The Chamberlain & Lewis Five Stages Of Small Business Growth Model

Neil Churchill and Virginia Lewis have developed the five stages of small business growth model to discuss the issues involved and moving between the stages. The five stages are as listed below:

1. Existence
2. Survival
3. Success
4. Take-off
5. Resource Maturity

Stage One Existence

In this first stage, the business has to show that it has the ability to get customers to buy their products and delivers on the promises so well that customers pay and become repeat customers. At this point customers either move onto the next stage or fail and close their business once they use up their start up funds.

Stage Two Survival

At this point we see that the business model works, but is the company able to generate profits and fund their future growth plans? A lot of businesses get stuck in this stage, they started their business but didn't take it to the next level. They didn't measure their progress to see if they are even making any money. Many companies lose their motivation at this point and aren't ready to protect the company during tough times or push the business into stage three.

Stage Three Success

At this point the company has proven itself and they either look to expand or ensure it's ready for the future. They might stay in their comfort zone and the owner might decrease their involvement. Some might grow as big as they can for their location and decide to open in a new region.

Stage Four Take-off

This stage usually sees rapid growth which brings the challenge that cash required to fund growth is not available and they need to delegate responsibilities to a management team to support the bigger business. In order to fund growth companies will borrow from retained earnings, owners will make less cash withdrawals, incur debt or bring in venture capital. Any failure here will bring them back to stage three.

Stage Five Resource Maturity

Ok at this point the company is a big business and needs to do some streamlining and eliminate inefficiencies that may have appeared during growth. The company might get tied down by its size and lose its entrepreneurial sense and creativity.

Critical Factors For The Owner In The Growth Model

• Personal goals for themselves and the business
• The owner's abilities to do the important tasks themselves - critical in the early stages.
• The owner's ability to manage people successfully and delegate work.
• The owners ability to look at the business from a strategic perspective and see the strengths, weaknesses, opportunities and threats and take the appropriate action.

I think this is a good link to have in my toolkit just to look back at from time to time and see where my business is on the growth model.

http://businesscoaching.typepad.com/the_business_coaching_blo/2008/07/small-business-growth-problems-issues.html

Business Plan – Forcast Demand – LetsLearn.com

What is your company about?

The company LetsLearn.com has a unique business model with a clear value proposition of bringing the world of students across different continents and regions to one common place, your desktop. To start the target market is Massachusetts, and over 1 million students to share their knowledge and help each other. One-to-many and many-to-one learning and teaching, collaborating to get the answer to your questions and learning together is the main focus here.

What is the addressable market?

The addressable market is currently the state of Massachusetts and the 1 million students currently studying in the education system. We are looking at increasing our customer base by around 25% each year. And the forecasted population and eventually adding to the increasing student population and GenY that is going to start and rely more on the internet for their intellectual needs.

What drives demand in each segment and how might that change over time?

We are trying to start with a focused segment, by targeting the state of MA and specifically high school and college that want to come together to learn. The market is very dynamic these days due to the technology and new entrants coming in with similar business models. Therefore, to cope with these factors we are focusing on the IP rights and other measures that give us a competitive advantage. The demand for our service would definitely be driven by the quality of discussion and information exchange that will take place on the site. Therefore, its imperative to have a very smart and tech savvy web administrators team, who are always monitoring the content for relevance and timeliness. For the high school segment what will drive demand will be the relevance of material on our site, the qualifications of our staff and students having access to our site. High school students that are struggling in their classes and that are not comfortable finding their own study groups in school will use our site to find virtual study groups. This virtual nature is less stressful for students that are not comfortable is social settings and tend to be shy in class. The college student will have similar needs that lead them to our website but will focus on material that is more challenging. This will make it more challenging to find study partners in a physical setting.

What are the risks to the forecast?

Forecasts today are very liable to change and external pressure and factors. Forecasts are just assumptions based on the current market trends, level of education, Internet penetration, available resources and pool of students. However, these factors might change drastically due to new technology in the Internet field. As a matter of fact, there is always something that a business model lacks that someone else can see. Therefore, another product innovation is likely to occur down the road. Hopefully, it is our company that introduces innovations but it highly possibly that a competitor will instead.

http://massachusetts.educationbug.org/public-schools/

http://answers.yahoo.com/question/index?qid=20090325214055AAcYFBe

A Case for Crowd Accelerated Innovation

There is an interesting thing that is happening in the world of innovation. Whereas before most of the innovation happened in the R&D labs of large enterprises, today, innovation is happening everywhere, all at once. Think back to the days when innovation was all about trials, A/B testing, focus groups, scientific proxies and so on. Now think about how things have changes as the open web has created a whole new frontier of innovation; the crowd in the cloud. Crowd accelerated innovation is happening on the Internet like it has never before. For many organizations, this may represent a threat or an opportunity in terms of moving ahead of the competition or expanding markets. Let’s look at one of the best instances of crowd accelerated innovation and how it is shaping the future of new product development as well as opening up new frontiers for existing products and services.

Open Source Software

Twenty years ago, the word open source sent shivers down the spines of large organizations that had invested billions of dollars in creating proprietary software and designs. Back then, open source software was what torrenting is today; something illegal and left only to the underground world of illegal hackers. Nevertheless, the developer community, which was more interested in collaboration and innovation, continued to push the agenda and the results of that push are open source software platforms such as Linux and Ubuntu. With the advent of these platforms, a few aggregations of developers formed more robust and well organized groupings that undertook very deliberate and unidirectional development and this gave rise to products such as Mozilla. The entrance of large enterprises into this crowd accelerated innovation space was a bit late owing to IP issues and royalty dollars but by and large, there is no stopping technology when it is on the move.

Google Android and Apple iOS

One of the more popular companies that has adopted open source as part of their organizational structure is Google. Their most popular and well known open source offering is their Android operating system. A case in point that proves the power of crowd acceleration is the fact that the platform was released around the same time as Apple’s iOS and has been able to keep up and actually rival the Apple operating system despite the significantly less investment that Google have made into Android. The collaboration of Google with 84 hardware, software and telecommunications companies also created that accelerated innovation ecosystem that has seen Android leapfrog through 7 rapid iterations in five years and diffused in that time to be the preferred operating system running on over 190 million devices across the planet today compared to Apple’s 186 million across three proprietary devices; iPod Touch, iPad and iPhone. Keep in mind Google have no branded Google gadgets and work with third party manufacturers. Their overall market share also grew from 2.8% Q2-2009 to a 33% Q4-2010, an over 1000% increment in one year. This can all be traced back to the open source nature of the platform and the collaborative effort using open source free software licensing models.

This example of crowd accelerated innovation can also be seen through some less tangible factors such as third party apps for the operating systems. The Apple app store has been a phenomenal success. However, one of the biggest issues that many developers have about it is the walled garden approach that Apple has adopted. On the other hand, the Android market is a much more free market and it gives many developers the much needed leeway in terms of development. From its introduction in 2008, the Android market has zipped to over 350,000 apps with over 6 billion apps installed compared to Apple’s 500,000 apps and 10 billion downloads in a similar period respectively, but with significantly less investment and existing infrastructure such as the Apple iTunes store. In a direct correlation, this shows that the Android market has grown at 1.5 times the speed of the Apple app store and at significantly less budgetary impact. This clearly demonstrates, again, the power of crowd accelerated innovation.

Links:

http://www.tipb.com/2011/04/19/apple-sold-187-million-ios-devices/

http://www.macobserver.com/tmo/article/apple_160_million_ios_devices_sold_so_far/

http://en.wikipedia.org/wiki/App_Store_(iOS)

http://en.wikipedia.org/wiki/Android_Market

http://en.wikipedia.org/wiki/Android_(operating_system)#Market_share

http://bits.blogs.nytimes.com/2011/11/10/ios-and-android-app-downloads-expected-to-hit-25-billion-in-2011/

http://www.ted.com/talks/chris_anderson_how_web_video_powers_global_innovation.html

Mapping the Startup Genome to New Technology Adoption Life Cycle

Released as a project hypothesis, the Startup Genome is a study that was conducted in order to create a framework by which to benchmark technology start-ups in Silicon Valley and across the world. The report is a mash-up of various hypotheses put forward by thought leaders in the field of entrepreneurship and strategy. One of the key pillars of the report is the Marmer stages of entrepreneurial growth. What I found interesting though is the similarity between the overall theme of the paper and the already well-known stages of new technology adoption. Here is a comparison of the two.

Stage One: Discovery/Validation maps onto Innovators

According to the Startup Genome, this stage of the entrepreneurial journey consists of few to no customers, an ambiguous value preposition and almost no sort of structure. Its corresponding stage has the same characteristics. The stage has only few early innovators adopting the new technology and a generally low penetration and traction ratio.

Stage Two: Efficiency maps onto Early Adopters

Same story here: as the business gains traction and builds trust and an easily communicable value preposition, the number of customers/ users increases. The corresponding stage in the other graph shows that after the innovators, the early adopters come in and growth begins to take off. In both instances, success or failure is pegged on this group of people. It is important to note that in both instances, it is at this stage that the product or service either gains traction or begins to decline. Rapid iteration is critical to this stage.

Stage 3: Scaling maps onto Early Majority

This is the stage at which the company really takes off. This stage is characterized by seeking venture capital and the priority is given to growth over product development. The corresponding new technology adoption stage is likewise characterized by viral growth and a greater emphasis on conversions. Something interesting to note here is that in both instances, the business usually gets a UI overhaul; for the startup it means rebranding, new offices, etc.; for the technology it’s a cleaner UI and UX.

Stage 4: Profit Maximization maps onto Late Majority

Now that the business has successfully reached and passed the scale stage, it is now time to maximize the profits. In both instances, this stage is characterized by an emphasis on monetization. This means deriving more value from the already acquired customer/ user base. If a Freemium model was being used, this is the stage when premium products are released. If it’s indirect monetization, revenue models are bolstered (Facebook ads).

Stage 5: Renewal maps onto Laggards

This is perhaps the most important and interesting stage as most businesses miss it and end up being overtaken by new entrants, as Porter’s five forces model indicates. In both instances, the owners must find a way of reinventing themselves in order to stay on top. It’s ironic that the lifecycle of technology is around 10 years and so is that of a typical startup before they both start to decline or are replaced by a new entrant (Hi5 and MySpace).

Links:

http://tutor2u.net/business/strategy/porter_five_forces.htm

http://maxmarmer.com/2010/01/5-steps-of-entrepreneurial-growth/

http://startupgenome.cc/

http://apps.business.ualberta.ca/mlounsbury/techcom/readings/darwin%20and%20demon.pdf

20 Innovative Tech Startups

20 Innovative Tech Startups

This article provides good insight to the different approaches that companies have taken to use the Internet. An interesting mix of people and technology can do wonders. There is a lot of great information in the article and provides the perspective of a technology dependent world. The website “Kaggle” is one of the entrepreneurial ventures that really made me think, “Ah why didn’t I think of that?”. Inspired by the article, I did some research to see what other innovative tech startups were out there across the globe. Developing countries like China, India and most of the Asia Pacific countries have also shown great support and drive for innovation. I happened to find one such startup called “Kwench”.

Library Redefined

/’kwench is India’s first corporate library solutions provider, bringing a paradigm shift to the concept of conventional corporate libraries.

It offers convenient access to a wide range of books, meeting both professional and personal needs. It is an unfulfilled need for most book readers. This is particularly true for the customer who spends most of their time at work. From a corporation’s standpoint, setting up a good quality library requires management effort, capital expenditures on books, administrative effort and costly real estate. I remember when I worked as an Auditor right out of school for my undergraduate degree; we used to have a whole room dedicated to storing all the Audit and Tax publications and guidelines. We would receive updates to specific sections periodically and as industry guidelines and rules were modified, which could be quite frequent. We would have to remove the outdated sheets and add in the replacements. It was very tedious and there was little value added.

The launch of /’kwench/ library services enables employees to conveniently access books across 40 plus categories that cater to the professional and personal reading needs of the individuals. Customers can search for titles on the website and place an order to borrow the material. The collection is accessed online while the physical book is shipped to the customer’s workplace within 24 hours. This eliminates the administrative task up updating physical references, like I once did and saves precious space that can be better utilized.

To read the article or for further information about /’kwench/ please see the links below:

www.kwench.in

http://www.businessinsider.com/20-innovative-startups-2011-11?utm_source=%23frankguillen&utm_medium=twitter&utm_campaign=FrankGuillen+Buzz