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Why paying attention to the “ups” and “downs” of the business lifecyle will help you – Part 2

My previous article looked at the traits of a business that has just begun, may be with just a thought, and how it moves into a start-up phase.  This article looks at the next 2 phases as the business begins to take shape and grow, then reaching maturity.

3. Growth phase

Your business has made it through its infancy and is now a child. Revenues and customers are increasing with many new opportunities and issues.  Profits are strong, but competition is emerging.  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 overcome this stage of development.  Growth life cycle businesses are focused on running the business in a more formal fashion to deal with 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 may be sourced from banks, profits, partnerships, grants and leasing options.At the Growth phase, you’re making your climb to the top. The market is beginning to know your name and so are your competitors.

Demand for your products and services are increasing, maybe at a faster rate than you can deliver. It’s an exciting, fast-paced time. It’s often easier to focus on new customers and customers than on re-evaluating the systems and procedures you put in place months or years ago. 

Are they still adequate for your current needs and future projections? Do you have the financing in place to match your growth? Has your strategic planning process kept pace? Are your benefits plans designed to attract, motivate and keep good talent? What are your next steps?

4.  Maturity phase

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.  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.  A mature 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.  Funding is likely to come from profits, banks, investors and government.You’ve made it to the top! Your financial position is strong, your team is experienced and your operations are stable. But staying on top creates a whole new set of challenges.
At this point in your business life cycle you may want to investigate mergers and acquisitions, look at more sophisticated financial and compensation planning, minimise risk and liability, or conduct trend analysis to discover new ways to expand and grow your business.
This is a time for major decisions.  The decisions you make now will produce the results you need to prepare you for the next leg of your journey expansion and transition.
Each stage of the business life cycle may not occur in chronological order. Some businesses may quickly move through each life-cycle phase; some may skip some out all together.  Many business owners will choose to avoid expansion and stay in the mature life-cycle stage. 

Whether your business is a glowing success or a dismal failure depends on your ability to adapt to its changing life cycles. What you focus on and overcome today will change in the future. Understanding where your business fits on the life-cycle will help you foresee upcoming challenges and make the best business decisions.

1 comment

  • Phil said on August 20th, 2007 at 8:46 am :


    Your article is exactly what I needed to hear at the stage my business is at.

    I run an international on-line business that sells products that eases the stress on aching feet and bodies, naturally.

    My business is at the growth stage of the business lifecycle. For the last few months, I have been very busy developing it and I have put in a lot of effort and wondered if I was moving forward. After reading your article, I am encouraged because I know that I am one of many business owners going through this part of the lifecycle and it’s perfectly natural.

    Phil Goad, Owner, http://www.earth-garden.co.nz

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