Ways of working

The SME life cycle

Reading time:  3 Minutes

Every large corporation was once a small and budding enterprise. Around 95% of global businesses are currently classed as SMEs – small- and medium-sized enterprises – but they’re set to thrive thanks to the help and encouragement of the World Trade Organisation. From those initial days as a lone entrepreneur to the next years of early expansion, here’s what you can expect from the life cycle of your SME.

One man and a coffee machine

In the beginning, it’s just you and your laptop. At this point you’ll be deeply involved in every aspect of the day-to-day running of the company, from pitching to sourcing potential clients to doing the coffee run.

Growing your business at this stage is about increasing your client base while keeping existing customers happy. This means regularly checking their satisfaction levels and keeping a close eye on their journey, using tools like Google Analytics to find out what you could do better.

Taking on a team

Once your company has a solid client base (and a decent cash flow), it’s time to take on a small team. They’ll help to handle your heavier workload and plug any gaps in your knowledge or skills. Co-working spaces enable you to scale up your headcount at this early stage without any additional fees – and their flexibility is a great pull factor for new employees.

Choose your teammates carefully at this point, as this is a busy and hectic stage of your SME’s life cycle. The individuals you work with need to be passionate about the company and its aim, happy to work a few late nights and able to work independently. Now you can also decide whether you want to be the leader, or if you’d prefer a different staff member to hold that position. The leader is different from a manager in that they decide which direction the company is heading in. They also need to be able to motivate the team and keep them on track.


Looking for investment

You may now have a good few loyal customers, but it’s time to find some extra funding for the next big step. This means courting angel investors and pitching for local government business funds. You’ll need a clear, well-thought out business plan, and a great sales person on hand to steer meetings in the right direction. This also means having a clear idea of what your investors might expect and knowing how much of your company you’d be willing to give up during this process.

Finding structure

As your company grows, it will take on a more formal structure. Admin and entry-level staff will join, and members of your original startup team will move up to managerial positions. You’ll be able to step back a bit from the day-to-day running of the business, taking on a more strategic planning role alongside (or as) the leader.

Cementing the structure

Your SME is getting bigger by the day. You’ll need a human resources team to handle recruitment, training, and all the legal paperwork. Your company now needs more levels of management to handle your core staff. Those who have stuck around since the second phase of your business growth will move up again, and you’ll be able to take another big step back. This means handing down more control to junior managers.

With more delegation, the skill set of your company is able to expand and flourish, which allows your SME to benefit from even more healthy growth.