The 5 Stage of the Business Life Cycle: Where are you?
Every business will encounter each one of the business life cycle, many businesses will experience the stages in sequences and others won’t experience the stages in this exact order. Each business will endure similar and different challenges that will require their strategy to swift, maintain, increase, and/or change the course of the company in all of the stages. This will demand different amount of resources and/or investment to increase the chances of succeeding to the next stage of the business life cycle.
Stage 1: Development
The beginning of your journey will start in the development stage of the business life cycle. Even if it is merely a thought to start up a business. This is the initial stage where you will be exploring all possibility and growth of your business. Whether your business is worth pursuing, stage 1 of the business life cycle with help you determine that. Research, obtaining feedback, and conducting rounds of test will be a part of your stage 1 experience. If you decide to act in moving your business forward in this stage, your business success will be determined by your financial foundation, knowledge of the industry you wish to pursue, and your passion to push through.
Stage 2: Start Up
Once you have chosen to move forward it is time to expose your business by launching your product and services, implementing your marketing and sales plan, and networking. To ensure profitability and to meet your customer’s expectations you will have to modify your business structure. It is in this part of the business life cycle that is considered the riskiest stage. Your mistakes and actions will determine the path in your company’s success. Analyzing your results will allow you to tweak in areas that requires improvement to move on to the next stage of the business life cycle. It may seem confusing at first when you are making so much changes and adapting to such demands that it becomes unclear. Don’t get discourage the clarity will once again come.
Stage 3: Growth / Establishment
In this stage, you should be feeling more secure than you ever have in this cycle. Investment is the key, this stage will bring the biggest challenges. Your time will be invested mostly in your customers, employees, and expanding. Consistent revenue will flow in to cover the on-going operating expenses. Your business is gaining new customers and relationship with existing customer strengthens. Competition and expanding in the workforce are some of the biggest obstacles your business may encounter. “Hiring smart people with complementary skillset is necessary to make the most of your company’s potential during this phase, and so any good founder will be spending a lot of time directly involved in the recruitment process.” Written by Neil Petch in The Five Stages of Your Business Lifecycle: Which phrase are you in? To achieve the best, you will need to modify in areas such as marketing, operations, and sales to expand to the mass market and set your company in the right path.
Stage 4: Expansion
Your business is fully established and your existence in the industry is known. It’s day to day routine operates smoothly. Don’t get to comfortable! “In business, if you are not moving forward you are moving backwards, and without a constant, almost nervous itch or desire to expand, complacency can set in, and you might get caught off guard.” – Written by Neil Petch in The Five Stages of Your Business Lifecycle: Which Phase are You in?
In this stage, your business will expand and stretch it’s limits into new markets. The marketing, operations, and sales plan modify in stage 3 will be implement in this stage to take your business to newer heights. Remember, implementing these adjusted plans does not necessary mean your business will not fail. There is no way of predicting if the adjustments to your business’ plans will succeed. Some business has expanded rapidly and damaged what was built. It is important to expand but cautiously measuring all risk, disadvantage, and advantages to ensure the business success.
Stage 5: Maturity
You are at the top of the industry, entering this stage your business has successfully implemented all business’ plan and profits become predictable. Your position in the industry is exclusive and will expand to new territories using your brand recognition. You will be face with two factors: expansion or sell. If you choose to expand you will then enter back to the expansion stage. Many CEO has step down at this stage and allow a new CEO to take its position who is more fit to take on the new challenges. This may not necessary be the decision every business take on. If you choose to sell/exit the business and the business is declining the amount you desire to receive for the business may not be in your favor. Which ever decision you choose to make, it’s going to cost you money and time.
Credit of article:
Neil Petch, “The Five Stages of Your Business Lifecycle: Which phrase are you in?”