1. Life Cycle of a Business
From Birth to Death

2. Life Cycle of a Business
All ventures, whether businesses or not-for- profit organizations, go through a life cycle
Series of stages, starting at when the idea is conceived to when the business ceases to exist
Often is graphed
as a hill

3. Pre-Start Up Stage Preparations are made to launch the business
Research is done, ideas are investigated
Review your resources and consider how to best allocate them
Test the markets response to your ideas
Careful budgeting and planning are important
This is the time when you create your venture plan!

4. Development Stage (Start-Up)
Research and market testing is complete
Arranged for any financing you will require
The goal in this stage is to reach the BREAK- EVEN POINT
This can take some time, depending on the amount of initial outlay a business needs to make
This is normally done through good management practices

5. Rapid Growth Stage
The business has passed the break-even point and is now making profit
This may be the point where you bring in external “experts” to help grow the business
Often you expand your product line, broaden your customer base or open new locations
The ultimate goal here is to improve the profit / efficiency of your venture

6. Comfort Stage (Maturity)
Now the venture is established and secure, normally growing but at a slow rate
Enjoying the benefits of success
The assets (things the business owns) are worth more than its liabilities (the debts the business has)
Dangerous time if entrepreneur is doesn’t put the time and effort into improving and growing the business

7. Turnaround Stage (Decline)
This stage means that the venture is in financial trouble
Company is losing money, competitors are stealing customers, working capital has disappeared
Normally leads to layoffs, restructuring, selling of non-productive assets, cancelling product lines, etc.
Think of what the major car companies needed to do a couple years ago
Often new management and
consultants are brought in to
help turn the company around

8. Rebirth or Death
Depending on what your company does in the turn-around stage, the company will either die or be re-born
Death
Company goes bankrupt, sells off it’s assets to pay its creditors and ceases to exist
$ goes to creditors first, then anything left over will go to shareholders/owners
Rebirth
Company establishes new revenue flows, increases working capital and re-enters the
life cycle at the growth stage