The 5 Stages of a Business’s Life Cycle

From the moment a business idea sprouts in your mind, your business’s life cycle has started. Every business goes through 5 stages in its life cycle: development, startup, growth, maturity, and decline or renewal. Each phase brings about its own challenges. Therefore, understanding each of these stages makes a huge difference in the strategic planning of your business. In this way, you will be able to anticipate any hurdles your business may face so you can be prepared and strategise accordingly. In this article, we give you a rundown of the life cycle so you can determine what stage your business is at to get you challenge-ready.

1. Development

The very first stage is development. This is where the ‘seed’ is first planted. You have a business idea and you now want to research the market and do the initial testing. Here, you ascertain the prospects of your business and whether your idea is feasible. You need to ask yourself: Who is my market? Is my market ready for my business? Am I equipped with the skills to make it happen? How will my business be structured? 

2. Startup

At this stage, you have decided to go ahead with your business. Here, you will be working on ways to sell your products or services. You will be communicating with your market to further understand their needs and how your business can be tweaked to further suit your market. In this stage, patience is key. We understand this may be the most difficult stage as you are still working towards achieving profitability. We recommend keeping an open mind as adaptability is key to surviving this stage. It is okay to feel like you are still finding your feet in the market. Rest assured if you keep making those tweaks, your business will be on track. Just remember that by now, you should have an ABN and your business registered. Lawpath offers an easy-to-use ABN registration service to help complete your application in less than 5 minutes.

3. Growth

Here, your business will have a more solid stance in the market. Sales will be on the rise and your business will ideally be generating profit. As such, you will have enough cash flow to cover the ongoing expenses. Your customer base will be growing as well as recurring, as the market will be able to rely on your product and price stability. Many of your employees will be here to stay due to your ability to support them financially. The challenging part of this phase will be to manage the rapid shift in demand from startup to growth, and grappling with the various roles your business demands. A good way to manage this will be to establish clear roles and responsibilities so all your bases are covered.

4. Maturity

The maturity stage is a very stable one. Your business will be generating steady and reliable profits. Here, your sales will most likely peak and then plateau. As such, you will feel the most secure in this phase and would want to prolong your business’s maturity so you can enjoy this security. However, do not get too comfortable and you should be on the lookout for signs your business needs to change it up a bit. 

5. Decline or renewal

From the point of maturity, your business will go either one of two ways. It may be on the decline, where sales growth will be negative and profits will decrease. This may be due to the market being oversaturated with your product/service and there is less of a need for your business offerings. However, this does not have to be the fate of your business. If you try and make major changes by reinvesting in your business, adopting new marketing strategies, and maybe even introducing new products and services, your business may be on the road to renewal. In the renewal stage, sales will eventually pick up again. However, this may be expensive both time and money-wise. Therefore, be prepared for extensive planning so your attempt at renewal is worthwhile. 

Final Thoughts

Running a business is tough and carries many risks. However, if you are more attentive to the bigger picture of your business, you will realise that most of the time, the challenges are part of the process. It is important that you are made aware of the stage your business is in so you can figure out how to overcome its respective hurdles. It will also mean you can anticipate what is coming. If you are still confused and need some guidance with strategising, be sure to reach out to the team at Lawpath for assistance.