What’s Your Company’s Stages of Growth?
Cool Companies magazine 2007 Vol.2 Issue 2
Content by Donald Rumball, Chair of Cool Companies magazine’s Editorial Board, and past Business Editor of The Financial Post
Interviews by Claudia Sammer, Founder and Editor of Cool Companies magazine
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There is no doubt that a company and its CEO must evolve for the company to survive and grow. Are there common milestones of growth? We present a research study of high-growth Ontario companies that suggests there are. The stages of growth are marked by employee size: 10, 20, 30, 50, 100, 100+ employees. We take a look at the characteristics of each stage and the milestones the company needs to reach before they enter the next stage. Entrepreneurs of high growth companies from across Canada comment on their growth experiences.
Introduction
Wouldn’t it be amazing if there was a manual on how to grow a company from 1 to 100+ employees in a decade? Maybe we’ve found an outline.
The Chair of Cool Companies magazine’s Editorial Advisory Committee, Donald Rumball, did a research project for the Government of Ontario. (Footnote 1). He discovered 6 distinct stages of growth in a company’s evolution with distinct milestores. The stages are marked by employee size: 10, 20, 30, 50, 100, 100+ employees.
The Rumball study was a market research survey of 746 high growth high growth companies headquartered in Ontario, and controlled by Canadian residents. It is for high growth companies, only 17%of companies fit this description with 50% growth over 3 years. While we may not all be CEOs of high-growth companies, let’s use high-growth companies and Rumball’s study as a benchmark and discussion starter. We take a look at the characteristics of each stage. Of course, not everyone fits but the overall theme of the stage is interesting Each stage requires the CEO and the company to make a switch in behaviour, and this will happen at different times within a stage. The majority of companies in any one stage behave in a comparable fashion, however they do not all grow to the next stage at the same time. Company evolution is seldom a tidy, linear and discrete process. Companies can even go back a stage. Growth is often erratic as companies have periods of stability as they try to digest their recent growth spurt or figure out how companies reach their full potential. Some are sold off to bigger companies; some struggle along without ever breaking through to the next stage, and some die.
CEOs of high-growth companies have a superior track record, with a lower failure rate than other firms. They possess great independence of mind, so their learning process is different. It is heavily based on the experiential advice of their peers; and it is highly focused on immediate needs, opportunities and challenges (with no time or patience for hypothetical learning).
Footnote 1 in this section:
1 “The 6 Stages of Growth” Publication No. 3. Researched and written by Donald Rumball for the Ministry of Economic Development and Trade, 2001. The study can be found at
http://www.sbe.gov.on.ca/ontcan/sbe/downloads/wisdom_exchange/we_report_sixstagesofgrowth.pdf
Definition of High Growth companies
High-growth companies are uber-performers characterized as generating sales growth of 50% or more in a 3-year period. In 2001, 17% of all Canadian for-profit companies with fewer than 500 employees and less than $50 million in annual revenues were high growth companies. Between 1985 and 1999, high growth companies created roughly 50% of all new jobs in Canada. They can be found all over Canada; however, the results of the Rumball study in this article focused only on high growth companies in Ontario. Reference: Patrick Huot and Christine Carrington of Industry Canada
Descriptions of each stage and a quote from an entreprenuer
· Stage 0 to 9 employees: One-person shows
· Stage 10 to 19 employees: Start Delegating
· Stage 20 to 29 employees: Operationalizing + Customer-centric
· Stage 30 to 49 employees: The People Crunch
· Stage 50 to 100 employees: Professionalizing
· Stage 100+ employees: The Corporation
