Although each business is unique, all businesses go through the same stages as they develop. This is called the business lifecycle. The great thing about the business lifecycle is it applies to every industry and company structure, meaning it will definitely be relevant to you.
Business Lifecycle Definition
Let’s start by defining the business lifecycle. Simply put, it’s a framework that helps business owners understand the challenges they are likely to face. It is also useful for figuring out what you’ll need to do next to progress. The business lifecycle is accurate because it looks at characteristics rather than size or maturity. This is important because every business grows and matures at its own rate.
What Are the Five Stages of a Business Lifecycle?
There are no official terms for the business lifecycle stages (different sources give them different names), but they are generally accepted to be five. The lifecycle starts with the launch of the business, also called seed or existence. Next is survival, or startup. Third is growth, or success — a continuation of survival. This is followed by expansion, or takeoff. The final stage is maturity, when some business owners choose to exit.
For you to figure out where your business lies, it’s necessary to explain the business development lifecycle in detail.
Stage 1: Launch
Launch stage begins the moment you decide you want to put your business idea into action. It involves determining if your startup would be viable — in the case you are able to attract sufficient customers and deliver enough products or services. In addition to being viable now, it should be scalable later. If it is not likely to be both viable and scalable, you need to think about what you could do to change that.
You’ll need to do a large amount of research at this stage: assessing the competition and market, asking contacts what they think of your idea, and consulting with professionals in the industry. You should also think about your own abilities. Do you have sufficient skills to see success or will you need to fill gaps in your knowledge with a partner or employees, perhaps even through outsourcing?
Finally, it’s necessary to determine how you’ll fund your idea. As well as your own savings, you could ask people close to you for money, take out a business loan, or use crowdfunding. Of course, you should have confidence that your business will lead to high enough returns to make this worthwhile.
The launch stage ends in one of two ways: with success or failure.
If you are successful, you’ll gain enough customers to sustain your business and will be able to produce enough offerings to meet demand and maintain consistent quality.
Businesses that fail at this stage tend to do so either because startup capital dries up before the company is able to stabilize or because the business owner gives up due to the high demands. In the case of failure, you can either sell your business for the value of its assets or dissolve your startup.
Stage 2: Survival
A business in survival stage is still young. However, in the test phase of the launch stage, you’ve seen that your idea has the potential to become a fully-fledged business. The main challenge at this point is to keep going with limited cash. You’ll need enough cash to maintain your assets, pay your bills, and develop your business enough to create recognition and start building a customer base.
To pass the survival stage, you need to be flexible. Strategies you thought were foolproof could backfire and it will be frustrating to find you’ve invested your time in activities that turned out to be useless. Being willing to adapt is key. You’ll also need to dedicate many hours to ensuring your business is compliant with relevant laws and regulations.
In the survival stage, you — the entrepreneur — are still running the show. You may have a small number of employees, perhaps even someone to supervise them, but you (along with any business partners you have) are the only one making major decisions.
Some businesses spend a long time at this second stage — and many never make it any further. To progress from survival stage to growth stage, your business must start to become profitable, gain more customers, and possibly hire more employees. It may be possible to sell your business instead, although likely at a slight loss.
Stage 3: Growth
The growth phase of the business lifecycle is where you don’t just survive: you thrive. You should have a positive cash flow most of the time and a consistent income. Depending on the type of business, you may have a regular stream of new customers or a base made up of repeat clients who consistently receive your services. You should also be seeing a gradual increase in profits.
By this point, you’ll have figured out some key strategies for your business. However (as always) there will be challenges to face. For one thing, you’ll need to decide how involved you want to be in the company at this point. You’ll have the chance to disengage and hand off some (or even all) of control of the business. This may be a good option if you want to use the experience you’ve gained to launch a new company. Alternatively, you may want to stay at the helm during your growth strategies.
In either case, growing your team is important at this stage. Once you’ve figured out how you’ll remain involved, it will be necessary to hire and outsource for skills your company currently lacks. This requires a similar assessment as the one you conducted at the launch stage, although you’ll now be recruiting and contracting talent at all levels (from entry-level to experienced leaders). Your aim will be to create teams to collaborate and bring results. It’s important to make sure everyone is on the same page and working toward the same long-term goals.
Stage 4: Expansion
The third stage was just the beginning of your business growth — you now come to the expansion stage, which is all about growing rapidly. By this point, you’ll have developed a solid base of leadership and will have committed employees at all levels. Your business will be a known name in your industry. The challenges you face at this point are all about making the right next move for your company and figuring out how you’ll finance your expansion.
Options for expansion include entering new markets or expanding your offerings. Since you will have become comfortable in your current position, expansion can come as a shock. There is research to conduct and strategies to plan — it can make you feel like an entrepreneur running a startup again. As some of your expansion tactics are likely to fail, you’ll need to have a plan in place to avoid too severe effects on your business as a whole.
At this stage, you’ll also need to continue delegating more of the management of your company. You’ll have to accept that whoever you delegate to will make some mistakes, although you must ensure that none of these mistakes fall under the category of compliance, to maintain a legal and ethical business.
The expansion stage is not optional: if you cease to grow, you’ll start to decline. You need to work hard to remain relevant and continue to take advantage of new opportunities that come your way.
Stage 5: Maturity
By the maturity stage, your year-over-year profits are stable. You may continue to grow at the same rate as during the expansion stage or your growth may have stagnated. You’ll likely have a large number of employees who have been at your company for many years.
You have a few main options at this point.
One is to continue seeking growth opportunities. You’ll need to determine if this is sustainable, including whether there are enough options for growth and if you have sufficient capital. You may like to consider the possibility of a merger or acquisition. This has the advantage of reducing competition to help you increase your position in the market. However, you should be aware that both are complex and you’ll need to put in a large amount of preparation beforehand.
Alternatively, you may decide the best option for you is to start creating spinoffs. This can be beneficial, as it gives you the flexibility and agility of a startup while allowing you to maintain the market power of a large corporation. You can create subsidiary groups for various products or services and give each an individual brand image.
Finally, you may want to exit your business. At the maturity stage, businesses are often in an excellent position for a sale. Again, though, exiting is more complex than it may appear. To see success, you’ll need to undertake some activities that may seem counterintuitive. For instance, it’s important to keep running your business as if no sale will happen, among other things.
Support with the Business Lifecycle
To have any chance of reaching the later stages of the business lifecycle, you’ll need support from the start. The virtual assistants for entrepreneurs at MYVA360 have the skills and experience your business needs to survive. Sign up today and we’ll match you with a VA who meets your needs. Schedule a consultation to receive a special 10-percent discount on our services.