Why Growth Plateaus After the Initial Surge
Starting a new business is an exhilarating experience, often marked by a rapid growth phase fueled by innovation and market excitement. This initial surge can be incredibly promising. However, after this honeymoon period, many young businesses encounter a plateau, necessitating a shift in strategy to sustain growth. Understanding this transition is crucial for any orgnization aiming to navigate the complex journey from a fledgling startup to a stable business.
The Initial Surge: Capitalizing on Novelty and Demand
In the first few years for a company, it is possible to achieve exponential growth. This phase is characterized by the market's enthusiastic response to a new, innovative product or service. During this period, the business leverages its unique value proposition, capturing the attention of early adopters and securing a foothold in the market.
Initial growth is often driven by:
1. Novelty and Innovation: New products or services that solve a pressing problem or meet an unmet need can generate significant buzz and demand.
2. Industry reputation: Many companies are started by experienced industry personnel that have existing contacts.
3. Market fit: The product or service resonates well with a niche audience, leading to swift adoption and revenue growth.
However, this phase is not infinite. As the niche market or existing contact base saturates and the initial excitement wanes, the growth curve starts to flatten, leading to the next phase.
The Plateau: Challenges of Sustaining Growth
After the initial surge, young companies often experience a plateau in revenue growth. The factors contributing to this leveling off include:
1. Market Saturation: The initial target market becomes fully penetrated, and finding new customers becomes more challenging.
2. Increased Competition: As the market opportunity becomes evident, competitors enter the space, making it harder to maintain the same growth rate.
3. Diminishing Returns on Early Strategies: The tactics that fueled early growth, may yield diminishing returns as the market matures.
This phase necessitates a strategic pivot. Businesses need to look beyond initial organic growth strategies and explore more structured sales strategies to continue their upward trajectory.
Transition to Sales-Driven Growth
Recognizing the need for a sustained sales effort, many organizations decide to hire salespeople. The goal is to build a sales team that can systematically generate new business and drive revenue. However, this transition is fraught with challenges:
1. Hiring the Right Salesperson: Finding individuals who not only have the requisite skills but also align with the company's culture and vision can be difficult. A poor fit can lead to underperformance and high turnover.
2. Training and Coaching: Even the best salespeople need proper training and continuous coaching to understand the product, the market, and the sales process. This requires a significant investment of time and resources.
3. Developing a Sales Strategy: A well-defined sales strategy is crucial. This includes setting realistic targets, identifying key markets, and creating a proven and repeatable sales process.
Despite these efforts, growth during this phase is often slower and less predictable than the initial surge and this is where most organizations struggle. The belief that “sales is sales” and thinking that a salesperson that has been successful before will be successful in their new role usually results in failure. Initial success is also cause for future failure as business owners will be convinced their product or service and sales process work and are proven to do so. So it is believed that the failure has to be the fault of the salesperson, when it is the entire sales structure that is to blame.
The end result? Organizations really need to analyze their overall sales structure and sales process when they reach the plateau, even before hiring salespeople or the stagnant growth will continue indefinitely.