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The 4 Stages of Maturity for a Business

  • December 29, 2013
  • By JJ Johnson
  • In Advisory, Industry

I originally heard about this concept at a Ran One advisory seminar a year ago. The specific stages made the most sense to me as I was looking back on how I had grown my own business but we can all easily relate to each stage. This model really can apply to any business.

There are 4 stages of maturity for a business. A great question to as is what stage are you at right now and where would you like to be? Here is how it plays out.

Stage 1 – I will do business with anybody.

This is where most new firms start out. Hungry to get work from any clients (and in some cases, just plain hungry), you’ll take work from anybody, under any conditions.

Stage 2 – I will only do business with clients that actually pay me.

Armed with the experience you gained in Stage 1, you are now able to look at potential clients and assess their ability to actually pay you for your work. Instead of asking “How can I get this client to work with me?” you’re asking “Can I make money by working with this client?” This is the first step towards creating a sustainable firm, and it’s the most important stage to progress to, if not through.

Stage 3 – I will only take on new clients that operate in my preferred business method.

At this point, you’re becoming an expert at determining what kinds of work your firm does best and how to run your business for maximum profit. And because you have a relatively stable client base, you can be a little more selective about which new business you choose to take on.

Is there a certain software system you prefer your clients use? Do you like to bundle services in a certain way? Do you prefer clients who will work with you via online portal? At this stage, you can use your experience as leverage to move new clients to your way of doing business. It might sound a little presumptuous, but it often results in better service to the client, less hassle for you, and higher profits.

Stage 4– I will only do business with clients that operate in my preferred business method.

Though many firms never make it to Stage 4, it’s a great place to be. You have a strong client roster. You’re a respected expert in your field. And perhaps most importantly, the business model you established in Stage 3 is working like a well-oiled machine.

Still, you probably have a few rogue clients hanging around from Stages 1 and 2. They don’t fit your business model and you’re dedicating a disproportionate amount of time to serving them. This is the time where you begin asking yourself whether it’s worth keeping them around.

You may be able to bring them around to your business model–chances are they’ll be happier in the long run. But if they won’t adapt, it might be time to end the relationship. You probably know a few firms in Stages 1 and 2 that would love to have the business.

There you have the four stages of maturity for a business. Getting to Stage 3 or possibly to Stage 4 can make life a lot easier and more enjoyable, but knowing all the stages can make it easier for you to think about the growth of your firm as you consider the types of clients you would like to attract and your stage of firm maturity. Not to mention giving you something fun to talk about at conferences and cocktail parties.

“I want to put a ding in the universe.” - STEVE JOBS

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