How Growth Mode Differs from the Startup Phase of a Business

Post Date: April 17, 2020

The goal when starting a business is to grow the business.

The growth of a business requires specific resources, whether it be employees, technology or even funding. But once the business is established, how does one scale the business?

Starting a Small Business vs. Scaling a Small Business

The challenges between startup and scaling of a business differ. A startup small business is tasked first with establishing effective workflows that bring products or services to market and defining their brand differentiators. With the addition of needed resources, it is the expectation that growth will follow.

Scaling, on the other hand, is when a business sees an increase in revenue without needing to increase resources, but instead getting bigger by successfully handling growth.

Small Business Growth Challenges

Scaling evolves a business past breaking even and into profit and revenue growth. It can also encompass growth in staffing, as companies add more employees or offices or even products and services. But here’s the challenge: it takes resources to scale. Scaling requires a balancing act between growth, the resources necessary to sustain growth, and the bottom line.

This is a crucial point of differentiation between startup companies and growing businesses. While cash flow may be relatively stable in a company that’s preparing to scale, it doesn’t necessarily mean that there’s enough cash to sustain growth. Growth takes higher production. Higher production usually takes more resources or greater output. Higher growth may even mean greater financial losses, at least at first, but the goal of a scalable business is almost always to increase revenue without increasing costs significantly. 

Business growth is when a company isn’t a startup, but it isn’t mid-market, either. Big decisions need to be made at this point, encompassing workflows, technologies, staffing, and more. 

One huge problem or pain point when a company evolves from startup to growth mode is always related to funding and revenues. It’s potentially one area that remains, on the surface, similar from startup to scale mode, but it is the scope or volume of cash necessary to scale that may change.

Small Business Funding for Startup and Growth 

The issues and challenges of small business funding change from startup to growth mode. Startup businesses can have trouble even finding small business funding. On the other hand, established companies with a viable track record may find it easier to seek small business funding from traditional resources.

Whether a business is in startup or growth phase, Benetrends can help with funding. We innovated 401(k) rollover funding with our Rainmaker Plan®, which allows entrepreneurs to use their qualified retirement plans to fund a business, without upfront taxes or early withdrawal penalties. Because it isn’t a loan, entrepreneurs can start a business debt-free.  To learn more about the Rainmaker Plan or any of Benetrends’ additional funding opportunities, download Innovative Funding Strategies For Entrepreneurs.

Categories: Blog

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