Starting the business is only the first step — to stay afloat, it also needs to evolve and complete the lifecycle. An estimated 90 percent of startups fail to sustain themselves once the founder starts ignoring the fundamental aspects of the business process and fails to set realistic goals for scaling. 

That’s why knowing your position in the business life cycle and tweaking your strategies can be hugely rewarding, especially if you want to stay ahead of the curve. By the end of this article, you will walk away with a roadmap of the critical stages of growth of a business and an awareness of which stage you are currently in. 

What is a business life cycle?

A business life cycle provides a cyclical representation of the evolution of any business. Like a living being takes birth, grows, matures, experiences a decline in quality of life, and ultimately dies, a business also experiences a similar cycle.

Whether you are bootstrapped small business or a million-dollar tech company that has raised funds from VCs,

Here are the key stages your business will find itself in: 

• Seed
• start-up, 
• growth, 
• maturity, and 
• decline  

The exact time taken by each business to reach or pass through a specific stage of the lifecycle varies. However, every founder can enhance the business value by optimizing the strategies based on the stage of the lifecycle. Some owners can even work out newer ways of using or marketing an existing product/service in its decline stage and extend the overall lifespan of the business.  

Let’s take a closer look at each stage:

Seed 

If you want to enjoy lush apples from your apple orchard, you will need to start planting the seed.

This is exactly what the seed stage represents. It marks the initiation of your business, right when you have an idea.  During this stage of the business life cycle, you are looking to plant the business idea and nourish it to help it thrive. 

Use this stage for some introspection —  start by examining the viability of your idea through market research or talking to friends, family, and colleagues. Ask yourself the current pain points your target customers face and how your product can make a difference to the market? Even the best ideas fail to take off because the founders shy away from assessing its viability and jump straight ahead. 

Start- Up 

Once you are confident about the idea, it is time to set the ball rolling. The start-up stage marks the birth of your business. Investors also use this stage to take care of the finances by approaching investors for fundraising or investing their capital. 

It is also one of the high-risk stages for your business —  only 15.8 percent of businesses manage to progress further from here. One wrong move, and your business may bear the brunt for years to come. Always remember that the primary goal of this stage is to make the business sustainable and profitable. Focus your efforts on establishing a clear business structure, working out cash flow models, listening to the feedback from the initial set of customers, and trying out different ideas to make the business work. 

Growth 

Once you exit the orbit of the start-up stage, your business starts growing. It is also an indicator that your strategy is working. 

During this period, you may experience a healthy cash flow but lower turnovers. But don’t worry — once you make it past the break-even point, you will also start recording profits. That’s why your sole objective during this stage should be implementing strategies that maximize profits. This is the time to hire the best talent in the market to optimize your business’s full potential and work towards cementing stronger relationships with your customers. 

Spend some time thinking about the next round of investment to meet the increasing demands of a growing business and take it to the next stage. 

Maturity 

In this stage, your business has been able to establish a strong foothold in the industry. You are also able to generate steady profits for consecutive years.

Instead of micromanaging various aspects of the business or getting too comfortable in your zone, it is time for you to expand the horizon. Start thinking about the future of your business and if there are expansion opportunities. Also, stay realistic about the cost v. potential returns and work out an exit strategy as you enter the next stage. 

Decline 

Entering this stage is inevitable if you stop making efforts to keep the business in top shape. When you find yourself here, you can either exit the business entirely or think about renewal efforts to reinvent it. 

But before you proceed any further, take an honest look at your business and ask yourself if you are ready for further growth. Speak to your key managerial executives, accountants, and lawyers to explore the possibilities. Dragging on a business that has run its course will only make you one among many in the business graveyard.  

Looking for someone to help you navigate the business growth cycle?

Understanding the business life cycle helps you predict the potential pitfalls and chalk out a strategy to stay safe. Given the fiercely competitive markets, it is crucial to know where you are and what lies ahead of you. But your acumen alone may not be sufficient to cruise through the various stages and take the appropriate decisions. Connecting with a business mentor can help you sharpen your practical business sense and improve the chances of success.

Jupiter Business Mentors has been set up to connect mentors to the start-up community and small & medium business enterprises so that you can learn from their experiences and move ahead. With 35+ expert mentors across the industry on the same platform, getting tailormade advice for your business has never been easier. Click here to set up 90 minutes of free sessions with any six mentors on the platform.