Understanding the Life Cycle of Your Business

In Branding, Enterprise, Small Business by tmc

Outlining the growth patterns of a typical business – in the simplest way that is useful to entrepreneurs – seems to be a heavy task. Even though businesses may vary in organizational structures and management styles, it is ideal for an entrepreneur/business owner to understand the growth stages of a business as it aids in assessing challenges.

For example, an 8 months old business with 15 team members cannot thrive on the same rules and guidelines of a 20 years old business with 600 employees. For the former, cash-flow planning is paramount while for the latter, planning and budgeting to achieve a very good, operational system is most important.

The life cycle of a typical business includes five (5) stages.

  1. The birth stage
  2. The initial growth/survival stage
  3. The expansion/success stage
  4. The mature stage
  5. The decline stage

The birth stage: this is the stage where firms get newly started. It is the stage of existence where the business owners are concerned about getting customers and delivering the product/services required of them by customers. In this stage, the following questions come to mind.

  • How can we get customers?
  • How can we deliver our services in the best possible way?
  • Do we have enough money to meet the demands of this start-up phase?

Here, the business owner carries out the most important task and supervises the subordinates directly. The goal of the company/business at this stage is to remain alive. Sadly, some business owners cannot keep up with the demands of the business and they quit while those that remain, move to the next stage.

The initial growth/survival stage: this is where the business is established enough to satisfy its customers even though still simple and may still have limited number of employees. The major goals here include:

  • Survival and earning money for investment
  • Generation of cash flow for finance growth and stability in business

The expansion/success stage: at this stage, the business owner has a set of happy and satisfied customers that are willing to refer the company’s services online or offline. This is where solid results are gotten using solid strategies, adequate organization and methods are imbibed and displayed.

Interestingly, this is the most difficult phase to manage because business complexity and organizational size grow, and these require more management attention. For example, when the business grows, increase in points of sales and channels is expected, thereby increasing the complexity of the business. At this stage the company can morph into a great company, if managed well.

The mature stage: having gotten through the expansion stage successfully, the company/business now yields some stable profits year-after-year. Some companies/businesses continue to grow to the top line at a decent pace while others struggle to enjoy those same high-growth rates. Here, the business owner either decides to push further to expand the business, or exit the business. If the decision to expand further is taken, the following questions come to mind;

  • Can the business sustain further growth?
  • Are there enough opportunities for expansion?
  • Will the business be able to cover for an unsuccessful attempt of expansion?

As the business owner, are you a CEO who can navigate new challenges and who sees failure as a ladder to the top?

The decline stage: this is where businesses notice sale and profit decline. The business owner has to adjust their strategies to suit the needs of its immediate environment. This is where businesses opt out for new markets and variations and also re-brand.

In conclusion, not all businesses will experience every stage of the business life cycle, but awareness helps you know the stage in which your business is, and anticipate what is coming next. This helps to prepare you and maximize the chance of success.

Courage and a great deal of knowledge of, and experience in, your business help you make the right decision at each stage.