Understanding the five stages of business growth

What are the five stages of business growth?

The stages in a company’s growth are often classified differently depending on who you talk to. From ‘start-up stage’ to ‘maturity phase’, these widely used terms don’t always mean the same to everyone.

That’s why we’ve developed a formal system of ‘company life stage personas’, to help businesses understand where they are in their journey, what’s needed to transition to the next stage of development and what help is available.

We’ve broken down business growth into five stages…

• Pre-Seed Stage Business (Growth Hubs are geared to support these businesses)
• Seed Stage Business
• Early-Stage Business
• Growth-Stage Business
• Scale-Up Stage Business

Pre-Seed Stage Business

We define Pre-Seed as a very early-stage business that has been operating for less than a year. The business might have an idea for a new product or service and a loose business concept but may not even be registered as a company yet

Age: 0-1 years

Staff: 1-5

Turnover: 0

Key activities:

• Refining idea
• Business design

At this stage, it’s all about defining your product or service offering and taking the first steps in designing your business model and goals.

Potential pitfalls to avoid

Sometimes, an idea is borne out of a personal problem or issue and hasn’t been tested on a large consumer group. At this stage it’s important to ask;

• Has the idea been validated with the target customer?
• What is the product or service going to solve?

Avoid making assumptions, and always test your business idea on potential customers.

How we can help

Pre-Seed businesses are currently out of Innovate UK EDGE scope for support, however, we are able to refer you to a Growth Hub in order to reach the next stage of your journey.

Seed Stage Business

A Seed stage business is a registered company that may be starting to look into market research, product testing and prototype development. It may have already received an Innovate UK grant or may be borrowing or using the owner’s own money to fund the growing business. However, the business may still be in the pre-revenue stage.

Age: 0-3 years

Staff: 2-10 FTE

Turnover: <£100k

Key activities:

• Build/test
• Empirical research
• Feasibility studies
• Prototype development
• Testing

At this stage, the focus is on finding market opportunities for your product or service and establishing a customer base appropriate for your offering.

Potential pitfalls to avoid

Businesses don’t always have a clear picture of where they are on their journey or what we mean specifically by different growth stages. Knowing how to correctly classify your business is important so you don’t miss out on vital developmental steps.

Knowing how your business is classified will also help you to understand the complex business support landscape and where you fit in terms of available support and funding.

It can be hard for some small businesses to take a step back and objectively classify their business. This is where an Innovation and Growth Specialist can help. We can help you to categorise your business and point out the funding available at each stage.

How we can help

Our Specialists can help you navigate;

• Value propositions- early intervention
• Market opportunity assessment
• Access to skills and collaboration opportunities
• Grant Funding readiness- IUK/H2020 (assessment of right funding calls and how to navigate through the process)
• Seed finance (understanding of key financial terms, pitch training, investment deck especially for SEIS schemes)

Early-Stage Business

This is when commercialisation starts to kick in. An Early-Stage business will be starting to generate revenue and profit and be moving on to pilot testing, customer validation and developing a business model.

Age: 1-5 years

Staff: 5-20 FTE

Turnover: £20k – £200k

Key activities:

• Customer validation
• Value propositions
• Business models
• Manufacturing/supply chain readiness
• Pilot testing

Potential pitfalls to avoid

Without a clear strategy, end goals and a timeline for growth, it can be harder to turn your innovation into a successful business. Whether it’s increasing revenue or making a social impact, having meaningful goals can help you to expand and succeed in the long term.

Funding and cash flow management can be a challenge at any stage of growth. While there are many opportunities for grants and funding out there, knowing which ones are applicable to your business and navigating the process can throw up difficulties. That’s where we come in…

How we can help

Here are some of the ways we can support your business growth at this stage;

• Business Modelling / Value Proposition (polished), support around pilot testing, MVP
• IP assessment- costings / timeline / process
• Support around manufacturing / supply chain readiness
• Grant funding readiness- IUK / H2020 (assessment of right funding calls and how to navigate through the process)
• Seed finance (pitch training, investment deck especially for SEIS / EIS schemes)
• Collaboration agreements / Regulatory frameworks

Growth-Stage Business

A Growth-Stage business might already have its product on the market and may be looking to expand into new, international markets. At this phase of growth, finding partners and collaborators might be more of a focus.

Age: 2-10 years

Staff: 5-100 FTE

Turnover: £100k – £5m

Key activities:

• New markets
• Exporting / sourcing
• Physical presence
• Market intelligence
• Partner search

Potential pitfalls to avoid

Agility is important when it comes to the development of your product or service. Often, businesses we work with want their offering to be perfect before launch, which can take years. Avoid burning through your funding before you’ve had a chance to start seeing revenue by building up your offering stage-by-stage.

Andrew recommends creating an initial roadmap to launch a product or service before building on any improvements and customer feedback for the next relaunch.

How we can help

Our Innovation and Growth Specialists can advise on;

• Market research (partner search, competition, rules re: having physical presence abroad)
• International collaboration opportunities, modes of engagement
• IP assessment
• Investment readiness for loans / VC finance or other financial vehicles
• Pitching Competitions / Conferences / Exhibitions, including international

Scale-Up Stage Business

A Scale-Up will be seeing exponential growth and may be looking for help streamlining processes to improve efficiency and productivity. At this expansion stage, the focus might be on talent acquisition, leadership capability and business strategy.

Age: 3-15 years

Staff: 20-250 FTE

Turnover: £250k – £50m

Key activities:

• Talent acquisition
• Infrastructure
• Leadership capability
• Finance
• Strategy

Potential pitfalls to avoid

Challenges at this stage could include accessing markets of the future, access to connections and resources or attracting growth capital.

How we can help

We can help scale your business through our Scaleup Programme, which helps the highest potential businesses realise their ambitions.

How long could each stage take?

High growth innovative businesses can move through stages and enter the next growth phase in under a year. We are here to help accelerate your business on its growth journey by assisting you to focus on resolving the most important issues.

However, moving through phases is dependent on the customer links your business already has in place, what you’re developing, in what market, through which distribution channels, the extent of your sales and marketing activity and a whole host of other internal and external factors.

How innovative companies can find business growth support tailored for them

The unique aspect of Innovate UK EDGE is our bespoke approach to innovation business support. We work 1-to-1 with businesses, working around your needs to provide specific help and advice, tailored to you.

Support can cover;

• Vision and strategy – ambition, leadership & innovation culture
• Market readiness and alignment – value propositions & internationalisation
• Innovation process – innovation management & fit with business strategy
• Internal capability – business model, drivers & enablers, management & leadership skills & experience
• Collaboration – for technology development and transfer or for scaling
• Results – benchmarking, innovation KPIs and business KPIs
• Intellectual Property (IP) – IP Audit, IP management & freedom to operate
• Finance for growth – reserves and cash flow, grant funding and equity finance
• Support for growth – engagement with the innovation support landscape
• COVID support – navigating the challenges of furlough, grants & remote working

Becoming part of the Innovate UK EDGE family gives you access to a wide network of stakeholders, experts and vital connections such as the Catapults or local innovation networks. It’s this wide-reaching, cross-sector support that can really help to grow and scale your innovative business.

Wherever you’re at on your business growth journey, get in touch to learn more about our innovation and growth support.