5 Signs Your Business is Maturing and What You Need to Know

You can’t always be starting up.

This seems like a world that celebrates startups, but you can’t remain there. At some point, you’ll need to view your business for what it is: a strong, growing entity that has moved past its starting stages.

Identifying when you’ve left “startup” status isn’t always easy. It’s not as if one day you come to work and everything has changed and you realize your business has entered a new phase. Instead, you have to look for the signs that your business is maturing. Here are five of them:

1. The Numbers Are Changing

A mature business has different data from its early days. What are the numbers telling you? Some of the places you’ll want to be looking for maturation include:

• Production Abilities: You have exceeded your business’s initial ability to create the product or service your customers pay for, and have to level up production.
• Changes In Expenses: Your expenses are less about acquisition and more about maintenance of property, workforce, customer base, and what’s already established. The one exception may be in production expenses.
• Goal Completion: You are hitting the growth and benchmark goals you set for your business.
• Sales Funnel: More sales come from customers firmly in the sales funnel. Fewer sales are to new customers.

A related sign that your business is mature?

You are plan-driven. An immature business sees changes in this kind of data and tends to be reactive to it, but a mature business uses data for proactive planning. So not only does the data change, but how you respond to those changes also indicate your business’s maturity level.

2. Your Growth Rate Has Changed

A general rule of thumb is that when your growth rate slows, your business is maturing. It makes sense; a new company has a much larger field of potential growth and new customers, while a mature business has steady customers and more saturation.

There are some different approaches to this line of thinking, though.

Aswath Damodaran from the Stern School of Business at New York University cautions that using growth rate as a way to determine if your business is mature can vary based on what growth rate you use in defining that maturity. According to Damodaran, “…any growth rate that we adopt as a cut-off point will be subjective –we will find more mature companies, if we adopt a 6% growth rate cut-off than a 4% growth rate.”

He also notes that not all business and areas of operation grow at the same rate. “[W]e have to decide whether the growth rate that we use for the categorization will be growth in revenues, units or earnings. It is conceivable for a company with low growth in revenues to deliver high earnings growth, at least over short periods.”

It would be easy to assume a slowing in the growth rate of sales is a sign of saturation, but is your revenue still growing? Are your sales fewer, but of a higher bracket individually? What are industry norms for your business as far as evidence of market saturation, stagnation, or simply a change in how your customers do business with you?

Using growth rate to help determine whether your company is maturing is useful, but you will need to be cautious in both how you define those growth cut off points as well as which areas of growth (or lack of growth) you are using to make the determination.

3. Customers Come To You

There is a distinct change from the initial stages of a business in which you need to aggressively seek out customers. Your advertising and marketing approaches reveal this.

Early on, you may have spent a high percentage of marketing dollars making yourself known and other techniques that amounted to you letting people know your business existed and why they should care.

As your business matures and you build a customer base, you still do some of that type of marketing, but you also shift towards retaining your current customers. Your marketing is equally or more targeted towards retention than towards customers at the top of the sales funnel. It is less about finding customers because they are coming to you.

Do you notice more new customers coming in because of word-of-mouth referrals rather than an ad or social media campaign? Do you notice customers coming to you with requests based on their understanding that your business is a recognized expert and leader in the industry? These are signs of a mature business.

4. Talk Of Expansion

Early-stage businesses start with a few founders, and then often experience a large hiring wave to fill positions once that business moves from the basic “idea” stage into a functioning startup stage. As a business matures, there is talk of additional rounds of expansion. This expansion might include:

• Additional staff to handle higher workload.
• New locations or production facilities to meet customer demand.
• A shift in ideology or the original founder idea of what the company is about.

It is that last item, the change in ideology, that is one reason why some businesses are loathe to admit they have matured.

Expanding (or perhaps contracting) can be painful. It requires the business leaders to reassess whether or not the original product or operating model is the best solution for what their current customers want. Slowing growth can indicate market saturation or a shift in sales, but it can also indicate customers who are looking for something different than currently offered.

When talking about expansion, it’s worth noting that mature doesn’t necessarily mean large. Smaller businesses can also be mature.

5. Leadership Is Not Involved In Every Meeting

If your staff and department heads can hold meetings without you needing to be there, your business is mature.

Young businesses sometimes suffer from necessary micromanagement as leaders work to instill objectives and their operating model. As your staff builds both in size and experience (and, hopefully, your trust), you don’t need to have a say in lower level decisions.

Can you take a vacation without worrying about what’s happening in your business? Are you confident the management that’s in place can run their departments? If so, your baby has grown up.

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Understanding when your business is in a mature stage is important. You will need to make different decisions about staffing, customer outreach, and products or services than you did in your earlier stages. 

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