Last week we left off with the 3rd stage of a business and this week we will talk about the next stages of the small business cycle.
As a small business you might be emerging into higher levels of complexity and strategy. Strategy is important at any stage of business but as you grow, you start to understand what this really means to your business. Strategy develops as you grow your business and over time you will decide what was helpful and what was not.
Your decisions to date have in some cases been lucky. One of the many advantages of having a young small business is having the opportunity to try a wide spectrum of new things because you are simply feeling it out and figuring what works best for the company.
Business owners at this point are dealing with multiple issues that typically involve time and money. Let’s face it, we all have limitations, so figuring out how to leverage such limitations while being aware of a time crunch or budget is critical.
An emerging company starts to understand the value of both of these precious resources as well as understanding that leveraging knowledge will also take them a long way. There is NO WAY to know everything. It’s not humanly possible or even necessary. If in this stage you don’t have a strong financial team you will absolutely need that before going to the next stage.
The pain points for emerging companies are the same as in Stage 3 but it becomes almost a desperate situation. Within this stage you are moving fast. You find yourself entangling bad processes and even worse, bad habits.
At this stage, the full outsourced CFO services would be a great compliment to your company. At MOD Ventures we handle the accounting functions so you don’t have to. We usually combine all the tax services, planning and strategic planning to our package and do the whole engagement under a monthly fee arrangement.
Stage 5 – Maturity
In this stage, it is easy to get into the “been there, done that” attitude, but those companies that show a drive to always improve will continue the process of growth. A company at this point understands that what got them to this stage of growth; their tenacity, strategy and the team they surround themselves with.
Companies either increase or decline depending on the attitude of the owner. It’s easy to get comfortable and more secure but things can change in an instant and new strategies will need to be implemented to keep you on top. You must always be on your toes!
The biggest pain points for companies at this stage is usually the cost of compliance. The cost vs. benefit is always being evaluated with the help of their team. Strategy and the long term goal formation are big parts of the life of a business owner at this stage.
As a mature business, you may lean on an advisory board or a couple of close advisors to help you make the big decisions.
Again, this stage would benefit from a Full Outsourced CFO. Depending on the size and number of moving parts, the traditional CFO model would work just as well as an Outsourced CFO. Strategy, analysis, planning and relationship building with vendors and business partners would be at the forefront of the CFO responsibilities. This broadens your reach and increases the skill and the knowledge of the core team.
In stage 6, the company is getting ready for the succession plan. The plans vary and are as unique as the business is, but designing a plan that will meet the needs of the owner and other interested parties (such as employees) is usually the goal.
This is a project all on its own and to be honest there are so many variables that I can’t even begin to list them all.
Bottom-line! You need professionals. The tax ramifications of a sale can be mitigated with proper planning. Legal advice and contracts are a must. Your financial advisor would be a great asset as well, being that your future cash needs are a major part of the pie they manage.
You need a team of professionals and a DIY attitude at this point will only cost you money.
It’s your business and your money. Manage them well.
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See you next week when we return with another creatively inspired message.