Stages, Challenges and the Focus of Businesses at each stage

  

Date Posted: 4/18/2012 3:07:51 AM

Posted By: sashoo  Membership Level: Silver  Total Points: 382

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BUSINESS LIFE CYCLE.
A business goes through the following stages during its life span:
• The Seed stage.
• The Start-up stage.
• The Establishment stage.
• The Expansion stage.
• The Decline stage
• The Exit stage.

1. THE SEED STAGE
Here, the business is just a thought or an idea. This is the conception stage or the birth of a new business.
The focus at this stage includes:
• Matching business opportunities with skills.
• Finding professional advisors.
• Coming up with an appropriate business plan.

2. THE START-UP STAGE
The business is now born and exists legally. Products and services are in production and customers are evident.
The focus at this stage entails that the business should do the following:
• Establish a customer base.
• Control and conserve the cash flows.
• Intensify marketing campaigns.
• Improve product designs.
• Enhance customer relations.

3. THE GROWTH STAGE
At this stage, the business has already made it and has grown into a child. The child is now so inquisitive, and revenue is increasing, customers are increasing, and sales are also increasing. Many issues and opportunities are knocking hard. Profits intensifies and competition becomes stiff.
At this stage, the business should focus on the following aspects:
• Better accounting and management techniques.
• Implement appropriate and proper internal controls.
• Hire new staff to deal with the influx.
• Run the business in a formal and professional manner.

4. THE ESTABLISHED STAGE
The business has now matured and is thriving into a company; the firm has already captured a niche in the market. It already has established loyal customers. The sales growth is not explosive but is manageable.
The focus at this stage should involve the following:
• Creativity and innovation to improve the quality and productivity and compete favorably in the market.
• Acquiring better systems such as automation to facilitate quality.
• Outsourcing to improve productivity.
• Diversification and searching for better markets and more customers.

5. THE EXPANSION STAGE
This is a stage of rapid growth. The business at this stage is striving to penetrate new markets. It is improving its product and

service lines through innovation and development. At this stage, the enterprise increases its range of products in the same market. There are long working hours.
The focus here entails:
• How to add new products and services to the existing market.
• Expanding an existing business to new markets.
• Increasing the customer range, in addition, to the already loyal ones.
• New product packaging and design.
• New marketing strategies.

6. THE DECLINE STAGE
This stage comes about if the revival stage is short-lived. That is, if the business does not succeed at the revival stage, then it automatically declines and finally dies.
This stage may arise due to competition, drastic changes in the economy, society or market. At this stage, sales and profits start to decrease.
Here, the focus should be about:
• Searching for new opportunities or a new business venture.
• Cost-cutting measures e.g. retrenchment and lay offs to cut on costs.
• Finding new ways of sustaining cash flows.

7. THE EXIT STAGE
The business should focus on the following at this stage:
• Getting the appropriate valuation or assessment for the business.
• Making the business worthy to potential buyers.
• Finding a business valuation partner.
• Consulting the financial and tax advisors on the best strategy to sell off the business

IT IS, HOWEVER, CRUCIAL TO NOTE THE FOLLOWING:

It is worth noting that not all businesses go through the above stages in a chronological order. Some may actually miss out on some stages. Successful enterprises do not even complete the life cycle. They do not get to the decline stage. They are able to reinvent, diversify and continue growing. They will come up with new products and penetrate new markets effectively.

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