The 4th Stage of Business : 2nd Growth

This is the final part of a four part post on the stages of business growth: Start-Up, Emerging, Performing, and 2nd Growth.

Like an Oak businesses have growth stages

Now, not every business reaches the 2nd Growth Stage, but that is not to say that those businesses that don't are unsuccessful.  Performing business are great. They are profitable, have reach a level of growth and can expand via vertical and/or horizontal integration. They have good management, a great brand and an excellent culture - but they may never reach the 2nd Growth Stage.

2nd Growth businesses are the great success stories. They can be small, medium, or large entities that go the next step in development.  This normally takes, what I term, big bet decision making and usually includes a major investment, merger, acquisition, new product line, or other impacting action that propels that business to reinvent itself. Apple's development of the iPhone, Netflix's switch to streaming from the mail order business, Amazon's decision to e-tail everything from just books - these are examples of 2nd Growth stage development.

We witness 2nd Growth in the technology, healthcare, and cleanspace sectors but it can occur in any type of business. Bose was a manufacturer of high-end audio speaker systems in New England and through innovative product development and a great branding program propelled itself to a 2nd Growth stage and is now a household word in audio products.

Businesses have growth stages. Like a sturdy oak that goes from acorn to sapling to tree businesses go from Start-up to Emerging to Performing and in special cases have a 2nd Growth.

Jim Lavorato

BRAND and CULTURE

A business's culture is sometimes short-changed but it is vitally important for any company's success.
Culture increases productivity and is certainly a factor in retaining employees and reducing turnover. It also improves customer satisfaction.

But, culture isn't enough by itself - it must be integrated and interfaced with the company's Brand.
A mutual and re-enforcing relationship must be established between what your business does on the inside (Culture) and how it is perceived on the outside (Brand).

The Culture must:
- express your brand's purpose and value
- develop employee mindsets and behavior that enable them to deliver on-brand experiences
- get everyone on the same page regarding the company's unique challenges and opportunities.

Your goal is to integrate the Culture and the Brand so together they give the company sustainable power. To do this you must:

- Adopt a Single Brand Purpose: to inspire, focus, and guide what the business does, what the Brand stands for. This defines the purpose of why the business exists.

- Articulate One Set of Core Values: that permeates inside and outside the organization. One set of core values that describes the way you do things, both as an company and brand.  You must engage your employees and customers with the same set of values.

- Assess the Existing Alignment and Integration: of the Culture and Brand of the business. What values should be embraced by the business to achieve the desired Brand - fusing internal Culture and external Brand is essential.

Culture and Brand go hand-in-hand, they must be developed together and used in tandem for both to be successful.

Jim Lavorato

Diagonal Disruption

The new dynamic impacting businesses around the globe is termed: Diagonal Disruption. Normally, businesses grow vertically or horizontally. Vertical integration strengthens a business's core, while horizontal, its reach; however, diagonal growth crosses the normal growth routes and disrupts the status quo.

The digital domain has given rise to diagonal disruption. Two good examples of diagonal disruption are crypto-currencies, such as Bitcoin or Ether, and Amazon's intended purchase of Whole Foods.

Crypto-currencies are changing the way national currencies are valued and used. Start-ups are using these internet-based currencies as a path to obtain venture capital. They collect the cyber-currencies from investors and exchange them into dollars to spend on operational expenses. Many large corporations have joined the non-profit, Enterprise Ethereum Alliance, including JP Morgan, Toyota, Merck, and Samsung.

Crypto-currencies have had a phenomenal rise. Bitcoins hit a record last week, being valued at $2,600 per coin. While the value of Ethers has risen over 4,500 percent since their inception  last year.

Amazon's incursion into the mass-market food industry will drastically alter the way supermarkets will be operated and managed. If Amazon repeats what it has done to other markets it has entered, one would expect food costs to be lowered as it increases its volume - this strategy has been part of Amazon's core culture since day-one. Amazon has been looking to expand its on-line grocery business and Whole Foods' 430 stores will allow Amazon to offer curb-side pick-up of on-line orders.

We'll be witnessing more and more diagonal disruptions as time goes on as the internet, robotics, and other emerging technologies bring unseen opportunities to light. We at the FUND-HOUSE will be doing just that - looking for the diagonal disruptors to invest in.

Jim Lavorato

Performing: The Third Growth Stage of a Business

The Performing Stage

This post is the third in a four part series regarding the Growth Stages of a business: Start-Up, Emerging, Performing, and 2nd Growth.

In the Start-Up and Emerging stages it's all about development and establishing a solid base upon which to build a growing and, more importantly, performing business.  In the performing stage, the business is now established and profitable. It continues to expand and scale by adding new clients/customers. Tattooing its brand on consumers' consciences and increasing its profit margin.
Growth is now the issue: increasing sales, marketing, and H.R. in general. Product development and
quality control are key issues. A confident, mature management is now well established and ready to implement a strategic, multi-year plan for future prosperity. In the Performing Stage, organic expansion is evident and acquisitions or a merger may be in the offing.

The Performing Stage is just that - the business is now established and running effectively, efficiently, and profitably.  Whether or not a performing business will ever reach the 4th stage of 2nd Growth is now dependent upon management and their vision and adaptability.

Emerging: The Next Phase of a Business

The second growth phase for any business is the Emerging phase. Emerging - when you further define your brand, customer base, marketing focus, staffing, and management culture.

Emerging: The time to take hold

Your business is now establishing itself - you're building revenue while keeping an extremely close watch on expenditures. The management team is finding a niche in the marketplace and being savvy about doing things right from the get-go.

Additional funding may be required for expansion and market penetration as the business begins to scale.  This is when venture capital may come into play as a sound emerging business is one that is not destined to stay small but exhibit significant growth opportunity.  This is when the decision is made on whether the business will remain small or warrants a significant investment in its potential to become a much larger enterprise.

It is the owners/initial investors that drive emerging businesses to the next level - Performing. Exhibiting operating cash flow growth is an essential mark that the business is now fully emerging and that management is right and ready to address the future.

Unlike the Start-Up phase, which is normally of a short duration, 6 to 18 months, the Emerging phase can take several years to develop.  Obviously, the shorter the duration the better and it is not uncommon for businesses in the technology or healthcare sectors to move from Start-up to Emerging to Performing in short-order.

The Growth Stages of Business - A Four Part Series

There are four Business Growth Stages:

- Start-Up
- Emerging
- Performing
- 2nd Growth

In this post I will be addressing the first stage: the Start-Up. In subsequent posts I will speak-to the other stages.

Start-Up

The Start-Up stage is most critical as it sets the foundation and initiates the business launch.  This is when crucial early-stage funding is required and must be utilized properly and prudently.

Pre-launch requirements are complicated for even the most basic of  ventures. Legal, tax, and financial requisites. Physical presence (location, size, and necessary infrastructure) can, for many businesses, determine success or failure. Establishing management roles (who does what), hiring, training, establishing policies and procedures, and spawning the business' culture. These are all start-up activities.

Marketing is extremely important as this is when the business establishes its identity and initiates its branding strategy. Creating a logo and perhaps a byline is required. Both traditional and new forms of promotion and advertising must be addressed.  Social media is requisite. A website is a necessity for even the smallest of companies and promotion through Amazon, Twitter, LinkedIn, Facebook, Google, and a company blog must all be considered. Traditional marketing outlets, such as, ads in newspapers, magazines, and trade journals. Radio and TV spots and a variety of promotional activities, especially at launch, are required.

In almost very case, the Start-Up stage requires assistance. Capital infusion from outside sources, such as angel investors or venture capitalists, may be required. Consultation from start-up specialists and legal and accounting experts may be required. The hiring of a website developer and/or a graphic artist will be needed. The issue is: you can't do it alone. Given the complexities of today's business environment it is almost impossible to conceive, research, plan, implement, market, and launch a profit (or for that matter non-profit) entity without outside professional assistance.

Remember: the Start-Up is the foundation upon which you build the business and prepare for the next stage - Emerging. This is when you begin building the business, solidifying your brand, increasing sales, developing a solid customer base, finding the niche, and nailing-down the product and service fulfillment.

The Fund House - Your Business Launch Pad

Who and Why To Read 'Launch Pad'

Fund House Logo

This is the very first post to the new Fund House blog. It is intended to be viewed and read in concert with the Fund House website, on-line videos, and social media interplay.

Fund House exists to provide two distinct and critical aspects to start-up and small business ventures: consulting and investment.

Consulting: We provide early-stage businesses and start-ups with the vital tools required to successfully launch and then maintain momentum which is critical to sustainability is the very harsh business environment we currently find ourselves.

Investment: We will provide micro/angel funding for those entities in the green space, technology, medical, and media/performing arts that we deem to have great potential and management and which compliment our portfolio.

Our strength lies in the ability to, not only analyze, but foster a forward-thinking business philosophy which builds high-performance, results-oriented cultures.  We are facilitators in the development of influencer products and services.

Why View/Read This Blog

As our logo depicts, the Fund House is a tri-union between our client, their business venture, and ourselves - working together to provide greater success than would be achieved otherwise. This blog will adhere to that credo. It will provide the best advice and information available without bias or sales pitch to the benefit of all small, early-stage, or start-up businesses.