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  • Writer's picturePhimation Strategy Group

Three Mindset Changes For Second Stage Business Leaders

Updated June 2, 2021

The challenge you face as a second stage business

One of the most common ways that small business owners get stuck is to have the wrong mindset for a problem. This happens a lot when companies emerge from start-up and move into the second stage of their development.

You wouldn’t hammer a screw …or bake a cake in your dishwasher…or pedal your car…

What does it take to be successful as a start-up? A high-quality product or service, quick reflexes, responsiveness, experimentation, frugality.

But those same qualities work against you when your business moves to the second stage of development.

The strategic switches your team needs

With the right mindset, you stay in control of new opportunities and problems; without the right mindset, you struggle and waste time with solutions that don’t work.

There are many ways of thinking that must be different in the second stage business. Let’s look at a few…

Switch one: Focus on ROI, not cost.

In start-up mode, it’s important to manage your costs so that you can get to a point of profitability. As you move into the second stage of business, it’s important to focus on your investment returns, and the best and fastest way that you can get results.

Often times in second stage business, the best answer – the one that will get you the best results – is not the cheapest. But, many second stage business leaders can’t break the frugal mindset, and are stuck in a cycle of underinvestment that never gets them where they need to go. Focusing on ROI, not upfront cost, is a mindset shift that must be made in order to break that cycle.

Switch two: Focus on markets, not customers

Success in start-ups is a built on one-to-one sales, and that intimate contact is important to win early adopters. In second stage businesses, though, making sales customer-by-customer is not scalable. What’s needed is the ability to sell to a market. The change from sales-driven to marketing-driven is a big one, and if a second stage business leader thinks she can just do “more of the same,” she’ll never be able to scale the business beyond her ability to add high-quality sales people. And we all know how hard that is. If you want to grow your business, you have to create an effective marketing machine that brings customers to your salesforce.

Switch three: Spend more time on strategy and communication

Start-ups are not simple – and second stage businesses are much more complicated. In fact, as a business grows, the complexity grows exponentially. But, many second stage business leaders are thinking that the complexities are only growing linearly. Because the business is more complicated, it needs more time invested in two key areas.

The first is strategy, which is how you coordinate and direct all the different parts of the business. The second, is communication, which is how you align all the different parts of the business.

Many second stage business leaders think that the decisions they have to make are simpler than they actually are. These leaders are commonly stuck in a reactive mode, because they don’t spend enough time thinking about their situation to develop appropriate action plans. Thinking your business can still operate as a relatively simple and reactionary start-up mentality means you are operating from intuition and not strategy, which limits the cap on your growth because your team can’t tap in to your intuition (but they can follow your strategy!).

What can you do if you’re stuck because of your mindset?

  • Honestly assess whether you’ve been as successful in second stage business as you were as a start-up

  • Work with someone with experience in your situation, who can help you understand the right mindset

  • Ask your team what frustrates them about the business – they usually have a good sense of how well you are managing, communicating, and planning

  • Get trained on management and strategy, which are going to be vital to your growing success as a second stage business

For more guidance, send an email to and we can set up a time to talk together about the challenges you face, how to adopt new mindsets, and the strategies it takes to be a winning second stage business.

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