Your business will go through different stages and you need to be able to identify the dynamic needs of each stage.
As you start a business, it is very important to know the life cycle of business as inevitably you will have to pass through them. Examining the different stages of the business lifecycle allows the entrepreneur to identify the different sets of obstacles and how they can overcome them.
It also helps in anticipating the key needs required at every stage and provides the entrepreneur with the opportunity to adapt to changes.
The stages of the cycle in business are almost the same as when a baby is born. What the baby is fed within the first 6 months is very different from what to feed on one year going forward.
Each stage is unique and if you fail to identify and feed your business needs then it will suffer and eventually die. Different strategies will be required when it comes to financing, market penetration, and even business development at every stage.
We have summarized five different stages that most businesses go through.
This is the start of the cycle also called the soul-searching cycle. This is the stage where you evaluate and analyze the potential and viability of the business. At Founder360°, we have designed a one-page business plan that allows you to test if a business idea is actually conceivable.
This is where you also do some soul searching on yourself – your skills set and knowledge of the market. One gets to seek advice from friends, relatives, potential customers, and industry veterans.
Your business is officially up and ready to run. It is duly registered as a legal entity. You have already developed the products and services and a team is behind you.
This stage will involve testing and be changing the products to fit the market. It requires establishing a customer base and a presence in the market. One will also require to effectively manage their sales expectations and cash flow in the business.
In this stage, the business is already thriving. You have sales and loyal customers and you have already assumed a business lifestyle. This stage basically invoices generating more revenue which is used to keep the company afloat and hiring more team members.
It will require further improvement of products and services on offer including the business model. Best business practices, automation, and even operations models will have to be tweaked in order to improve productivity.
The business has already grown and established a firm presence in the industry and is ready to expand into new territories and markets. This stage allows the owner to gain a larger market share with more customers on board and absolutely more profit generation.
The owner might need to source outside funding in order to facilitate this expansion. The sources of the funds could be banks, investors/partners, or alternatively, you can rely on your profits.
The business has solidly established itself in the industry and it could be still growing but not as fast as it was initially. The profits are positive and stable throughout the year. Fierce competition, new market dynamics, and policy changes by governments are possibly affecting the profits and cash flows.
You can either continue with the expansion or exit /partially exit from the business. Exits could include mergers, acquisitions, or initial public offering (IPO) or liquidate the company.