THE LIFE CYCLE OF A BUSINESS
LIFE CYCLE OF A BUSINESS Every business goes through 4 basic stage before it reaches full maturity. Stages 3 and 4 tend to continue to occur in mature companies.
LIFE CYCLE OF A BUSINESS A. CONCEPTUAL STAGE B. START-UP STAGE C. STABILIZATION STAGE D. GROWTH STAGE
A. CONCEPTUAL STAGE This stage is divided into four steps: 1. HAVING AN IDEA or RECOGNIZING AN OPPORTUNITY: Opportunities are found where needs or problems exist. The need or the problem is the opportunity. The skill of identifying these needs or problems is a skill that can be developed when one becomes aware of their surroundings.
A. CONCEPTUAL STAGE 2. ANALYSING THE IDEA Gather information and ask questions designed to assess the opportunity. 3. ORGANIZING THE RESOURCES Weigh the money-making potential against the costs of its start up and maintenance. 4. MOBILIZING THE RESOURCES Prepare for day-to-day running of business. (i.e., rent space). Once this stage is complete business is born
A. CONCEPTUAL STAGE THE ULTIMATE SUCCESS OF ANY VENTURE IS DETERMINED BY HOW WELL THE ENTREPRENEURS EXECUTE THE FOUR STEPS OF THE CONCEPTUAL STAGE. THE CONCEPTUAL STAGE CAN TAKE A FEW WEEKS, BUT ON AVERAGE, 6 – 9 MONTHS
B. THE START-UP STAGE Vision is tested Business Plan needs revision because everything usually takes longer and cost more to implement than was originally planned. MOST CRUCIAL stage in the life cycle BACK TO THE DRAWING BOARD!!!
C. STABILIZATION STAGE When a business reaches stabilization, the cash flow is relatively stable and the financial statements may start showing a profit. It is during this period that an organization’s structure begins to take shape.
D. GROWTH STAGE Entrepreneur decides if they want to take business beyond the stabilization stage. Re-enters planning mode & may require additional financing. Needs long-term strategies May start delegating tasks to others. May need more of the following: structure, employees, funds, expansion. Advertising budgets & new technology become important to stay competitive.