Module 1: Leading an Entrepreneurial Venture

Organizational stages of growth

Introduction

As an organization grows, it generally progresses through four stages of increasingly formal management structures.

Click on the links for Stages 1, 2, 3 and 4 below to read more about these stages.

Stage 1

In a one-person operation, the owner does everything: sales, bookkeeping, marketing, production and so on. Many firms remain one-person operations indefinitely due to the owner's family obligations, financial constraints, or contentment with the status quo.

Stage 2

As more people join an organization, the business owner becomes a player-coach. The entrepreneur continues to perform day-to-day tasks, but along with other employees. So the owner assumes additional employee management duties such as hiring, scheduling, supervising, and payroll.

Stage 3

Firms reach a major milestone in organizational development when they add an additional level of supervision. The owner relinquishes some direct control and begins working through an intermediary layer of professional managers.

Stage 4

As a company adds more layers of management and processes, it also adopts written policies, budgets, standardized personnel practices, organizational charts, job descriptions, and control protocols.