Your business is changing. With the passage of time, your company will go through various stages of the business life cycle. Learn what upcoming focuses, challenges and financing sources you will need to succeed.
A business goes through stages of development similar to the cycle of life for the human race. Parenting strategies that work for your toddler can not be applied to your teenager. The same goes for your small business. It will be faced with a different cycle throughout its life. What you focus on today will change and require different approaches to be successful.
The Seven Stages of Business Life
- Challenge: Most seed stage companies will have to overcome the challenge of market acceptance and pursue one niche opportunity. Do not spread money and time resources too thin.
- Focus: At this stage of the business the focus is on matching the business opportunity with your skills, experience and passions. Other focal points include: deciding on a business ownership structure, finding professional advisors, and business planning.
- Money Sources: Early in the business life cycle with no proven market or customers the business will rely on cash from owners, friends and family. Other potential sources include suppliers, customers and government grants.
- Challenge: If your business is in the start-up life cycle stage, it is likely you have overestimated money needs and the time to market. The main challenge is not to burn through what little cash you have. You need to learn what profitable needs your clients have and do a reality check to see if your business is on the right track.
- Focus: Start-ups requires establishing a customer base and market presence along with tracking and conserving cash flow.
- Money Sources: Owner, friends, family, suppliers, customers, or grants.
3. Growth Stage: Your business has made it through the toddler years and is now a child. Revenues and customers are increasing with many new opportunities and issues. Profits are strong, but competition is surfacing.
- Challenge: The biggest challenge growth companies face is dealing with the constant range of issues bidding for more time and money. Effective management is required and a possible new business plan. Learn how to train and delegate to conquer this stage of development.
- Focus: Growth life cycle businesses are focused on running the business in a more formal fashion to deal with the increased sales and customers. Better accounting and management systems will have to be set-up. New employees will have to be hired to deal with the influx of business.
- Money Sources: Banks, profits, partnerships, grants and leasing options.
- Challenge: It is far too easy to rest on your laurels during this life stage. You have worked hard and have earned a rest but the marketplace is relentless and competitive. Stay focused on the bigger picture. Issues like the economy, competitors or changing customer tastes can quickly end all you have work for.
- Focus: An established life cycle company will be focused on improvement and productivity. To compete in an established market, you will require better business practices along with automation and outsourcing to improve productivity.
- Money Sources: Profits, banks, investors and government.
1. Seed Stage: The seed stage of your business life cycle is when your business is just a thought or an idea. This is the very conception or birth of a new business.
2. Start-Up Stage: Your business is born and now exists legally. Products or services are in production and you have your first customers.
4. Established Stage: Your business has now matured into a thriving company with a place in the market and loyal customers. Sales growth is not explosive but manageable. Business life has become more routine.