Characteristics of Second-Stage from the Edward Lowe Foundation:
Second-stage companies are those that have grown past the startup stage but have not grown to maturity. They have enough employees to exceed the comfortable control span of one owner/CEO and benefit from adding professional managers, but they do not yet have a full-scale professional management team.
A business typically begins to enter its second stage when it approaches $1 million in total receipts. The transition process can continue until it hits $100 million in receipts, although for most companies $50 million represents the upper limit of second stage. By $100 million, a firm will have to be professionally managed in order to continue to thrive and grow and be in its third stage of development. Employee numbers and revenue ranges vary by industry, but the population of firms with 10–100 employees and/or $750,000 to $50 million in receipts includes the vast majority of second-stage companies.
Here are a few of the many signs identified by Eric Flamholtz and Yvonne Randle that indicate to a CEO that second stage is at hand:
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Many people are not aware of what others are doing.
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People lack an understanding of the firm’s ultimate goals.
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A precipitous drop in product quality occurs for unknown reasons.
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Turnover increases sharply, just when the company needs more personnel.
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You wake up worrying about operational tasks that someone else ought to be handling.
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All your customers want to meet with you, but finding the time to do so seems impossible.
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