Episode 1: The Lifecycle of a Business
Every business experiences what’s known as the lifecycle, and each phase of the lifecycle has unique challenges and opportunities.
When you understand these unique phases, you can avoid the pitfalls and take advantage of the opportunities to grow a business that’s sustainable over the long term.
Part 1: The Startup Phase
Part 1: Startup Phase
If you’re a serial entrepreneur, then you’ve been here before. In fact, you likely spend the majority of your business life here. Welcome to the Startup Phase.
The Startup Phase is where businesses are born. Concepts become prototypes. Critical decisions are made. Direction is determined. Traction is achieved. Plans are solidified.
In this stage of your business:
- You’ve decided to pursue a business idea
- Your product and/or services are determined
- You need to learn & adjust a business model to ensure profitability
This phase’s challenges include:
- Obtaining initial funding
- Managing cash reserves
- Managing sales expectations
- Accounting management
- Establishing customer base
- Establishing market presence
Here’s what you need to do/how to navigate through these challenges:
- 42% of startups fail due to a lack of demand for their products or services; don’t be a statistic!
- Ensure your business model provides some level of sustainable cash flow; your survival is riding on it.
- Establish a structure for your business entity, otherwise you just have a hobby.
Part 2: The Rapid Growth Phase
Business Lifecycle: The Rapid Growth Phase
Are you in the lucky 16%? Because that’s the percentage of Startups that survive and move on to the growth phase. If so, kudos to you because you’ve done some things right!
But surviving the Startup Phase is only the first stage in the gauntlet that is business ownership. As your company takes off, you’ll encounter a whole new set of challenges…and opportunities.
In this stage of your business:
- Your business is consistently generating revenue
- Cash flow opens new opportunities
- You’re fine-tuning your business model
- You’re expanding to new markets/channels
This phase’s challenges include:
- Dealing with increasing sales
- Dealing with increasing customers
- Increasing market competition (pricing, etc.)
- Moving into new markets
- Effective management
- Adding new products/services
- Expanding existing business
Here’s what you need to do/how to navigate through these challenges:
- Evaluate & address your internal expertise needs
- Strengthen & leverage client relationships
- Re-invest in the company, don’t kill the cow
Part 3: The Maturity Phase
Business Lifecycle : The Maturity Phase
This phase reminds me of an AARP commercial I saw recently. The message is something like, “We may be older, but we’ve still got some spunk!” The same is true for companies in this stage of the Business Lifecycle – they have been around for a while, with products/services that have served a purpose, that may need a refresh/reposition/repurpose to reach a new audience.
You’re in a groove with your business. It’s providing stable, predictable profit and cash flow…but for how much longer? What’s around the corner that might disrupt that cushy situation?
In this stage of your business:
- You have a dominating market presence
- You’re still growing, but not at an explosive rate
- It’s time to step back and re-assess growth options
This phase’s challenges include:
- Increasing market competition
- Moving into new markets
- Adding new products/services
- Expanding existing business
- Exit strategy
Here’s what you need to do/how to navigate through these challenges:
- What are the options to reinvigorate/jump start growth? Rediscover the spunk and unleash it!
- Are there any acquisitions that might make sense to consider?
- What are your thoughts on an exit plan or strategy? This is the time to plan what it might look like.
Part 4: The Decline, Rebirth & Death Cycles of a Business
Business Lifecycle: The Decline, Rebirth & Death Cycles of a Business
This collection of phases may as well be titled “The Good, The Bad, and The Ugly,” with Rebirth being “The Good,” Death being “The Bad,” and Decline being “The Ugly.”
After a period of stability and success, a company may encounter a decline in revenue and profits. The decline can be exacerbated by an owner’s unwillingness to invest in people or technology, otherwise raiding the piggy bank and withdrawing their equity.
In this stage of your business:
- Decreasing sales, plunging profits
- Survival mode, cutting losses, exiting the business
- Searching for new opportunities & business ventures
You can avert this stage with innovation. This phase’s challenges include:
- Rejuvenating product line
- Re-evaluating customer needs & value provided
- Protecting cash flow
- Exit strategy
From the Decline Stage, your business will either move into Death or Rebirth.
The Death Stage is marked by insolvency, bankruptcy, and the business having no value. Yikes! The challenge is to reposition/rethink markets, customer needs and product offerings, and/or to start over.
The Rebirth Stage is marked by a successful turnaround effort, financial restructuring, new leadership, strategic focus, and process improvements. Challenges with rebirth include:
- Re-gaining traction in market
- Re-building sales
- Re-invigorating employees
- Rebuilding financial strength & equity value
- Re-formulating exit strategy
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