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Running your own business can be without a doubt, one of the most rewarding things you’ll ever experience in more ways than one. But it is also one of the hardest things you’ll ever do as well!

With a never-ending list of things to be done and decisions to be made, one of the greatest challenges we all face as business owners is knowing which of the many things on our plate we should to prioritize in order to move our business forward and achieve our goals faster.

Knowing what to focus on now, and what to hold off until later, can mean the difference between success and burn out.

If you’re working tirelessly in your business but not getting the kind of traction you expect, there’s every likelihood that you’re focusing on the wrong things based on the stage your business is at right now.

Here’s the thing. Every business fits into one of five clearly definable stages, and your current stage should determine your primary focus. Once you identify the stage of business you’re in, you can start applying the right strategies to get to the next level far more quickly and with much less stress.

The Harsh Reality

Two-thirds of all business owners will survive just two years in business. Half will make it to five years, and only one-third will survive ten.*

The first few years are undeniably the hardest, but knowing WHAT to focus on, and WHEN to focus on it, is a huge competitive advantage for any business owner!

When you stay focused on the right things for growth and have a solid framework to help you consistently achieve your goals, your business is more likely to last longer and continually advance through the stages of business below.

And just in case you’re reading this thinking you’re a special snowflake and those stats don’t apply to you, think again! *The Bureau of Labor Statistics tracked business survival across industries and concluded that these statistics are pretty consistent regardless of industry… no special snowflakes excluded!


The 5 Stages of Business Growth

5 Stages of Business Growth - Todd Herman

Stage 1: Start Up
Stage 2: Ramp Up
Stage 3: Build Up
Stage 4: Scale Up
Stage 5: Leader Up

Jump to each stage to discover:

  • The common experience shared at each stage
  • Questions to ask yourself at each stage
  • Common pitfalls to avoid at each stage
  • Growth activities to focus on at each stage


The Start Up Stage is exactly what it sounds like. You’ve made the leap and started your business. You have a good idea of the product or service you’ll be offering, but you’re still trying to identify and find the right target audience.

While every stage of business can be emotionally taxing, the Start Up stage tends to be riddled with the greatest fears of failure and self-doubt as there are often more questions than answers at this stage.

Common Questions At This Stage

  • Is this the right target audience?
  • Where can I find the right people to target?
  • Who else is serving this same audience?
  • Do I need to make any changes to my product/service to make it better?

Pitfalls To Avoid

Feelings of self-doubt and uncertainty can creep in resulting in Start Up business owners spending too much time researching, looking for inspiration, or simply watching others who are already in further stages of business development.

But rather than inspiring action, it can have the opposite effect and reduce motivation due to feelings of overwhelm brought on by the mountain of information consumed and not knowing where to start.

Now, of course the Start Up stage is not ALL doom and gloom!

There are many people who feel inspired and motivated at this stage. Heck, if we didn’t have those people, nothing would be launched or started. Unfortunately, a great majority of people don’t get out of this stage and continue to spin in the loop of research and comparing themselves to other, more established businesses.

Feedback is the breakfast of champions - 90 day year

The Start Up Growth Prescription

It’s time to channel your inner mad scientist and get experimental!

Be curious and be active and hands-on in testing and validating your idea, concept or service. Getting out into the market to validate your idea with the target group you want to serve is an absolute necessity.

Don’t let feelings of uncertainty hold you back from this essential step. If you’re in the Start Up Stage, you MUST go out into the market to generate awareness and trial of your offering in order to gain essential feedback from your potential customers.

If more entrepreneurs took this approach in the initial stages of their business a lot more things would be created (and we’d probably have a hell of a lot of happier business owners too!).

Trying to validate an idea from the comfort zone behind your computer screen isn’t enough. You can definitely get some wins that way, but nothing compares to talking to real people – people who need what you offer – on the phone or in person. The insights you get from those conversations are invaluable.

Curiosity is an essential trait of a great entrepreneur and the ability to flex your WOW Brain Mindset as you negotiate your way through this stage will see you come out the other side a much stronger business owner, ready to take on the second stage of business.

Activities To Focus On In Start Up 

Business owners at each stage must focus on developing one key system, which will drive their growth into the next stage of business and help keep them there.

In the Start Up stage, the key system to implement is a Validation System.

Blindly stepping into the market without knowing the REAL wants, frustrations, and feedback of the market is a recipe for wasted time, money, and energy. Without a proper validation system, new product launches have a much lower chance of success.

Activities in your Start Up growth prescription should include:

  1. Validating your offering (your product or service)
  2. Validating your target audience
  3. Validating your pricing
  4. Validating your business model

Once you’ve completed these actions, you’re ready to level up!

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With your offering, target audience and business model firmly validated, it’s now time to start to Ramp Up your marketing and sales systems!

If you’ve made it to Ramp Up, congratulations! When others might have given up, you kept going and crossed the HUGE chasm that separates Start Up and Ramp Up business owners.

I’ve worked with thousands of business owners from all around the world, and I can promise you, that despite the intense pressure and long hours, there’s an underlying sense of optimism and excitement when you now have paying customers and an idea of what the future might hold.

Common Questions At This Stage

  • How can I differentiate myself to stand out?
  • Where can I find more qualified leads?
  • How can I convert more leads to customers?
  • What marketing channel should I use to grow my business?

Pitfalls To Avoid

The optimism and excitement that many feel at this stage can quickly turn to overwhelm as the reality of having an actual business and serving customers can cause many to throw in the towel.

In the Ramp Up stage, sales have started to come in, but they’re sporadic and it’s not enough to be profitable. You’re wearing 18 different hats in the business and juggling lots of new tasks that you may not be naturally good at, nor enjoy, but until you have more revenue coming in to hire a team, it’s something you learn to cope with.

Mindset is a key survival tool during the Ramp Up Phase because if business owners knew the size of the mountain they were about to climb, they’d probably never start!

Be mindful of negative self-talk that can start to invade your head with questions like:

  • Am I really cut out for this?
  • How can I possibly get ahead when I’m buried under so many menial to do’s?
  • When is my partner going to ask me to go ‘back to work’?

Long hours working can lead to heightened emotions, decision fatigue and stress. Some Ramp Up business owners may start to doubt that things will change and feelings of loneliness and isolation can rear their heads (especially for the online entrepreneur spending hours and hours behind their desk!)

Robert Kiyosaki Quote - 5 Stages of Business - Todd Herman

The Ramp Up Growth Prescription

Focus on building your Sales and Marketing System 

For Ramp Up Businesses, any mental, creative, and physical energy directed anywhere but marketing, sales and product systems is misdirected – and will keep you stuck in this stage for far too long.

If you’re someone who lacks marketing and sales experience in 2023, you can get completely overrun by people who are savvier at the game of demand and persuasion.

Just like the radio was built for recording artists, the internet was built for entrepreneurs – Seth Godin

While the internet has created a level playing field for ANYONE to start a business, it has created an uneven playing field – tilted steeply in the direction of the best marketers.

In the Ramp Up Stage, it is vitally important to get your product in front of people, to get them sharing, talking, and most importantly—buying!

If you’re in the Ramp Up stage, stop right now and take a look at your list of activities in your planner, fancy task app, or whiteboard.

Review the percentage of activities that are focused on building out your marketing, sales, or product systems.

If it’s below 80%, start prioritizing your day so you can get into the next stage, Build Up!

Activities To Focus On In Ramp Up 

If you’re in the Ramp Up Stage, it’s time to Create. Market. Sell. Lather. Rinse. Repeat!

The key system to implement is a Sales & Marketing System.

Once your sales and marketing system is humming and you have a consistent stream of new leads and customers coming into the business, you’re ready for Stage 3!

In the meantime, focus on developing your sales and marketing system. Activities in your growth prescription should include:

  1. Determine how you will differentiate yourself from similar offerings in the market
  2. Build your sales and marketing system
  3. Identify the single most important marketing channel to attract new customers
  4. Develop your sales process and optimise your conversion strategy

Once you’ve completed these actions, you’re ready to level up!



With consistent revenue flowing into the business via the sales and marketing system you implemented in the Ramp Up Stage, you’ve now arrived at the third stage of business: Build Up!

At the Build Up Stage, you have quality leads, prospects, customers/clients coming into the business. Now is the time to develop the operational systems within your business, remove the many hats you’ve been wearing until now and offload some of those tasks that you’ve had no other option but to do yourself, until now.

Consistent revenue into the business has finally started to support the type of life you want financially; however, it can be hard to enjoy the fruits of your labor, because you’re constantly ‘laboring’!

Feeling like a hamster on a wheel when you break through to the Build Up Stage is common as you don’t yet have the ‘operational’ systems or mind to see the path to freedom. You may feel cautious about bringing people into the business to help, whether due to concerns over trusting others, or even knowing what people you need.

Spare ‘mental time’ is almost non-existent, because you’re always thinking about the business and all the new opportunities that appear during this Stage.

Common Questions At This Stage

  • How can I cut back the number of hours I’m working without things falling over?
  • What can I get off my plate and who can I hand it over to?
  • Where can I find people that I trust to work with me?
  • How should I structure my business to scale?
  • Which areas of my business should I systemize first?

Pitfalls To Avoid

At this stage of business, your revenue is likely directly correlated to you doing a lot of the work. This is dangerous if you fall into the trap of believing that is the way things must always be. Unless you plan on being a constant hamster on the wheel, running the business off your own frenetic pace and hustle, something will have to change.

The ‘Build Up’ stage is the point along the path to scaling up your business where the sales and profits are giving you the opportunity to breathe a lot easier, however without the infrastructure to scale, more sales & more marketing will only exhaust you.

More growth may even hurt the business if things aren’t in order behind the scenes.

If you find yourself with boom and bust leads/sales, it’s potentially a direct result of not having a solid marketing and sales systems in your business. Do yourself a favor and go back to your Ramp Up focus for a short time to get this fixed, otherwise, you’ll always be teetering on the edge of burnout. And trust me, this is far worse than a couple of months of extreme hustle.

Will Smith Quote - 5 Stages of Business - Todd Herman

There’s No “One-Way” In Business 

On average, only 50% of business owners who start out, have the capability to build their businesses to this stage, with the grit and hustle they personally possess. However, it’s also as far as most businesses grow. Not because the business lacks a broad appeal, but because many business owners simply lack the skills to build sufficient operational systems in their business.

While many learn to market and sell the product or service they create, fewer have the ability to streamline and systemize the business operations, which is why this stage can be the ceiling for many businesses.

But hitting a ceiling at this stage in business can be fine if that’s what you want. Not every business owner sets out to build an empire and there are some great businesses producing phenomenal lives for people in the Build Up stage.

They’re typically service-based professionals that love what they do and aren’t looking to offload the work they do to someone else. This is totally fine. There’s no ‘one-way’ to build a business, but just ensure you’re not overlooking some great wins in your business that could be found by systemizing your operations.

The Build Up Growth Prescription

Now Is The Time To Build Systems. Systems. Systems

Focus your time on systemizing the operations side of your business starting with one pillar at a time until you have solid systems in place. Explore the key areas including Sales and Marketing Automation, Customer Service, Product Development & Fulfilment, Finance and Logistics.

The fastest way to systemize your operations is to bring someone on board that knows how to do this. Just because you’ve proven in the past that you can learn how to bootstrap and do things yourself does not mean that should be your modus operandi going forward. In fact, if you want to grow, it can’t be.

Remember, what got you here, won’t get you to where you’re going.

So, whether you hire a Business Manager, Operations Manager, Project Manager, Consultant or COO, this person will be responsible for taking care of the parts of the business that always slowed you down and exhausted you. The great thing—there are a lot of quality people out there capable of doing this job. So find them.

Activities To Focus On In Build Up 

In the Build Up stage, it’s time to build your Operating  System.

Once you have solid operating systems in place across the key parts of your business you should have reduced your working hours by at least 20% and now have the time, team and head space to level up!

Key Takeaway: Focus on systems, systems, systems. Activities in your growth prescription include:

  1. Review the tasks you have on your plate now to see what can be removed
  2. Review your key business pillars and choose one area at a time to start building a system around
  3. If you don’t know where to start, find a solid operations person who can help
  4. Review your technology platforms and streamline the systems already in place

Once you’ve completed these actions, you’re ready to level up!



This stage of business is entered once you’ve built a solid infrastructure and you feel confident you can scale the business without breaking it. Now it’s time to focus on your growth strategy and develop the leaders of your business.

One of the most common experiences for the business owner at this stage of business is more time! Remember that? When you leave the Build Up stage, operations should have been systematized and you’re no longer the hamster on the wheel. You’ve just bought yourself back some time!

Percentage of profits can dip at this stage, because you’ve invested more into the people of your business or operations. However, sales and revenues can increase because of the increased working capacity of the team. So the overall profits may increase, for example;

Build Up Stage: $2,000,000 in sales x 50% in profitability = $1,000,000 in profit.
Scale Up Stage: $3,000,000 in sales x 38% in profitability = $1,140,000 in profit.

(That’s a very basic example, and my CFO consultant wife would hate to see those basic numbers, but it gets the point across.)

Common Questions At This Stage

  • How do I get everyone aligned?
  • Where can we find new growth areas?
  • Are there any new products/services we should launch?
  • What markets could we move into?
  • How can we create an exciting culture where people want to stay and people want to come?

Pitfalls To Avoid

The worst thing you can do is micro-manage the team you’ve brought in and tinker with the systems they’ve created. A great benefit of Scale Up is the opportunity for the owner to truly work more in their ‘prodigy zone’.

If you find yourself at the stage where you’ve unshackled yourself from a lot of the daily activities of the business – congratulations! This is a place where few entrepreneurs get to because the skill ceiling in the Build Up Stage stops most people.

In today’s fast growth, constant innovation and global marketplace, if you’re not building a great culture with strong leadership, you’ll have a hard time attracting and keeping the talent you bring into your business.

At the end of the day, your human resources – the people you have working on your team – are the most valuable thing you’ll have in your business. Yes. Even more valuable than you!

A common pitfall at this stage is something I call ‘owner tinkering’ or the most common phrase: micro-managing. As a result of having more free time on your hands at this stage, the restlessness of ‘what should I do?’ sets in and you can end up tinkering with all the great systems and processes your team has built out.

It’s a hard thing to do for most owners, but you have to allow your team to take care of their responsibilities. Otherwise, that team you’ve worked hard to build will get frustrated, and you run the risk of driving people out of the business.

Tim Ferris Quote - 5 Stages of Business - Todd Herman

The Scale Up Growth Prescription

Focus on developing talent within your team and exceptional company culture.

Invest time, resources, and money on attracting talented people into your business. Then work at building up your personal leadership skills to continue to drive the business forward, OR, give up the helm of the ship to your COO and let them run the operations while you work on strategic vision or start a new venture.

Often times, starting the new venture and letting someone else run the show are the best options for many entrepreneurs. Developing your self-awareness and knowing who you are, can either free you to do what you’re most suited for, or frustrate you to become a round peg jammed into a square hole.

Know yourself, know your limitations, but make sure the business focuses on building great teams and a strong culture.

Activities To Focus On In Scale Up 

Scale Up is all about building a strong company culture, establishing new channels to market and optimising performance to execute even more efficiently.

Key Takeaway: Focus on developing your succession plan and business systems. Activities should include:

  1. Develop leaders within the business
  2. Explore and establish new distribution channels
  3. Optimize all business systems for improvement

Once you’ve completed these actions, you’re ready for the final level!



This fifth stage of business is a rare position that few business owners ever reach. The opportunities that exist for a ‘Leader Up’ business are plentiful. Everyone wants work with you, be you or partner with you. Now it’s time to continue your focus on growth, stewardship, and acquisitions.

So, if you’ve made it to Leader Up – congratulations! You’ve climbed to the top of the mountain and managed to plant yourself firmly in the position of being a leader in your market.

You’re in some rarefied air up here! And if you’re the founder that ‘sherpa’d’ the business to the top, you’re even rarer. This was a fundamentally challenging task to undertake, with pitfalls, vultures, and market landslides along the way, but you’ve made it!

Common Questions At This Stage

  • How can we protect the brand?
  • How do we prevent our people from screwing things up?
  • What are some other brands/products we could acquire?
  • Who are the ‘upstarts’ we need to be careful of?
  • What can we do to remain lean and not get bloated with new opportunities?

Pitfalls To Avoid

The worst thing you could do is become complacent and expect success. Many businesses have failed because they didn’t pay attention to the market.

Leadership failure can bring down entire companies together with Greed, Power and Vanity – three of the more challenging human vices which plague many corporate leadership failures.

Think Enron, Tyco, Worldcom – even Apple was on the brink of total collapse until they brought back the prodigal son to save it.

Beware of complacency: No industry is safe from the digital keystroke of innovation. Because there are heavier investments in operations and cost of goods, businesses in the Leader Up Stage can be slow to move, which is just the nature of a bigger company. In 2018, there aren’t many industries that couldn’t be made obsolete by a cruel twist of market innovation.

Stephen Covey Quote - 5 Stages of Business - Todd Herman

The Leader Up Growth Prescription

Anyone in this stage will need to keep their eye keenly peeled towards upstart companies perfect for acquisition.

There are always going to be pockets of the market where a bigger player won’t be able to go and develop products and services. It is critical to pay attention to those markets and their growth potential, so you can protect your position and bring in new offerings for clients and customers.

A good friend, who is the CEO of a major corporation, tells me his only job is to watch trends, see what’s happening in the market, and go hunting for great companies. (It sounds more lethal than it is, he’s one of the nicest people to do business with.)

Also, ensure you know who your leaders are, and constantly invest time in their development. All it takes is one very bad decision to bring down an entire business. Or, in the case of the financial markets, a culture of greed to bring down an entire global economy (sadly, we never learned that lesson).

Activities To Focus On In Leader Up 

In the Leader Up stage, it’s time to build your Market Leadership System.

It’s surprising how many people don’t really know ‘who’s minding the store’. Leadership is a never-ending focus. Leadership is never a goal; it’s a mindset. Pay attention to the market. Don’t rest on your laurels, and only keep the absolute best at the head of the pack.

Key Takeaway: Activities in your growth prescription include:

  1. Acquisitions
  2. Market Leadership
  3. High Performance

Final Thoughts

At the end of the day, every single stage of business has a lot of balls in the air that we’re all trying to juggle.

But when you look at the color, shape and size of each ball, for each stage, they should mostly be categorized into one bucket.

Climbing the proverbial business mountain isn’t easy, but when you know where the base camps are along the way and prepare for the pitfalls, you can pack your backpack with the right equipment to get you there.


If You’re in Start Up

Validate your product or service and find your pocket of people to serve.

If You’re In Ramp Up

Focus your juggling time on marketing, sales and product.

If You’re in Build Up

Get your operational house in order.

If You're in Scale Up

Develop your team, culture and leadership.

If You’re in Leader Up

Protect your position through acquisition and innovation.

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