The business roadmap, from start to finish.
The five stages every business moves through, what to do in each one and how to tell when you’re ready for the next. Written by an owner who has built 16 businesses, every one of them cash flowing.
How to read this roadmap.
I’ve built 16 businesses, and every one of them cash flows. None of them grew in a straight line, but all of them went through the same five stages. Once you know which stage you’re in, you know what to work on this quarter. Just as important, you know what to ignore for now.
This is the roadmap I wish someone had handed me at the start. For each stage you’ll find the goal, the signs you’re in it, the moves that matter most, the traps I see owners fall into and a plain test for when you’re done.
Read your stage first. Then read the next one, so you can see what’s coming before it arrives.
Eric EllsworthFounder, Ellsworth Capitol
Find your stage
Your stage is the earliest one you haven’t finished, not the one that sounds most impressive. A company doing millions in sales that can’t see its cash for next month is still in Stabilize.
Work the moves in order
Each move is listed in the order I’d tackle it. Skipping ahead feels productive and usually means doing the work twice.
Check the finish line
When every line under “What done looks like” is true, move to the next stage. Until then, stay put and keep building.
Start
Set up to openThe goalGet paying customers with a model that makes money on every sale, before you spend big.
Pick one customer and one problem
Decide exactly who pays you and what you solve for them. “Everyone” is not a customer. A narrow focus is cheaper to market and easier to be great at.
For youYour marketing money reaches people who actually buy.
Price for margin from day one
Add up what it costs to deliver one sale, including a fair wage for your own time. Then price so there’s real margin left over. Raising prices on existing customers later is far harder than starting right.
For youEvery sale funds the business instead of draining it.
Sell before you build
Get deposits, preorders or a signed first client before the big spend on a buildout, inventory or software.
For youYou learn whether it works while mistakes are still cheap.
Set up the money basics
Form the entity, open a separate business account, keep books from the first transaction and set aside money for taxes. A CPA is worth paying for this hour.
For youYou always know where you stand, and tax season isn’t a surprise.
Make it easy to buy
A clear website or profile, a phone that gets answered and a simple way to pay. People who are ready to buy shouldn’t have to work for it.
For youInterest turns into revenue instead of drifting away.
Know your runway
Write down how many months you can go before the business has to pay you. Look at that number every month.
For youYou make decisions from a position of facts, not hope.
Grow
Win more of the right customersThe goalBuild a repeatable way to bring in customers, so sales stop depending on luck or on you personally.
Double down on what already works
Look at your last twenty customers and where each one came from. Put more time and money into the source that produced the best ones before you test anything new.
For youGrowth comes from what’s proven, not from guesses.
Know what a customer costs and what one is worth
Work out what you spend to win a customer and what that customer brings in over a year. If the second number isn’t comfortably bigger, more marketing just loses money faster.
For youYou know exactly how much you can afford to spend to grow.
Get found where buyers look
For most local businesses, that means Google: a complete profile, a steady flow of honest reviews and a website that answers the questions people call to ask.
For youMore calls come from people who are already looking to buy.
Write down how you sell
The questions you ask, the offer you make, how you follow up. Once it’s on paper, someone else can learn it.
For youSales stop depending on your calendar.
Answer fast and follow up
A lead that waits a week usually goes cold. Reply the same day, and keep following up until you get a clear yes or no.
For youYou keep more of the demand you’re already paying for.
Raise prices on purpose
Growth is the best time to test a higher price. New customers never saw the old one.
For youMore of each sale stays in the business.
Stabilize
Turn growth into steady cashThe goalMake the business predictable, with steady cash, healthy margins and simple systems that hold when you’re busy or away.
Hold a weekly cash meeting
Fifteen minutes, same time every week. Cash in the bank today, and what’s coming in and going out over the next thirteen weeks.
For youPayroll week stops being a surprise.
Close the books every month
Have last month’s numbers finished by the middle of this month. You can’t steer with numbers that are a quarter old.
For youYou catch problems while they’re still small.
Learn your margin on everything you sell
Some of what you sell is carrying the rest. Find out which, then reprice or drop the products and services that lose money.
For youYour effort goes to the work that actually pays.
Build a cash cushion
Pick a target, such as two to three months of operating costs, and add to it every month, even if it’s a small amount at first.
For youA slow month becomes an inconvenience instead of a crisis.
Write down your ten most important processes
Start with the ones that cause the most mistakes or the most calls to you. One clear page per process beats a manual nobody opens.
For youWork gets done right whether or not you’re watching.
Get paid faster
Take deposits up front, invoice the day the work is finished and set a clear policy for late payers.
For youCash you’ve already earned shows up in your account sooner.
Run better
Fix what matters firstThe goalGet the business running without you in the middle of everything, so your time goes to the decisions only you can make.
Track your own week
Write down where your hours go for two weeks. You’ll likely find a big share goes to work someone else could do with a little training.
For youYou see exactly what to hand off first.
Run the business on a short scorecard
Pick five to ten numbers that tell you how the week went, and review them with your team every week. When a number slips, one person owns fixing it.
For youProblems surface early, and you don’t have to go looking for them.
Put a strong second-in-command in place
Hire or promote someone who can run day-to-day operations. For most owners, this is the hire that changes their life the most.
For youThe business keeps moving when you step away.
Hand off decisions with clear limits
Spell out what people can decide without you, and up to what dollar amount. Then let them decide.
For youYour team moves faster, and your phone gets quieter.
Fix one bottleneck at a time
Find the step that slows everything else down and fix it before touching anything else. Then find the next one.
For youEach fix pays off in full instead of getting lost in a long list.
Plan in ninety-day blocks
Choose a few priorities for the quarter, each with one person responsible and a clear finish line. Review progress every week.
For youBig goals actually get finished.
Plan the exit
Leave on your termsThe goalBuild a business with real options, so that whether you sell, pass it on, take on a partner or keep it and step back, you choose the timing and the terms.
Start years ahead, not months
The best exits are planned long before they happen. Time lets you fix the things a buyer would otherwise discount.
For youYou negotiate from strength instead of urgency.
Get your financials clean and consistent
Separate personal expenses, close every month the same way and work with your CPA on the level of financial statements your likely buyer will expect.
For youYour numbers hold up when someone else looks closely.
Take yourself out of the middle
If key customers, relationships or know-how live only with you, the business is worth less to anyone else. Move them to your team and into writing.
For youThe business stands on its own.
Spread out your risk
No single customer, supplier or employee should be able to sink the business. Where one can, start fixing it now.
For youA buyer sees stability instead of a reason to walk away.
Put everything in writing
Contracts, leases, licenses, key processes and who owns what. Find the gaps now, while you have time to close them.
For youDue diligence becomes a formality instead of a fire drill.
Decide what you want first
How much you need, when, what role you want afterward and what happens to your people. Get clear before you talk to anyone.
For youYou judge every offer against your own goals.
Line up your advisors early
A CPA and an attorney who handle business transitions, brought in well before you need them.
For youYou have the right people beside you when it counts.
Take the roadmap with you.
Get the printable roadmap, a one-page checklist for every stage and the 90-day plan I use to turn a stage into a quarter of work. All you need is an email.
General educational information for business owners. It is not legal, tax, accounting or investment advice, and it does not promise any particular result. Talk with your own CPA and attorney about your situation.
About the roadmap.
Is the roadmap really free?
Yes. You can read every stage on this page. Your email is only needed for the printable PDF and the checklists that go with it.
What are the five stages of a business?
Start, Grow, Stabilize, Run better and Plan the exit. Start is about proving people will pay. Grow is about winning customers on purpose. Stabilize turns growth into steady cash. Run better takes the owner out of the middle. Plan the exit gives you options on your own timeline.
How do I know which stage my business is in?
Your stage is the earliest one you haven’t finished. The free stage assessment takes about three minutes and shows your score for all five.
Does it apply to my industry?
Yes. The stages hold whether you run a restaurant, a clinic, a trade or a software company. The details of each move change by industry. The order doesn’t.
Will you call me if I leave my number?
Only if you tick the box saying it’s OK. We don’t send text messages. Phone is optional, and you’ll get the downloads either way.
You don’t have to build it alone.
If you want a second set of eyes on your stage, I’m glad to be a sounding board. My first priority is helping you grow.