Five Stages of Small Business Growth

150 150 Brian Lauzon

When I was with in the private equity industry, we would often be reminded that (regardless of industry), companies follow remarkably similar paths as the grow and mature.

The Harvard Business Review article below, “The Five Stages of Small Business Growth”, was published in 1983 and has been a reliable and time-tested blueprint for 38 years. Authors Neil Churchill and Virginia Lewis describe how companies evolve in five areas:

  • Management Style
  • Organization
  • Extent of Formal Systems
  • Major Strategy
  • Business and Owner (i.e. the extent to which they are synonymous or autonomous)

In an M&A context, understanding what stage of growth a firm is in and where they fall in each of these areas is powerful. But more importantly, this framework allows a firm to “see around corners” and grasp how they will likely have to evolve in order to thrive as they grow.

We had a lot of luck working through this framework with clients. In future posts, we will dive a bit deeper into each of the topics above, applying each to the wealth management industry. In the meantime, I hope you enjoy and find value in the original 1983 article below.