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Posted March 23, 2018

managing expansion


More than 30 years ago, the Harvard Business Review published a paper that detailed the five stages of small business growth and the challenges that owners faced at each point. Business experts in multiple fields still cite that paper because it so clearly lays out what an owner can expect once they launch, no matter what field they operate in.

The stages:

  • Existence – When a company must find customers and provide good service to keep them.
  • Survival – Once it has a foothold, can the business get enough return on investment to keep going?
  • Success – With a steady income and customer base in place, the owner must decide on maintaining that level or expanding.
  • Take-off – If the owner chooses to expand, how will they assign responsibilities to others and how will they finance the company’s growth?
  • Resource Maturity – As an established business, how does the company stay flexible and responsive to the market?

At each stage, the owner must resolve questions around staffing, equipment, operations and financing, and the paper offers valuable insights for owners who are building their business. Those who arrive at the Take-off stage are reaching a critical point, when the owner who has made the decision to grow must figure out how they will finance that growth and how the company will handle the additional work.

For a trucking company, the timing of that decision often comes when a customer offers a big job that will require more resources and possibly a more structured work environment. An owner who is accustomed to running the show must delegate more, without micromanaging the staff. They will undoubtedly need to spend now on equipment and staff, with funds that will be replenished by future revenue. It’s a time of risk.

According to the research paper:

“This is a pivotal period in a company’s life. If the owner rises to the challenges of a growing company, both financially and managerially, it can become a big business. If not, it can usually be sold—at a profit—provided the owner recognizes his or her limitations soon enough. Too often, those who bring the business to the Success Stage are unsuccessful in Stage IV, either because they try to grow too fast and run out of cash, or are unable to delegate effectively enough to make the company work.”

While it is certainly possible for a hard-working driver to start with one truck and build a business based on good reputation alone, most succeed because they have a plan. They know what their options are before the big job that can strain resources presents itself. They have money set aside for such opportunities, and they have researched factors with trucking experience that can help steady their cash flow when most necessary.

They are ready for that pivotal period in their company’s life, and they rise to the challenge.

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Ashley Wilks

Ashley Wilks