performance progressively over time. This means it's a logistic curve that plots the progress of one variable and relates it to another variable. It displays cumulative data, such as project hours, cost, quantities or progress against time. Project managers analyze S-curves to quickly identify growth, deficiencies and potential problems that may need immediate action. 

Professionals can use this curve to understand the pattern of a business's growth, a product's development or a project's progress. Ensuring a project is on schedule and within budget limitations is vital to a company’s success, and tracking that data is the main purpose of S-curve charts. Some of the most common ways companies use S-curves include:

  • Performance progress evaluations: As work progresses in a project, you can plot positive or negative variances to form an S-curve. Parameters could include planned labor compared to actual labor, planned quantity compared to actual or planned progress and actual progress, for example.

  • Cash flow forecasting: Cash flow is the movement and timing of cash as it relates to the events and tasks on the graph. The cash flow S-curve is useful to stakeholders for tracking spent cash and the need for cash and determining when they’ll require payments or output of cash.

  • Schedule analysis: In the early stages of a project, you can use an S-curve graph to confirm the baseline schedule. For instance, you can take labor hours and costs from a data-loaded schedule, and use that to plot an S-curve to review and analyze the intended performance.

  • Forecasting: As a project continues, the S-curve tracks the data and becomes a record you can use as a reference for future projects.

Related: How To Use S-Curve Graphs In Project Management (Plus Tips)

The 4 S-curve stages

An S-curve comprises four stages, which all have different growth rates. Each stage offers its own opportunities, so identifying the current growth stage can help businesses prepare for the next. Here are the stages of an S-curve in business:

1. Initial slow growth

In the first stage, as a business experiences slow growth and gains little market share, the slope of the S-curve is a slight increase. This stage is critical for building the foundations of a company’s operations. It also helps determine procedures and values that can help the company scale to a much more rapid form of growth.

Related: 6 Steps To Build a Successful Growth Model (Plus Tips)

2. Rapid growth

The second stage represents fast market growth. In this period, customers learn about the business's products, which helps a brand gain market share and creates a  sharp upward slope in the S-curve. Although companies scale to meet their staffing, manufacturing and real estate needs, this growth period isn’t permanent, so it’s important to recognize early indicators of change to maintain momentum.

Related: 14 Types of Business Growth Explained

3. Late-stage slow growth

In this stage, the growth of the business slows, creating a more gradual slope in the S-curve that internal and external factors influence. Watching for various influences can help a business understand when late-stage slow growth is starting. When they notice this, they can invest in counteractive measures, such as products or market shifts.

Related: 10 Growth Strategies With Template, Tips and Examples

4. Stationary demand

In this stage, the business's growth or product demand is either constant or decreasing, so the slope of the S-curve is zero or negative. When the stationary demand phase begins, companies may choose to adapt by innovating with new products or methods. This allows them to reshape their business structure or move to a new product.

Related: FAQ: What Is a Good Growth Rate for a Company?

What are S-curve inflection points?

The point of inflection is the portion of the S-curve that separates positive growth from negative growth, meaning the business' growth slows, and it may eventually stop or decrease. Internal changes within a company, external factors, like economic events, or a combination of internal and external factors can cause an inflection point. Inflection points can challenge a business, but they can also be great opportunities for change. 

A business that experiences an inflection point may adapt by offering new products, developing new features for its existing products or changing its processes to offer those products at a lower price. If this adaptation is successful, the business may begin a new S-curve at the initial slow growth or rapid growth phase. Some common causes for inflection points include:

  • New technology in the industry: When a company's competitors release a new technology or product, this may cause an inflection point that forces a company to adapt.

  • Market saturation: If a company's product was successful in a certain market, demand for its product may go down when it reaches a majority of its possible customers.

  • Regulatory changes: Additional regulations that impact a company's production or distribution can slow its growth and cause a negative inflection point, while reduced regulations may cause a sudden growth increase.

  • Funding changes: Financial changes, like new bank policies or government policies that affect subsidies, grants and loans, can limit or enable a company's growth, bringing an inflection point.

  • Natural disasters: Natural disasters can change what resources and infrastructure are available over the long or short term, sometimes bringing inflection points for entire industries.

  • Scaling issues: Some companies may have internal decision-making challenges when they begin to scale as owners and leadership work to hire, supervise and provide for a larger group of employees.

  • Changing values: For some companies, values may be more difficult to communicate or maintain as more people join the organization, and if the values are an important part of company culture or product value, this can cause an inflection point.

  • Customer relations: As companies scale, maintaining a high level of customer attention and individual care can be a challenge. This change in customer relations may change consumer behavior, bringing a decreased demand and eventually an inflection point.

  • Slower innovation: New companies or products that use new technology may face challenges to their innovation rate as they scale and their development process changes. If innovation doesn't meet customer needs or keep up with competitors, this can cause an inflection point.

Related: Organizational Growth: Definition, Benefits, Drawbacks and Stages

Tips for maintaining momentum on the S-curve

Here are some tips for using the S-curve concept to help your business maintain momentum:

Make plans before the stationary growth stage

When a product or service is selling well, the stationary growth stage may seem distant, but companies rarely can predict a sudden inflection point. A business can prepare for this by developing plans to innovate and investing in that innovation, even while its first product or concept is in the rapid growth stage. Doing this can allow the business to prepare to pivot when the stationary growth period arrives. If a business does this successfully, it may be able to keep a steady stream of revenue by shifting its focus to other products which are just starting their rapid growth stage.

Related: Ultimate Guide to Strategic Planning

Consider all S-curves

Many other processes and products in business follow an S-curve pattern. For instance, sales representatives may see this pattern in their ability to market a new product, or engineers and designers may have an S-curve as they research a new product, develop it and refine it. If you're determining where your business is within its S-curve but your data is unclear, it may help to consider how these other S-curves interact with larger sales and development trends.

Maintain a healthy corporate environment

You may be able to prevent internal challenges by maintaining and investing in employees and systems as you grow. For instance, consider training current employees frequently in new skills, like leadership and adjacent specialties. This can allow them to make decisions confidently and move into supervising positions as the company grows.

Related: Why Is Leadership Training Important?

Look at external factors as opportunities

External factors may provide opportunities for your business to grow in new ways. For example, you might respond to an economic or funding shift by moving into a market with different funding or creating a new product customers find more essential. This can allow you to stay proactive with your innovation and avoid negative inflection points.

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