The business lifecycle is a well-established principle.
Every successful SME will go through the following phases: startup, growth, and maturity before heading towards the final stage, either renewal or decline.
More detailed knowledge of the business lifecycle will be crucial as you move forward. At each stage, being armed with a better understanding of how it works will help you:
- Allocate resources correctly
- Invest in necessary systems
- Plan for the future
- Devise strategy
- Anticipate challenges and address them head-on
Aided by business consulting services, you can use this knowledge to your advantage. Read on to explore the business lifecycle and the actions you need to take at each stage.
Stage One: Startup
Identifying factors:
- Your business is less than two years old.
- You have few employees and wear many “hats,” such as marketer, sales, administrator, HR, and more.
- You are still learning about the market and tweaking your business model accordingly.
What you need to know about this stage
As you will be aware, the startup phase is the riskiest. Around one in five businesses don’t make their first year. Few make a profit, either.
You are building the foundations of your business. Sometimes, it can feel like you are doing so in the dark, wondering whether you are making the right choices.
With the right help from business consultants, you can implement systems to reduce unnecessary risks and improve efficiency and fuel development. Taking calculated risks is essential to growth at this stage of the business lifecycle. With the right expertise, you can decide when and how to bring in new talent.
Stage Two: Growth
Identifying factors:
- Your business has been off the ground for over three or four years.
- You have a growing and maturing customer base.
- You are beginning to generate profits.
- It is becoming more accessible to cover costs and retain employees.
What you need to know about this stage
This is the time to solidify your place in the market. It is a time of consolidation and a chance to enjoy your hard work during the startup period. However, keep momentum. Channel your energies into the areas below.
Focus on building strong teams and hiring the right talent. With the business established, you will be hiring people for more specific roles now. If you want to scale up quickly, you can use outsourcing solutions. That way, you will have more time to focus on management and strategy because you’ll spend less time on day-to-day operations.
Also, strengthen relationships within the business community, such as with your vendors and suppliers. These relationships will prove fruitful as you move into the following stages.
Finally, to stay active at an early stage, you need to review your business goals and set new ones frequently. Use a data-driven approach to do so. This will help you make the most efficient use of your resources.
Stage Three: Maturity
Identifying factors:
- You have an established customer base and a good share of the market.
- You have been in business for around a decade, and it is still growing steadily.
- Your business is relatively secure with a regular, plentiful cash flow.
- Your products and services are well-established.
- You have a great team of people, including professional management personnel.
What you need to know about this stage
It would be easy to be complacent at this time. You have put a lot of work into the business over several years, and the reward is a healthy, thriving business. However, you need to guard against disruptive forces.
Change is inevitable. Look at any industry over the last four and five decades, and you’ll see massive changes, often including who the market leaders are. Telecommunications, transport, and retail have all revolutionized and witnessed the introduction of tech-based disruptive forces. There’s always a danger that new entrants to the market could eclipse what you do.
At this stage, you should be looking to tap into new markets and expand your offerings. You should be on the pulse, ready to exploit new opportunities and fulfill changing customer demands.
You may also welcome opportunities to adapt your business by selling, buying, or merging with others. While you may have reached the stage you’ve strived for, the key is to avoid sitting on your laurels and stagnating. This stage is just as much about growth as any other.
Stage Four: Renewal/Decline
Identifying factors:
It can be difficult to tell whether your business is in a downturn. Often, the company may still feel healthy with a good customer base. Owners begin to notice when revenue starts to decrease. However, the business may have been in decline for a year or more.
The alternative to decline is renewal. Here are some positive signs that your business is seeking renewal rather than settling in for what will become an inevitable slump.
- You are actively seeking opportunities to expand your business.
- You are keeping a keen eye on industry trends.
- You are conducting consumer and competitor research to explore new avenues.
- You are adopting technological advances in your industry.
What you need to know about this stage
You must have a thorough handle on the health of your business at all times. Regular internal and external audits are good diagnostic tools that can help you spot the first signs of decline early on so you can put further renewal efforts in quicker.
Business consultants can also help you decide whether a business restructuring process would be worthwhile. Further options are to reinvigorate your business through selling shares or by reinvesting.
The most important thing to remember at this stage, as with every step of the business lifecycle, is to have a strategy. This strategy should set out how you intend to navigate the next few years of the life of your business, how you will respond to potential obstacles, and how you intend to grow the business. This is as vital 10 years in as it was on day one. Business consultants can be with you every step of the way.
