The four stages of business maturity

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Here is an old adage about the four stages of business maturity. While there is a bit of humor to it, there is a compelling message in its simplicity.

Stage 1—I will do business with anybody. This is the stage that most new businesses find themselves in initially. Hungry to get business from any source (and in some cases, just plain hungry)—the business accepts any customer, for anything and under any conditions.

Stage 2—I will only do business with customers who actually pay me. This is the first step towards creating a sustainable business—doing business with paying customers. Based on your experience in Stage 1, you are now able to do a basic qualification of the potential customer to ensure that you will get paid for your product or services (and hopefully at a level that you can break-even or profit from). Obviously, this is the most important stage to progress to, if not through.

Stage 3—I will only take on new customers that operate in my preferred business method. All businesses have a preferred method of operation. Some businesses like custom work, while others prefer a standard service or product. Some firms prefer to get paid immediately or even in advance, while others prefer to invoice. Some businesses like to work only with local customers, while others, even small companies, operate remotely or even globally.

In Stage 3, the business understands what their preferred operating model is, and only accepts new customers that fit that mold. Because it is the preferred method of the business, it often results in a higher level of service to the customer, less hassle to the firm and overall a more profitable customer.

Stage 4—I will only do business with customers that operate in my preferred business method. As firms begin to recognize the benefits of progressing through Stage 3, a few brave souls will begin to move into Stage 4. In this stage, the business actually works with existing customers in an attempt to move them to their preferred business method, or works to find the customer a new home. Working with an entire customer base that operates in the preferred business method generally provides the highest level of customer service, the highest level of job satisfaction for the company and its employees and the highest level of profitability.

As you consider the growth plans for your business, it may be helpful to give some thought to the types of customers you would like to attract and the stage of maturity you would like to achieve for your business. Getting to Stage 3 or possibly to Stage 4 can make life a lot easier, more enjoyable and potentially more profitable.

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