Hiring in Each of the Stages of Small Business Growth

The dynamics of business growth and the cycles that companies go through in the course of dealing with the ever-stormy realities of the marketplace have been a topic of research and writing for decades. In the 21st century, as the digital economy continues to transform the interface between businesses and consumers and to evolve the needs of small businesses at all stages of growth, it’s even more urgent to revisit that conversation from the standpoint of hiring in particular. Understanding the needs of your company at each step in its progression can help you to find the people who can propel your business into the future.


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What are the stages of small business growth?

The experiences of entrepreneurs are very diverse, often based on the specific industry verticals, circumstances and settings where they find themselves, but there are still larger patterns of growth and development that apply to most small businesses. There are different schematic ways of breaking down this progression, mostly depending on the level of detail that’s appropriate for the venue, but the most fundamental stages of business growth are:

  • Stage 1: Start-Up
  • Stage 2: Growth
  • Stage 3: Maturity
  • Stage 4: Renewal or Decline

This overall framework describes a common pattern of changes in everything from money supply to needed levels of internal structure as a business evolves, and the way in which employers go about filling staff and contractor positions in order to enjoy maximum business growth will likewise need to evolve. At least, that’s true in the case of lasting and successful companies. The best ways to join the ranks of successful hirers are treated separately and in detail in each stage below.


Stage 1: Start-Up

The start-up phase is, as the name implies, about finding a way to provide a product or service, launching it on the market and finding customers to buy it. This is the very first phase of a business simply existing. In this phase, a start-up also explores whether it’s feasible to deliver what they’re promising at a profit to a public that wants to buy it.


Often, the start-up phase involves a pilot or other proof-of-concept project that might eventually lead to a wider sales base. It’s all about a simple organization consisting of just a few people, or sometimes even a solo entrepreneur at first, trying to cover all the bases and find enough money to satisfy the cash demands of starting a business. A company won’t have much in the way of systems or formal planning: the business and the owner are essentially the same.


How to hire in the start-up phase

The start-up phase claims many businesses before they can get off the ground, simply exhausting the owners or failing to become viable before the supply of starting capital runs out. For those who manage to survive the earliest days of building a business, the time eventually comes when they decide where help is needed and hire their first employee.


The risk to businesses hiring in stage 1 is that the sheer pressure of staying afloat can lead to hasty staffing decisions. This is the pitfall it’s most necessary to avoid: It’s important to be deliberate about deciding what your needs are, vetting potential candidates, being aware of labor laws and salary standards, and hiring someone who would be both easy to work with and could pass a criminal background check.


Making the right hiring calls here is crucial to reaching stage 2, and even then, doing so won’t necessarily be easy. High rates of employee turnover are a common challenge to starting businesses.


Stage 2: Growth

Business growth starts to manifest in stage 2, when it becomes clear that there’s a market for what the company is doing. Revenue and public awareness start to increase, staff attrition starts to reduce, and the company’s customer base and market share grow. As this stage begins, growth becomes increasingly rapid.


There can be times when stage 2 will take a business, long used to struggling for survival, by surprise. It’s not always easy to stay focused on the business’s goals when the enormous pressure of the start-up process finally begins to ease.


During this phase of growth in business, a company should:

  • Focus on maintaining capital
  • Find effective forecasting that makes it possible to prepare for and adjust to changes and opportunities
  • Set realistic goals that make the most efficient possible use of its available resources

This is only possible to accomplish in conjunction with getting the right team, processes and structures in place.


How to hire in the growth phase

Dealing with rapid business growth involves putting together a hardworking team that pulls together to deal with vendors and suppliers, seeks out prospects and drives sales and marketing, and generally pursues and takes advantage of all the opportunities that make accelerated growth possible.


It’s also a time to set more formal policies and infrastructure in place: to put together an employee handbook, for example, and to formulate policies that make diversity, equity and inclusion — a key driver of growth — core to your business culture. This involves hiring people who are ambitious, creative and can think outside the box while still driving core priorities forward.


Stage 3: Maturity

The challenge of the start-up phase was risk and pressure, operating without a net to find out if the business would swim or sink. The challenge of the growth phase was being able to keep momentum once it began to build, taking advantage of a window of opportunity to reach success and build for the long-term.


By stage 3, the long term has arrived. The business is stable and has a strong market presence and consumer connection. Cash flow is strong, the resources and people are available to deal with issues quickly, and there’s a sense of security that wasn’t present before.


That new sense of security brings a different kind of risk with it: the risk of stagnation. The burning motivation to expand and grow is no longer a drive of day-to-day necessity, or at least, it doesn’t feel that way. This can be deceptive; for in fact, no matter the scale of a business in the modern marketplace, the pace of change remains relentless and the business that stops striving to change and adapt can find itself rapidly obsolescent.


For the business owner who is no longer interested in those kinds of challenges, this may become a time when selling the company becomes attractive. For those who want to keep moving forward and competing, this is a time to develop new products and expand into new markets.


How to hire in the maturity phase

Hiring in stage 3 is only partly about finding people who fit your values and can reinforce your established brand. Those things remain important, but it’s also important to find people with excellent teamwork and management skills who can marshal your existing team and bring fresh energy to their work, looking toward the expansion of market share and the opportunities of the future.


By this stage, what you will likely need to meet these objectives is a large-scale, disciplined and tech-savvy recruitment process that can evaluate large numbers of qualified candidates quickly, identify and connect you with the best hires, and in general, keep the company competitive in a fast-moving jobs marketplace.


Stage 4: Renewal or Decline

Finally, after a period of stable maturity, nearly every business will face a turning point at one time or another. If they fail to pursue the right opportunities or expand aggressively enough in stage 3, or if changes to their industry or updates in technology have radically challenged their business model, or if competitors have started to gain on them and eat into their market share, they can face the reality of decreasing revenue year upon year. It’s not uncommon for all of these problems to strike at once.


That falling revenue is the unmistakable indicator of decline. When faced with it, a business basically has two choices. Either they can reinvest in the company’s future or sell. It’s common to choose the latter, but that’s outside our scope here: If you’re hiring in stage 4, you’ve chosen the option of reinvesting.


Reinvesting likely also means reinventing. This is a lot easier if the process of planning for change and a culture of seeking out new opportunities was established in stage 3, but whether it was or not, it’s necessary to adapt at this point. If you’ve drifted out of touch with your target market or other realities of your industry have changed, this is the time to thoroughly evaluate what’s going on and change course. If you need to invest heavily in new technology and retraining your personnel, this is the stage when executing on those commitments becomes crucial.


The struggle for survival has begun again, now with much bigger stakes than the financial fate of a small start-up. And your hiring needs to reflect those stakes.


How to hire in the renewal phase

If you want the process of reinvestment to lead to renewal, your hiring process needs to be firing on all cylinders and making full use of modern innovations like applicant tracking software packages.


At this point, you need to attract people who have the drive, ambition and expertise needed to help reinvent your business strategy while at the same time having the experience and judgement to know what policies, processes and approaches to keep and which to change.


The process of renewal is also about reforming company culture and making sure that any new ideas and technologies are adopted company-wide. Getting true buy-in for that kind of transformation across an entire organization is easy to talk about but difficult to execute, and often requires candidates with strong charisma and the ability to vividly articulate a vision to multiple kinds of stakeholders. When trying to decide between two highly-qualified renewal phase candidates, the one who can deliver best on that interpersonal connection is often the strongest choice.


Dealing effectively with the stages of business growth is never an easy process, no matter the sector your small business is competing in. Taking a systematic approach to those stages, and to the hiring process that’s part of them, improves your chances of success immensely.

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