Stage Right

Of course, models are only representations of the real world, so they have their limits. For one thing, the growth path of an actual business is unlikely to exactly follow the graphs used in these models.

"It's not going to be a nice, smooth curve," Matthews says. And some models, Churchill and Lewis' in particular, don't even define growth.

Deciding where you are is crucial because many businesses spend extended periods of time in the critical existence and survival stages, Matthews says. Some never move on, and if a manager in one of these companies tries to make decisions based on later-stage considerations, it could prove disastrous.

The biggest complaint about growth-stage models is that they are too general and don't take into account factors important to specific companies. For instance, the intricacies of family-owned businesses are largely ignored by these models. "Issues of family dynamics and communication and relationships will shape the business life cycle dramatically," contends Gersick, "and generally are not considered in these models."

One key question in older family businesses is whether the next generation of family members has the skills necessary to run a growing company. The answer to this question may be more important in deciding whether to bring in professional management than whether the enterprise is in the right phase as determined by a growth-stage model.

Maybe the biggest obstacle to business-growth models for entrepreneurs is they generally don't like them. After all, if they'd followed the conventional wisdom, many entrepreneurs would never have created their own ventures in the first place. That's exactly Pinkowski's major reservation.

"I don't think you're going to be able to apply any model to a true entrepreneur," Pinkowski says. "We're all visionaries."

This article was originally published in the April 1997 print edition of Entrepreneur with the headline: Stage Right.