All businesses, including entrepreneurial efforts, go through phases of growth known as the business life cycle. The four critical stages are start-up, growth, maturity and decline. As you consider your business goals, what phase are you in? If you are just beginning a business or growing steadily in revenues, read on as management analyst Deron Mundle with consulting firm Riuberg Corp, shares what you can expect in the startup and growth phases.
So, You Are Expecting…
So, you are expecting to grow a business. Your concept, which some time ago was just a passing idea, is becoming an enterprise. You anticipate that it will eventually turn a profit and provide employment for many within the community.
The research has been done and friends, family and colleagues are showing a real interest in what you have to offer. The mentor from SCORE has asked many tough questions and now you are both satisfied that the concept really has a chance to succeed. You have taken the giant step to formalize a business and have received all of your licenses and permits. Congratulations, you have a new venture on your hands.
What then should you expect at this phase of your endeavor, a period that the online magazine, Chron, calls the start-up stage?
Navigating the Start-Up Phase
You will devote long hours to the new entity in hopes of making it viable in the market. It will be essential to conserve the cash coming in and going out of your business while still buying supplies, paying for help and finding customers. Even if you do not make enough sales to cover the expenses, it will be necessary to put more money in the business. Yes, more capital investment though you may not able to take a salary. In the unfortunate event that money runs out and more financing is not available, the business will have to be shuttered.
During the start-up phase with its attendant psychological pressures, the new entrepreneur may find solace by networking with owners of other fledgling enterprises and seasoned business operators. By sharing experiences, you may benefit from the knowhow and expertise that others have. Who knows, they might even give you some referrals.
In a Forbes article, it is reported that eight out of ten businesses fail within 18 months of being started. Yes, that’s correct, 80%. However, your business has found a niche in the market and things are looking good right now.
What then should you look for within what is called the growth stage after successfully navigating the start-up phase?
Building During the Growth Stage
Even with an increasing customer base and higher revenues, you will still need to pay very close attention to your cash flow as cash is the lifeblood of any business. You should also expect to make investments in creating new sales channels such as websites or e-commerce, establish your products and services in new markets, and promote the business with a view to gaining and retaining new customers. It may also be necessary to seek financing and the utilization of accounting and productivity software, to provide greater insights into the operations of the enterprise, is another necessity for any enterprise.
Every business owner starts off with great expectations for his or her enterprise. However, by knowing what to expect at the various stages of the entity’s life cycle, you can better deal with the complexities of owning and running a small business.