Business life cycle: 5 phases
Every business goes through different stages of growth. Economists think that a family cafe, an online clothing store, and steel pipe manufacturing are all living things. These startup stages make up the life cycle of the company.
A company, like a living thing, needs to be “fed” with money to stay alive and grow.
The main difference between a corporation and a person is that death isn’t necessary for them. And an entrepreneur needs to know where his business is in order to figure out how to grow it.
- 1. The first
Start-up: You’re going to start a business. This means you’ve already looked into the idea’s feasibility, found out what could go wrong, estimated how much it would cost at the start, and made a budget.
A person or an LLC signs up, hires people, and looks for their first clients. The project now needs money. If you run a business and want it to grow, the sources of its money will vary.
Check out our post “What a new entrepreneur needs to know” for more information, and if you want to start your own business, read our post on how to register it.
- This is the second step:
When you open a case, you can return the money you spent. To keep the business going, it needs to make a certain amount of money. This money comes from the sale of the goods, so it can buy more. You may not have enough money to make changes that will make you more money: you can’t hire more people or buy more goods. So, the business still needs money.
- 3. Stage of growth
The business makes more money and has more customers. You can pay off debts, hire more workers, and increase production. Additional money should be spent on improving the service and solving problems that are preventing growth. It might be better if your courier service had five cars instead of just two. There should be a lot of changes made to the website of the online store’s website.
People who have already earned money but don’t have it on hand or can’t spend or put it into circulation are likely to run into cash gaps.
- 4. The fourth stage of growth.
At this point, the business stops growing quickly and is more resistant to changes in the outside world. In this case, there should be a financial airbag that will allow you to get through the crisis and find a way out of it.
It’s not worth letting everything happen on its own. Even though the risks have gone down, it’s not worth it. This stage can last for a long time if you keep things under control. But you can grow your business and make it bigger. For example, you could expand the area where you do business or increase the number of stores in your area. This will require a lot of work and money.
- 5. Take down the stage.
Profits are down, expenses are going up, and customers are leaving. Net profit may not rise even if more people buy your product. The money will be used to pay for things.
But the decline stage doesn’t mean that the company has to close down. The company might still be able to be saved now.
How do you become rich?
At this point, don’t just spend money on the system that is already in place. First, figure out what’s wrong: maybe you’re wasting money and need to change how you spend your money.
Make new internal procedures. Management might start using a new employee incentive system or program that helps them do their best work. You can also make strategic changes, like selling a product your competitors don’t have or making a useful mobile app that will help you get new customers. If you want to do this, you can get a loan or find other people to invest with.
Five stages with an optional scenario.
It doesn’t have to go through all of these five stages, and the stages don’t have to be in the order they are shown. Everyone’s business is unique, and what happens to it depends on what you do. Some businesses start to decline right away, while others work for years, moving from the stage of maturity to the stage of expansion.
If you want to quickly and efficiently develop your startup, contact Outsourcing Software Development Company, we will be happy to help you with this!
