Even during the best of times, starting a small business is tough. During the Covid-19 pandemic, it became a quest for survival. While&nbsp;<a href="https://www.weforum.org/agenda/2021/05/america-united-states-covid-small-businesses-economics/" target="_blank" rel="noreferrer noopener">roughly one-third of small businesses</a>&nbsp;were closed amid the lockdowns, many have reopened their doors or launched anew as consumer demand roars back.



Each of the 31.7 million small businesses in the U.S. has its own unique flavor, challenges and path to success. Some never expand beyond a single founder; others could scale to become the next unicorn. Along the way, many founders will face common sets of challenges as they reach new levels of success.



For that reason, we’ve decided to bring you some real-life examples that illustrate the five stages of small business growth: existence, survival, success, take-off and resource maturity.



We didn’t invent this model—it was&nbsp;<a href="https://hbr.org/1983/05/the-five-stages-of-small-business-growth" target="_blank" rel="noreferrer noopener">developed by</a>&nbsp;researchers Neil C. Churchill and Virginia L. Lewis in 1983. Our goal is to bring each stage to life and start a conversation around the opportunities and experiences that business leaders encounter.



Every day this week, we’ll bring you insights from our contributors on each stage of growth. Today, we start at the beginning: the initial stage of launching a business and figuring out everything from product fit to customer acquisition.



Stage 1: Existence



<a href="https://www.forbes.com/sites/nishacharya/2021/08/02/move-your-ideas-from-lab-to-market-to-maximize-impact/">Idea validation and commercialization of research</a>



<a href="https://www.forbes.com/sites/jeffbevis/2021/08/02/how-to-determine-market-fit/">Product market fit</a>



<a href="https://www.forbes.com/sites/tomtaulli/2021/08/02/agile-taking-your-small-business-to-the-next-level/">Being agile</a>



Stage 2: Survival



<a href="https://www.forbes.com/sites/micahsolomon/2021/08/03/survival-of-the-nicest-customer-service-as-a-business-growth-and-survival-engine/">Customer service and building customer loyalty</a>



<a href="https://www.forbes.com/sites/abdoriani/2021/08/03/is-sacrificing-profitability-in-favor-of-growth-a-good-idea-for-all-startups/">Profitability and growth</a>



Stage 3: Success



<a href="https://www.forbes.com/sites/brianscudamore/2021/08/04/every-entrepreneur-comes-to-this-fork-in-the-road-heres-how-to-decide-your-path/">The founders dilemma</a>



<a href="https://www.forbes.com/sites/abdoriani/2021/08/04/5-ways-to-incentivize-word-of-mouth/">Incentivizing word of mouth</a>



<a href="https://www.forbes.com/sites/jodiecook/2021/08/04/securing-funding-to-drive-expansion/">Securing funding for expansion</a>



Stage 4: Take-off



<a href="https://www.forbes.com/sites/andrewfilev/2021/08/05/3-keys-to-successfully-scale-your-organization-from-small-biz-to-big-time/">Scaling operations</a>



<a href="https://www.forbes.com/sites/lisacurtis/2021/08/05/three-things-everyone-does-wrong-when-hiring/">Hiring and growth</a>



<a href="https://www.forbes.com/sites/rochellemclarke/2021/08/05/for-successful-small-businesses-resilience-is-a-strategy-not-an-option/">Resilience, business continuity and contingency planning</a>



Stage 5: Resource Maturity



<a href="https://www.forbes.com/sites/micahsolomon/2021/08/06/has-your-company-lost-its-customer-service-mojo-7-ways-to-make-customers-love-you-again/">Maintaining customer service while scaling</a>



<a href="https://www.forbes.com/sites/moiravetter/2021/08/06/the-future-of-marketing-is-lean-for-businesses-big-and-small/">Lean marketing for businesses</a>



<a href="https://www.forbes.com/sites/dileeprao/2021/08/06/how-99-of-unicorn-entrepreneurs-plug-vc-holes-with-reverse-vc/">Unicorn entrepreneurs and financing</a>



By Maneet Ahuja, Forbes Staff

Sole Trader Barbers shop in Ghana, Africa

Insights On The Five Stages Of Small Business Growth

Lydia Mbayo went from an engineering job to making some sharp-suited statements in the fashion business.



How does someone go from being an IT engineer to becoming a modeling agent and entrepreneur with a suit collection?



Lydia Mbayo, 39, who is all of that, says it simply: “I will never let anything stand in my way, if it’s the right time for me to do something, then it’s the right time. I will follow my dreams.”



After a stint as a modeling agent that saw her in-house talent grace global campaigns, Mbayo, originally from the Democratic Republic of the Congo (DRC) and now based in South Africa, has launched a collection of ladies’ suits and jackets called La Jaqueta.



“I was always in love with fashion. I have always liked to dress up. I always wanted to be a model. And I always had that entrepreneurship spirit,” she says.



Her new brand seeks to empower women through clothing and help build their confidence and self-esteem.



“I love suits, and I feel confident in them, so I wanted people to be inspired by that so that when they wear my suits, they feel confident too,” Mbayo says.



By her own admission, she is not a designer, but she hand-picks the fabric and adds her own personal flair to it, getting a lot of help from a local ‘cut, make, trim’ factory that assists in manufacturing her “dream collection”.



So how did a young woman who came to South Africa from Kinshasa in the DRC in 2001 to study IT engineering at the University of Johannesburg come to represent models?



Her degree led to her working as at an IT engineer in Johannesburg, but there was something missing. It was not in line with her true passion.



“They used to call me the IT Noami Campbell because I was clever and did well at university, meanwhile, being a Naomi Campbell,” she laughs.



Mbayo aspired to take underprivileged young women from small townships and turn them into international models who could one day represent the biggest names in the fashion industry.



“That was my dream, you get a girl from Hammanskraal and ask her, ‘do you know Paris’? She says to me, ‘mama, what’s that’ and then, I would say to her ‘come sit, let’s Google’ and I would show her the Eiffel Tower and say to her, ‘yeah, we are going here one day’.” &nbsp;



So, in 2013, she represented her first model, who went on to win a local pageant. In 2015, she started a modeling agency, FabulousDotCom. And two years later, she says some of her models were well on their way to attaining global fame.



“You know, in the beginning, no one wanted to book my clients, and I had no idea what I was doing. Everything I learned, I learned from Google – Google was my teacher,” Mbayo laughs. “I even resigned from my job as an IT engineer, and that was a big risk, but it was worth it.”



With the pandemic still at its peak, Mbayo’s brand will be available online for now.



“When it&#8217;s rain, you have a good time. You cannot have a good time if there is no rain. So when you have those challenges, those difficulties, those are just the rain and then the good time is coming,” Mbayo says.



“The coronavirus is not stopping my dream, so it should not stop yours.”

The Entrepreneur In Fashion Who Learned From Google

We inherently believe that if we had a chance to change the world, we would do something dramatically different. In reality, when people get into positions of power, they get bogged down with the mundane and eventually become conformists; it’s easier to adapt than to change. Having lived through five economic cycles over the last 30 years, I asked myself what I would do differently if I had control of the world at a time when the world economy is gutted by the pandemic and the World Health Organization (WHO) has stated that the worst is yet to come. With these onerous terms of reference, one is compelled to think of extreme measures to provide relief to the dire and helpless situation that the majority of people around the world find themselves in.



In any crisis, what becomes most critical is the availability and flow of money within our economies particularly to the small- and medium-sized enterprises (SMEs). It’s recognized that almost 70% of employment comes from the SME sector. However, in difficult times, the cash-tap dries up and money flows to this all-important sector dries up. Commercial banks are best known for the adage “offer an umbrella when there is no rain” and as entrepreneurs in the SME sector will validate this as banks ask for 100% cash collateral when things get tough. That is risk mitigation 101.



When unemployment is at 30% and when almost 70% of the global population is at risk, there is this select group of institutions that continue to do well. These are a majority of the listed companies and the financial services sector in general. I am quoting from my Publisher’s Note in FORBES AFRICA in June 2020: “Continuing to look at our magical numbers, global GDP is flirting around $100 trillion and total global debt is around $250 trillion (give or take a few trillion). The market capitalization of the 60 main exchanges in the world is around $70 trillion. In terms of profitability, just the S&amp;P 500 companies were projected to deliver approximately $1.5 trillion in profits in 2020, the global banking sector would deliver profits of $250 billion to $300 billion and the technology sector approximately $356 billion. These numbers are larger than the GDPs of most countries. The numbers for Africa are not as high but there are thousands of businesses that are doing well and will continue to do so after the pandemic is over. It’s, therefore, clear that while we have problems from time to time, we also have the resources to fix them; many times over. Hence, it’s time for us to go back to the drawing board and start from zero by redefining our purpose, the difference we need to make and the legacy we will leave.”



Let’s also put two other terms of reference on the table relating to banks. Bank closures and failures on account of bad debt write-offs, non-performing assets or over leveraged balance sheets, seldom come from bad loans to the SME sector or to farmers in the agricultural sector. History is a witness (as Google can validate) that the majority of causes come from lending to large corporates, poor governance and through fraud. Secondly, even in crisis, as central banks reduce interbank rates, commercial banks seldom pass this on to the SME sector; beneficiaries are once again people who can afford the higher interest rates.



Rather than rearticulate, I want to quote from the same note in June: “If we are to be truly reincarnated, the script must be rewritten and inequality must be the first value for rehabilitation. In reality, even though resources are abundant, the gaps have continued to widen and the levels of poverty have increased. This is largely because of how we have developed the economic value chain; people that make the most money are the financial engineers who are trading stocks and not those sweating in the field manufacturing products and delivering services. The cocoa bean, sugar or chicken farmer make 6% of the amount that the retailer makes selling the finished products, who in turn, makes 50% less than the equity trader, who makes the most money trading on the stock. Anna, the tea lady in our office in Johannesburg, was charged an annual interest rate of 26% by one of the top banks to pay the college fees for her only son; no recourse. This is exploitation and needs to change through radical reforms of our entire banking system and the capital markets to harbor on making them very efficient but not for profit; the profit needs to be reinvested at the grassroots level. We need more farmers ploughing the fields, as, at the end of the day, we cannot eat “paper stock”.”



Let’s agree that governments cannot be the answer to all the problems. Governments can provide stimulus, change policies and even print money (if that is indeed a solution), but at the end of the day, the real cash that is available is in the financial system to include capital markets. Even when the entire world economy has come to a standstill, the people who continue to make profits are those that are feeding off the financial services trough. &nbsp;



My over-simplified list of actions, as radical as they may sound, are mild in contrast to what is needed today. I would increase the capital of all multilaterals and Development Finance Institutions (DFIs) by pro rata contributions from the wealthy nations, but ensure that in turn they (including the World Bank and IMF) reduce lending rates significantly and waive interest for three years on all national debt for developing countries. Secondly, to shut all capital markets and exchanges for two years, stop all exits from private investments for two years (rather invest in venture and growth capital), no dividends are paid by listed companies for two years, ensure all cash raised in funds goes into growth capital, interest cap on loans to individuals at the lowest income bracket, and 100% of profits from banks, insurance, credit card, listed companies, investment banks, audit firms, consultancies and property development companies is channeled back to government coffers to support the core sector industries particularly agriculture, healthcare, SMEs and infrastructure (including low-cost housing). To plug some loopholes, no increases in salaries or any bonuses or incentives provided to any employee (other than the lowest income groups) for two years. It may put a small percentage of people through minor but endurable inconvenience but 70% of the world will see some measure of improvement.



The Greek physician <a href="https://www.yourdictionary.com/Hippocrates">Hippocrates</a>, is known to have said: “For extreme diseases, extreme methods of cure, as to restriction, are most suitable.” This, when translated by many people in history, has led to a common phrase “desperate times call for desperate measures”. Well, the time for procrastination is over and it is time to act. If I had the reins of the world, I most certainly would take draconian measures for better good.



– The writer is the Founder and Publisher of FORBES AFRICA

Tag: small entrepreneurs

FORBES AFRICA SOCIAL MEDIA

Insights On The Five Stages Of Small Business Growth

The Entrepreneur In Fashion Who Learned From Google

Desperate Times Call For Desperate Measures: What Could Be Done For The Greater Good