5 Stages of Business Growth for an E-commerce Business

When you’ve invested a whole lot of effort to get your consumer product business up and running, it’s natural to be impatient about seeing a return on your investment.

But with so many potential ways to grow the business, it’s hard to know how to best focus your time and limited resources.

The answer depends largely on what stage of the business you are at. In many cases, unrealistic expectations are a result of having skipped over critical early-stage activities such as financial planning and proof of concept testing.

This was certainly true in our e-commerce business’s case.

Because we had no idea what we were doing, the first years of the business were a long slog as we zigged and zagged, experimenting with different product ideas and slowly building our network.

It took patience, dedication, and years of hard work to get where we are today.

If you don’t know where you are in the 5 Stages of Business Growth for a consumer products business, you are less likely to reach your destination.

In today’s post, I clearly spell out the 5 stages of business growth. Understanding where you are today will help you prioritize your activities and manage your expectations at each of the five stages of growth, potentially saving you years of wasted effort.

Be honest about identifying where you are today in the stages of growth in your business.

As long as you’re still in business, it’s not too late to go back and start doing things in the right order.

Stage 1: The Planning Phase

At this stage of the product business lifecycle, you are determining goals for your business and planning for what it’s going to take to accomplish them.  

A big part of this phase will be making projections about how much it’s going to cost to launch your initial product(s) and how long it might be before the business is profitable (hint: probably longer than you think!).

Typical activities include:

  • Researching the market / existing competitors
  • Defining your product or brand concept (brand value proposition) 
  • Setting general business goals (financial, timelines)
  • Sourcing potential partners
  • Creating a business plan including financial projections and marketing activities

You have finished the planning phase of the product business life cycle when you conclude that the idea is worth exploring further, you have a plan on how you will fund the initial phases and you are willing to invest your time and/or money.

Typical Length: 1 – 6 months

Stage 2: The Proof of Concept Phase

Your primary goal at this phase of the product business life cycle is not profits, but to determine whether your assumptions about the viability and profitability of your product are correct – before you invest too much time and money.

This could mean doing a small initial run of products,  developing a prototype of your product, or running an online marketing campaign to solicit emails and gauge interest. If it’s an innovative new concept, you might even run a crowdfunding campaign.

Typical activities include:

  • Test marketing campaigns, including crowdfunding if relevant
  • Refining product specifications
  • Producing an initial test run or prototypes
  • Test selling to your target market, including retailers if relevant
  • Customer feedback
  • Refining your value proposition and marketing materials
  • Refining your sales and financial projections

Discovering that your product is NOT viable doesn’t need to be the end of your entrepreneurial dream. It just means you may have to alter or rethink your product idea.  

You are finished with the proof of concept phase of the product business life cycle when you have a reasonably high degree of certainty that your product is viable and are comfortable investing in a full-scale production run.

Typical Length: 6 – 12 months

Stage 3: The Launch Phase

In the launch phase of the product business life cycle, you are mass producing your product for the first time and doing everything you can to sell it through various channels.

You should now have a good idea of your margins, pricing, and revenue goals.

While you should have a marketing plan in place, you will still be learning about how to best market and sell your product.

Typical activities include:

  • Launching your online sales channel(s)
  • Selling to retailers
  • Testing different approaches to marketing
  • Attending trade shows
  • Seeking partnerships (reps, distributors, platforms, complimentary brands)

You are finished with the launch phase of the product business life cycle and moving into the growth phase when you are starting to see positive cash flow and predictable revenue for your business.

Typical Length: 1 – 3 years

Stage 4: The Growth Phase

In this phase of the product business life cycle, you are starting to systematize your business.

You are beginning to understand what repeatable actions are delivering the most value to your bottom line and you are formalizing business procedures, which in turn allows you to confidently delegate key responsibilities to employees.

You will see natural growth as you add efficiencies to the business and grow your sales volume through the channels you have established. You may even start to add additional channels into the mix.

Typical activities include:

  • Increased spending on marketing your products
  • Seeking financing
  • Defining best practices
  • Systematizing and automating procedures
  • Increasing your sales outlets
  • Defining your company structure
  • Hiring and delegating key responsibilities

You will have graduated from the growth phase of the product business life cycle when you are able to step away from the business for extended periods and have it run smoothly without you.

Typical Length: 3 – 5 years

Stage 5: The Diversification Phase

In the diversification phase of the product business life cycle, there is a degree of stability in your core business that allows you to focus on longer time horizons.

You are liberated from the day-to-day operations, which are now highly automated and overseen by qualified managers.

You now have an established brand that can act as a platform for moving into new product categories, focusing on new markets, or evolving your business model.

If your plans are ambitious, you might consider private equity investment in exchange for a partnership stake in the business to help fund the growth. You may also consider selling the business outright or acquiring a complementary enterprise.

Typical activities include:

  • Establishing long horizon goals
  • Diversifying your product categories
  • Exploring new geographical markets
  • Dealmaking to sell, acquire or take on Private Equity partners
  • Hiring effective managers

Typical Length: 5+ years


It is important to understand where you are in the 5 growth stages of a consumer products business so that you can manage expectations and allocate your time and resources properly.

While you may have read about companies with extraordinary growth rates, these cases are the exception rather than the rule, and it will likely take you a number of years to build a stable, profitable business.

However, by taking incremental steps towards your goal, you will be building something of real value that can help you achieve your financial dreams, and may even grow into a life of its own without you.

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