Everything has a life cycle, and businesses are no exception. As your small business grows, it progresses through each phase or stage of its life cycle, and its needs also change as it grows. Growing your small business isn’t impossible, but it’s not easy either. To have it advance through each of its growth stages, you’ll need the help of people experienced at growing small businesses, such as small business marketing consultants. Here’s what you can expect to happen to your company and what services are required to help it move successfully through its life cycle.
What Is the Business Life Cycle?
The business life cycle is defined as the progression of an enterprise in stages over time. This is composed of five stages: launch, growth, breaking out, maturity, and decline.
Stage 1: Launch
As this is the first stage, the challenges a new business will face are very basic. This will mostly entail being able to get enough customers, deliver products and services, and do all that’s needed to stay in operation. As the business owner, you will be performing all the tasks and directly hiring and supervising any employees if you have them. Growth is far from your thoughts, and formal planning and organizational structure are either minimal or nonexistent at this stage.
The business’s main aim is existential; all its efforts are focused on paying wages and merely staying alive. The services that can beneficial for businesses at launch include product development, marketing, and cash flow management. A consultancy can be hired to ensure that the company and personal earnings are correctly managed and kept separate.
Stage 2: Growth
Once the business has successfully hurdled its first couple of years and moved on to growth, its struggles are less burdensome. The firm has survived potential pitfalls and established a customer base to make it a viable and more stable enterprise. There is a growing demand for its products and services. The main challenges have shifted from managing cash flow to operating revenues and costs. The operational aspect remains simple, but there are more employees and possibly a supervisor.
Planning is centered on cash forecasts, survival is still a concern, and the owner remains an active participant in the day-to-day operations. While the business is on more stable footing, it is not as secure and is still vulnerable to closure. Services that can help identify growth opportunities and recommend ways to maximize them can be of great benefit to a business in its growth stage.
Stage 3: Breaking Out
This is what you can call the “success” stage. At this stage of the business’s life cycle, the owner now has the luxury of choosing between keeping the company stable and profitable or gearing up for expansion. Should more than one person own the business, one or more of them can decide to partially or distance themselves from the company and begin other pursuits, as the business continues to earn. At this stage, the owners can contact a business consultant or hire a manager that can assist them in attaining more success by preparing for more growth. This is when a more professional HR and IT-automated processing service package can benefit the company most.
Stage 4: Maturity
At this point in its life cycle, the business has attained greater heights after is has “broken out” and became an industry success. As the company is bigger, operations are now more decentralized, with competent management staff and experienced employees at the helm of a growing and increasingly more complex business environment. There are more operational and strategic planning structures in place, and the owners are less involved in operations. The business now has the opportunity to become even larger or be sold to competitors at a profit if the owners wish. Services like change management for department restructuring can be beneficial to a business at this stage of growth.
Stage 5: Decline
A business is considered to have genuinely made its mark in its industry once it gets to this stage. Extensive strategic and operational planning structures are in place, and management is decentralized and composed mostly of experienced decision-makers. The main concern of a company at this stage is to remain innovative and not lose to more entrepreneurial-minded rivals. The biggest challenge for companies is to stave off complacency and keep their entrepreneurial spirit. Companies that have reached this stage need services that can help them come up with innovative products and services to remain competitive.
Businesses face different types of obstacles and opportunities, and it can’t succeed in funding alone; a business needs the right people, services, and information to successfully advance through each stage of its life cycle and avoid stagnation and closure.