The Six Business Life Stages

THE SIX BUSINESS

LIFE STAGES

Table of Contents

2

Page

Research Method 3

Executive Summary 4

Business Life Stage Predictors & Progression 6

Starting Up Businesses 8

Growing Businesses 12

Maturing Businesses 16

Re-Inventing Businesses 20

Surviving Businesses 24

Transitioning Businesses 29

Conclusions 33

Representative of Middle Market nationwide

Nationally Representative Sample

of Business Owners

3

• 1,366 Interviews

• Businesses with 5-499 employees

• Owners, C-Suite, Key decision makers

• Phone Internet interviews

• Fielded January 2016

Research Method

Businesses, like people, go through different life stages. Our latest research, among business owners of companies

with 5-499 employees, identified six distinct business phases: Starting Up (3% of SMBs), Growing (29%), Maturing

(36%), Re-Inventing (15%), Surviving (12%), and Transitioning (5%).

Starting Up and Growing. The youngest companies are those that are Starting Up and Growing. Sales growth rates

among these businesses are strong, with more than half experiencing annual sales growth of 11% or higher. These

business owners are the most confident in the future success of their businesses. They are enthusiastic since they

are ‘building something’ and ‘bringing their ideas to life.’ For them, everything is possible!

Maturing. Maturing businesses are well established and have arrived at a state where the business is steady and

stable. These companies experience sales growth, although to a lesser degree than the Starting Up and Growing

businesses. Business owners running these companies are the least concerned about customer acquisition and

retention. They don’t need to be; the company is a well-oiled machine, that is basically running itself.

For many businesses, everything continues running smoothly; but about one-third are hit by some type of disruption.

They might experience product relevance declines, or intensified competition, or perhaps something goes awry with

the U.S. economy and demand for their particular products and services wane. Others simply decide they are ready

to move on…either to retire, or to start a different business.

Re-Inventing. Re-Inventing businesses are established companies that due to declining sales and increased

competition have been forced, out of necessity, to do something different. It’s as if the rug got pulled out from under

them, and they are working to regain their footing. They are in pursuit with a vengeance. Re-Inventing owners are

using technology, the latest marketing vehicles, specific targeting, and hot issues (e.g., sustainability) to move their

companies forward.

Executive Summary

4

Surviving. Surviving businesses, too, got hit by a downturn. Yet unlike, Re-Inventing business owners, they are at a

loss about what to do. They are the most worried…about the economy, their customer base, and the upcoming

presidential election (the majority are Republicans). Nearly as many who are excited about new technology for their

business are overwhelmed by it, and say that it is hard to keep up with. They primarily use traditional marketing

approaches. Using a newer technology, like cloud computing, is not yet on their radar. They have the lowest incomes

and education levels, and with nearly two-thirds concerned that they don’t have enough money to retire, getting out is

not really an option.

Transitioning. Even though Transitioning business owners are the oldest of any life stage segment (average age

58), they are not necessarily selling off or passing the business along in order to retire. Most are waiting to retire

because they like working, and nearly 20% are ’transitioning’ in order to start another business or to pursue a

different career. Yet, they are clearly winding their current business down. Four out of ten have a succession plan in

place, and one-third have stopped all marketing activity. The big question for them is, what’s next?

Executive Summary (Cont’d)

5

Business Life Stage Predictors

6

74%

82%77%

63%

37%

51%57%

50%

36%

29%

14%

31%

Starting Up Growing Maturing Re-Inventing Surviving Transitioning

Any Sales Growth

11% or HigherSales Growth

Years in Business

(average)13.7 years 23.5 years 30.4 years 33.3 years 31.0 years 27.7 years

Higher Sales Growth

& Younger BusinessesLower Sales Growth

& Older Businesses

Sales growth and the number of years a company has been in business are key predictors

of business life stage.

Business Life Stage Progression

7

Starting Up Businesses

3%

103,000 businesses

Growing Businesses

29%

996,000 businesses

Maturing Businesses

36%

1.2M businesses

Sales

Growth

Decline

Economic

Downturn

Intensified

Competition

Re-Inventing Businesses

15%, 519,000 businesses

Surviving Businesses

12%, 415,000 businesses

Transitioning

Businesses

5%

173,000 businesses

Base: Businesses with 5-499 Employees

8

STARTING UP BUSINESSES

Recently started the business, still learning,

getting things in place

Starting Up Businesses (3% of SMB Owners)

9

Businesses that are in the ‘Starting Up’ segment account for a small share of small and mid-sized

businesses with 5-499 employees. These businesses are riding the strong upswing of sales growth

as their companies successfully get off the ground…with 57% experiencing annual sales increases

of 11% or more. And Starting Up business owners are highly confident their companies will grow

even more over the next 24 months. To ensure the momentum continues, many are accessing

business loans, and they are also exploring non-local geographies to help drive sales.

Average Age47 v. 53 for all other SMBs; 35%

under 40

Years in Business (avg) 13.7 years, 55% under 10 years

# of Employees (avg) 13

% with Sales Growth 74%, 11%+…57%

Women-Owned 47% v. 30% for all other SMBs

Minority-Owned 29% v. 11% for all other SMBs

Starting Up business owners are

highly confident that their business

success and growth will continue.

62%

47%

Starting Up BusinessOwners

All Other SMBs

% Extremely/Very Confident in Success of

Company Next 24 Months

Key Characteristics

To ensure ongoing momentum, many Starting Up businesses are accessing loans; few have implemented standard business services

10

35%

61%

51%

73%

15%

27%

35%

41%

Employee benefits services

Commercial insurance services

Payroll services

Accountant, CPA, tax prepservice

Starting Up Business Owners All Other SMBs

Many Starting Up SMBs have yet to

put in place general business

services.

Used Past Year

For Starting Up SMBs, getting access to

capital is top of mind. Four out of ten have

recently applied for loans.

22%

22%

20%

23%

33%

35%

32%

43%

High LOC critical factor whenapplying for new credit card

Very concerned about havingaccess to capital, business

loans or credit

Use business loan funds toexpand operations

Applied for business loan past 2years


Starting up businesses are exploring non-local geographies to help drive sales; Social media is a channel they leverage

11

Social Media is an important marketing

tool for Starting Up businesses.

33%

28%

24%

40%

52%

55%

Use Social Media to generateleads

Generate revenue fromSocial Media

Post at least severaltimes/week to Social Media

for business


Starting Up SMBs are generating sales

both nationally & internationally, as well as

locally. They travel often for business to

keep their non-local operations going.

Starting Up

Business Owners All Other SMBs

Generate Sales:

Locally89% 92%

Nationally 76 61

Internationally 49 24

Travel for business

once a month+64 31

% of time work out

of the office40 20

12

GROWING BUSINESSES

Increasing sales, employees, locations or

knowledge

Growing Businesses (28% of SMB Owners)

13

More than one-fourth of U.S. businesses are in the Growing segment. These businesses have all

cylinders firing to keep their upward sales momentum on track, and it’s working! Growing business

owners are both passionate and driven. They started their companies because they wanted to bring

an idea to life, and they love making that happen. Growing business owners work the hardest of any

segment, and use leading technologies to move their companies forward, as well as a host of

traditional and new lead generation tools.

Average Age 51 v. 54 for all other SMBs

Years in Business (avg) 23.5 years, 26% under 10 years


% with Sales Growth 82%; 11%+…50%

Women-Owned 34% v. 29% for all other SMBs

Work 60+ Hours per

Week37% v. 29% for all other SMBs

Household Income (avg)$202K v. $178K for all other

SMBs

Growing business owners are highly

confident in the ongoing success of their

companies.

63%

41%

Growing BusinessOwners

All Other SMBs



Key Characteristics

Growing business owners want to build something & bring ideas to life; they use multiple lead generation sources

14

Growing business owners started their

companies to build something and bring an

idea to life.

They use multiple sources, both

traditional and digital, to drive leads and

the business forward.

65%

64%

70%

73%

76%

84%

Get to do what I love

Bring my ideas to life

Build something

Growing Business Owners All Other SMBs

Reasons Started Business

38%35%

27%24%

31% 30%

22%20%

Social media Website/emailnewsletter

registrations

Eventsponsorships

Direct mail

Growing Business Owners All Other SMBs

Sources Used for Driving New Business Leads

Growing business owners are excited about new technologies and use more cutting edge tools (like the Cloud) than other SMBs

15

Growing SMBs are leveraging

leading technologies to continue

their business growth.

Growing business owners’ excitement for

new technology far exceeds the overwhelm of

trying to keep up with it.

71%

61%

38%46%

Growing BusinessOwners

All Other SMBs

Excited about new technology

Hard to keep up with technology

Used Past Year:

Growing Business

Owners

All Other

SMBs

Company Website 79% 71

Tablet 52 47

Cloud services 40 30

Mobile/Internet

payment devices

35 29

% Strongly Agree

+33%pt gap +15%pt gap

16

Settled, established, stable, business

is steady

MATURING BUSINESSES

Maturing Businesses (37% of SMB Owners)

17

Over one-third of businesses in the U.S. are in the 'Maturing' business life stage. These companies

are settled, established and able to generate sales and sales growth without the stepped-up

marketing, worries and concerted efforts found among other businesses. Maturing business owners

have 'arrived.' Their companies are like well-oiled machines that have an ingrained rhythm and

momentum all their own. They tend to be locally-focused and are confident in the future success of

their companies.


Years in Business (avg) 30.4 years



White Collar Industries 64%

Household Income (avg) $189K v. $183K for all other SMBs

Maturing business owners are fairly confident in their

future success and are less concerned about their

marketing efforts than other SMBs.

Key Characteristics

54%

56%

45%

43%

45%

50%

Maintaining existing customerbase

Being able to attract newcustomers

Extremely/Very Confident infuture business success

Maturing Business Owners All Other SMBs

% Very Concerned

Maturing business owners are very active in their communities; their local engagement drives sales and generates business leads

18

Maturing business owners run businesses with a

strong local focus. They are less inclined to

generate sales nationally and internationally.

93%

56%

20%

91%

64%

27%

Locally Nationally Internationally

Generate Sales…

Maturing Business Owners All Other SMBs

Engage in public, community activities (e.g., vote,

attend town meetings, sign petitions):

83% Maturing Business Owners

76% All Other SMBs

Obtain business leads primarily via word of mouth:

79% Maturing Business Owners

74% All Other SMBs

They are active in their communities

and generate business leads primarily

via word of mouth.

With their businesses working well, maturing business owners are slower to adopt new technologies than other SMBs

19

Maturing business owners’ excitement and

degree of overwhelm with technology are fairly

close. For other SMBs, excitement strongly

outweighs overwhelm.

Not surprisingly then, Maturing

business owners are not early adopters

of technology.

61%66%

46% 43%

Maturing Business Owners All Others



% Strongly Agree

Maturing

Business Owners

All Other

SMBs

Company website 68% 77%

Mobile/internet

payment devices

28 33

Cloud services 27 36

Used past year for business:


20

Re-defining the business, or finding specific niche in

the market either from personal desire or necessity

to stay competitive & profitable

RE-INVENTING BUSINESSES

Re-Inventing Businesses (15% of SMB Owners)

21

Slightly more than one out of ten businesses are in the ’Re-Inventing’ life stage. These companies

have been in business for many years, but got a wake up call at some point, often a flattening or

decline of sales, that drove them to re-assess and begin looking at how to do things differently. The

drive of these business owners is strong, and they are exploring all possible resources to help the

company turnaround…technology, new media, sustainability, etc. Many provide employee benefits &

pension plans, which presumably further tax their revenue base.


Years in Business (avg) 33.3 years


% with Sales Growth 63% (11%+…29%)

Household Income (avg)$173K v. $187K for all other

SMBs

Re-Inventing business owners are less

confident than other SMBs about the

future success of their companies.

39%

48%

Re-Inventing BusinessOwners

All Other SMBs



Key Characteristics

Re-Inventing business owners are concerned about getting & keeping customers; technology plays a key role in their re-invention

22

49%

51%

57%

57%

Maintaining existingcustomer base

Being able to attractnew customers

Re-Inventing Business Owners All Other SMBs

Acquisition & retention are key concerns

for Re-Inventing business owners.

% Very Concerned

50%42%

81%

62%

35% 31%

72%

51%

Email marketing Cloud usage Co website Apps


Used Past Year for Business

Greater technology use is part of their re-

invention strategy.

Without state of the art technology and systems, it’s difficult to grow the

business

67% Re-Inventing Business Owners

61% All Other SMBs

Re-Inventing business owners are leveraging multiple strategies and tactics to regain a solid business footing

23

25%

45%

58%

53%

32%

58%

64%

68%

Developing prdts/services thatcater to the young

Becoming more tech advanced

Working to make sustainabilityan integral part of prdts/services

Launching new prdts/services tomeet changing customer needs


Many Re-Inventing businesses are

generating sales nationally and

internationally to supplement local sales.

Re-Inventing

Business Owners

All Other

SMBs

Generate Sales:

Locally90% 92%

Nationally 67 60

Internationally 31 23

% Agree

They are using a number of strategies to

meet customer demands and change the

nature of their businesses.

24

Under pressure due to the economy, competition and/or

decreased sales, customers or credit availability

SURVIVING BUSINESSES

Surviving Businesses (12% of SMB Owners)

25

Roughly one in ten businesses falls into the 'Surviving' business life stage. Most businesses that are

in the ‘Surviving’ segment have been in operation for a number of years. Yet, whether it was an

inability to come back fully from the recession, or some substantial threat from a competitor, they

now find themselves working hard to keep the business afloat. Sales are declining, and they are not

highly confident things will turn around. The U.S. economy is suspect, and the uncertainty around the

impact of the presidential election hangs heavy. About half have a hard time keeping up with

technology, and they tend to lag when it comes to using the more current marketing tools.


Years in Business (avg) 31



College graduate+ 63% v. 69% for all other SMBs


Married 68% v. 75% for all other SMBs

Surviving business owners have

low confidence in the future

success of their businesses.

38%

84%

Surviving BusinessOwners

All Other SMBs



Key Characteristics

Surviving business owners have heightened concerns about many facets of their businesses, as well as the U.S. economy

26

36%

45%

48%

48%

49%

48%

52%

62%

65%

69%

69%

70%

Outcome of the presidentialelection

Having enough $ to retire

Rising costs of business

Maintaining existing customerbase

Being able to attract newcustomers

The U.S. economy

Surviving Business Owners All Other SMBs

Surviving business owners carry heightened

concerns about the economy, rising costs,

their customer base & the outcome of the

presidential election.

They include the highest proportion of

Republicans of any business life stage

segment.

% Very Concerned

Surviving SMBs All Other SMBs

Democrat 18% 19%

Republican 53 45

Independent 23 26

Other/None 6 10

Political Affiliation…

Surviving business owners started their companies to be their own boss & make money; many find technology overwhelming

27

Surviving business owners started their

companies in order to be their own boss.

Nearly half find new technologies

overwhelming.

Surviving

Business Owners

All Other

SMBs

Be my own boss 1 2

Make money 2 3

Have control over my

schedule

3 6

Build something 4 1

Reasons for Starting Business in

Rank Order

59%64%

48%44%




% Strongly Agree


Surviving owners tend to use traditional marketing approaches; few are planning to employ cloud services for their businesses

28

32% 32%

26%

14% 13%

31%34%

22% 21%

16%

Printadvertising

Emailmarketing

Direct mail Social mediaadvertising

Online searchadvertising


Marketing/Advertising Vehicles Used Past Year

Surviving business rely on print, email

marketing and direct mail; social media and

online advertising are little used.

Surviving

Business

Owners

All Other

SMBs

Familiar with 79% 87%

Used for business

past year24 34

Extremely/Very

Likely to Add Next

Year

9 17

Cloud Computing for Business

Few Surviving business owners are

using or planning to use cloud

services for business.

29

Selling or transitioning the business to

someone else, or closing it

TRANSITIONING BUSINESSES

Transitioning Businesses (5% of SMB Owners)

30

Every year a small number of business owners decide it is time to move on…these are the

‘Transitioning’ businesses. These companies have been in business a long time, but their owners are

either passing the businesses along to another, or selling the company. It is often not about

retirement. Even though Transitioning business owners skew older, a fair number are wanting to try

something new; a new career, or maybe even a different business. They have decided it is time for a

new beginning.


Years in Business (avg) 28 years


% with Sales Growth 51% (11%+…31%)


Transitioning business owners’ confidence

in the success of their companies has

waned.

28%

48%

Transitioning BusinessOwners

All Other SMBs



Key Characteristics

33%25%

40%

21%

66 or older Never / Not Sure

Transitioning business owners are moving on to pursue some other type of business; few are ready to retire

31

Planned Retirement Age…

They want to continue working because they

like being active & enjoy it. Nearly 20% want

to try something new.

Transitioning business owners skew

older; but most are not yet ready to retire.

58.1

52.6

Average Age

Transitioning Business Owners All Other SMBs

Reasons Want to Keep Working

7%

6%

25%

26%

32%

65%

70%

11%

14%

21%

25%

27%

54%

66%

Want to start another business

Want to try a different career

Need $ to make ends meet

Keep health insurance/otherbenefits

Want money to buy extras

Enjoy working

Want to stay active & involved

Transitioning Business Owners All Other SMBs

Four out of ten transitioning owners have a succession plan. Marketing is dialed back in preparation for the transition.

32

Some Transitioning business owners are

passing the business along; the rest are

selling or closing the business.

Transitioning Business

Owners

Have a formal

succession plan39%

Don’t have one / Not

sure50

Not applicable 11

In preparation for the business transition or

sale, one-third are no longer using advertising

or marketing vehicles to promote the business.

No Specific Marketing or Advertising

Vehicles Used Past Year

31%

19%

Transitioning BusinessOwners

All Others SMBs

Conclusions

33

Messaging Themes and Considerations

Starting Up Businesses • Women & minority ownership skews; younger owners (47 average age)

• Strong need for access to capital

• Opportunity to enlist them with/give advice about general business services (payroll, insurance,

employee benefits, etc.) that they’ve yet to set up

• Reach them via outdoor (travel), and through digital/online and social media

Growing Businesses • Work the longest hours - have all cylinders firing

• Passionate, bringing their ideas to life through their business

• Technology lovers, use cutting edge devices/services - the Cloud for them is big

• Leverage traditional & digital channels…suggesting that both are avenues for reaching them

Maturing Businesses • Have arrived, and everything is working!

• Strongest local focus of any segment, movers in their communities; local efforts key to reaching

them

• Reluctant, slow adopters of new technologies

• Key strategy might be to help them get more knowledgeable about tech before/or so that the

business doesn’t slip

Re-Inventing Businesses • Things slipped and they’re trying to regain their edge

• Avid technology adopters; Using all the latest and greatest (marketing tools, new products,

targeting, etc.) to turn things around

• Strong advocates of sustainability as a business strategy

Surviving Businesses • The least confident in the future success of their businesses

• Extremely worried about the economy, their customer base, having enough for

retirement…opportunity to address these fears with easy-to-use tools and solutions

• Opportunity to leverage their need to be in control, and be their own boss; self-empowerment

Transitioning Businesses • They need guidance for both buying and selling businesses, and how to set up a succession plan

• Wealth management is another key need; although they are not necessarily retiring, they are the

oldest segment

Research:

Jessie Shaw, VP

212-500-0611

[email protected]

About The Business Journals

34

National Advertising:

Ryan Whittington, SVP

704-973-1839

[email protected]

For more than three decades, American City Business Journals has been the

nation’s largest publisher of local business news and information in print and

online, deploying more than 600 journalists across 43 major U.S. cities. ACBJ

serves audiences valuable news and data anytime and anywhere they seek it.

Local Advertising:

Alex Orfinger, EVP

703-258-0888

[email protected]

Mike Olivieri, EVP

704-973-1005

[email protected]

mailto:[email protected]




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