In the United States, approximately 4,000,000 businesses start each year. Only 18% of businesses survive to their first anniversary, and only 50% make it past five years. What are the common traits of most failed start-ups? They don’t know how the phases of business life affect their company.
The seven stages of the business life cycle include conception, startup, early stage, rapid growth stage, maturing stage and innovate or decline. You must know how each stage functions and what you can do to be successful. We’ll look at seven stages in a business cycle and what you can do to maximize them.
1. Conception Stage
Conception is the first stage in starting a new business. This is the time to brainstorm and research potential business ideas. You will now have the time to think about what type of business you would like to start, and why you believe it will be successful.
Market Assessment
It is possible that you have already identified the niche in an industry which would be most beneficial to you, based on your market research, competition and resources available. Many people look for funding and partnerships at this stage.
Create a Business Plan
Entrepreneurs can still gather outside advice to help them decide whether to move forward with their idea. This is also the perfect time to start creating your startup plan. This plan will cover your abilities, resources, customers, marketability and potential sources of startup capital.
Be prepared to Work
Most small business owners work at least fifty hours per week, and the initial stages are often the most challenging. It’s common for entrepreneurs to handle the majority of day-to-day duties themselves in the beginning. Therefore, it is important to manage your time, plan and organize. You can end up in a dead-end or a rocky road if you don’t follow through or stay focused while getting your business started.
2. Start-up Stage
In the early stages of your business, you’ve already taken some steps. You may still be trying to establish your business and are experiencing inconsistent sales.
Be Flexible
If you find that profits aren’t flowing as quickly as you thought they would, it is important to be creative. If you find yourself in this situation during the start-up phase, try to think of creative ways to lower costs and experiment carefully to adapt your product or service according to market needs, wants, and expectations.
Create a three-year business plan
In the start-up phase, you should create a business strategy covering the next three to five years. You can also develop a marketing plan that will help your company gain the stability needed to succeed. This plan will help you to evaluate your progress and make decisions based on your goals. It’s important to keep the plan updated as new information becomes available.
3. Early Stage
Early stages of a new business are often the most exciting, as you start to see your cash flow and income grow. You may have a solid customer base, but you still need to find new customers and determine how to remain competitive. You need to delegate, communicate your vision and pay close attention to marketing.
Develop a Marketing Plan
A marketing company or an internal marketing specialist can refine your brand’s competitive edge. To gain visibility within your niche market, you will need to create a Marketing Plan. This plan should include branding, public relations and advertising strategies, as well as social media, search engine optimization, and social media.
Hire, Delegate, and Outsource
It’s important to hire a management team that is capable for the success of your business and your personal well-being. You’ll have to delegate some responsibilities that you were handling yourself in order to be more effective. Professionals who know your business well can provide you with valuable feedback that will help you make the best decisions.
Outsourcing can help you reduce the burden of daily tasks. You can subscribe to automated services, or hire specialized companies that specialize in specific tasks like cleaning your office space, financial management or tax preparation.
4. Growth Stage
During this stage of growth, your company will continue to take in cash and spend money on expanding the market. In the growth stage, you should hire more people and expand your business to serve more customers. Investors will also be able to see your business’ viability and are more likely to give you the money to grow.
Share Your vision Clearly and Constantly
Your outstanding personality and your excellent communication skills deserve to shine. Your top priority will be to manage these relationships with customers, employees, and investors.
Continue the delegating process while presenting your vision to your team about the direction of the business and how that relates to the personal growth opportunities for your team members.
Plan and Strategize for the Future
It is time to plan and strategize. You’ll also need a strategic plan, which includes goals and metrics to measure your business’s success. This plan isn’t just for you or your company. It involves all of your employees, and how you will move forward together. This document will help you set clear goals for your company and guide all employees to take actionable steps.
An operating plan can help you to coordinate your business functions as they grow into departments or teams that specialize in certain areas. This will ensure smooth and effective interaction between all the different business functions. Planning should include all business functions and the steps necessary to achieve a goal.
You’ll also need to develop an exit strategy. You may decide to step back from the daily operations of your business, even if you intend to own it until retirement. Even if your plan is to remain fully involved in the business, you should consider all exit options available to you now and at any future stage. A well-planned exit strategy can help you influence the direction of your company and encourages it to grow.
Secure funding for greater capacity
As your business grows, it’s important to get funding for expansion and to hire more employees, buy equipment, create more space, or meet other needs.
You can choose from a variety of funding options, including private investors and conventional lenders. There are also non-profit organizations, such as SBA Loans, that help small businesses .
funding. Decide what you think is best for the organization and its goals, as well as your financial situation.
5. Rapid Growth
You’ll feel amazing at this point. Your business is booming. Your competitors will be taking note if you’re growing faster than the industry.
Expand Responsibly
You should not continue to increase your expenses and staff permanently, even if the rapid growth is impressive. To standardize the experience for your customers and keep costs predictable, you should streamline and systematize all your operations.
It is also important to assess the current capacity of your suppliers. Lack of products or services or delays in delivery can damage your reputation and cause stress to customer relationships.
Restructure and Evaluate Leadership
You have a good management team in place and you should be able to keep everything moving smoothly. This is a great time for some entrepreneurs to sell their business. You may find that your success will cause you to outgrow in terms of your skill set or bandwidth.
You and your team can adapt to the situation if you choose to stay with it. It may be necessary to increase the level of expertise in your management team so that you can provide more practical guidance. There are opportunities to develop professionally by gaining training, leveraging your industry’s networks and pursuing education.
Prioritize Goals
Your entire management team should be involved in the annual review and revision of the strategic plan of the business. This annual plan should be very clear, and only changes are allowed if there is a significant update in information and the feedback of the whole team.
Priorities should be clear and based on vision. Too many priorities in your strategic plan can place undue stress on your team and processes, as well as your cash flow.
6. Mature Stage
Your business has a steady presence on the market. You’ve stabilized your sales patterns and are a leader in the industry. You should work to maintain the value that you have gained, and balance both short-term and long-term gains.
Reinvent and remain flexible
You can innovate, expand strategically, and even acquire complementary companies, if that is what you want to do. Some entrepreneurs will split their company into different business units, based on the services each department offers.
Continue Leading with Vision
Keep the vision of the company at the forefront in planning and decision making. It is your responsibility to lead a group that can agree upon the shared values between each member of the organization. It is important that you ensure your employees feel a sense ownership and are happy so as to avoid a high rate of turnover due to misaligned value.
Plan of Transformation or Exit
Consider how your business can transform over time to remain relevant, profitable, and competitive. You can revisit your Exit Plan once the company has shown its profitability and value.
7. Innovate or decline stage
In the last stage of a business’s life cycle, a company must either innovate or face extinction. In this phase, businesses must find new ways to innovate products, services, and markets.
Keep your body and mind fresh with
Companies at this stage in the life cycle may want to diversify their product offering and expand into other industries. You can expect to lose some business if you don’t innovate. Over time, you may even become irrelevant and unprofitable.
Promote Creativity
Influential leaders encourage a culture of creativity, and they will invite their team to provide constant feedback. At this stage, taking strategic risks is worth it. You must also constantly reinforce your vision. You can get caught up in internal confusion if your team starts to drift away from a common vision.
Take note of the external conditions
You can encourage your team to keep up with the changes in your industry by encouraging them to read, network, attend conferences, and educate themselves on how other companies are innovating. You can find inspiration by looking at your rivals, or even other industries.
