Talk about the seven stages of the company life cycle and the strategies one should use to overcome each stage's obstacles.
Every business has a lifecycle. It begins with a company's idea, start-up, execution, development, maturity, and decline. Different businesses and thinkers use different words for the business life cycle stages that constitute the product life cycle. Some philosophers discuss start-ups, growth, maturity, and decline. Start-up, growth, maturity, saturation, decline, renewal, and withdrawal are the seven stages of the company life cycle. Adding or removing phases does not change the company life cycle. The company life cycle has seven stages. Five stages of the company life cycle exist alongside the seven. As a firm age, it will go through stages of growth. This document discusses the seven company life cycle stages.
Business life cycle phases and obstacles
Business focus may shift with new demands and obstacles. Multiple ways must be implemented to overcome the issues, and probable funding sources must be examined throughout the entire life cycle.
Below are the company life cycle stages:
Seed: The seed stage begins when a business owner gets a concept. The business owner must discuss the company's idea, logo, name, website, etc. Market acceptance is the hardest part of starting a business. The business owner must determine whether the company can make a name for itself. The business owner must devote money and effort to research market acceptability. Focus emerges after assessing business acceptance obstacles. The company entrepreneur must match his talents, enthusiasm, and expertise to the business opportunity (Venugopal & Yerramilli, 2018). He may also focus on the business's structure, ownership, advisers, and plans. Once the focus is defined, consider funding. As the business is new, nobody will fund it. No one will trust such a corporation. The entrepreneur must rely on himself, friends, and family for funding. He may seek suppliers, government funds, or customers. Completing the business strategy is considered a step toward success at this business life cycle stage. At this point, the business's cash must be evaluated. The company must operate without outside income.
The company has become legal at this stage of the corporate life cycle. When the business's potential is obvious, the owner implements ideas. Find a place, examine suppliers, choose partners, plan business, make a marketing strategy, register business, etc. The business owner must decide how many staff are needed or, if it is a family firm, who will run it. The company has made its product or services (Szerb & Vörös, 2019). The business owner may now evaluate if the first stage's financial and time investments were sufficient. The proprietor must advertise the goods. The business owner must examine consumer wants and confirm the company's direction. This stage focuses on building client relationships, establishing the firm in the market, and monitoring cash flow. In this stage of the business life cycle, owners, family, friends, suppliers, consumers, or government grants may finance the firm. At this point, the business owner must establish payment terms with suppliers. The business owner must face rivals. Taxes and obeying guidelines are vital (Hasan, Al-Hadi, Taylor and Richardson, 2016). The business owner must introduce its services or services effectively in the market so that people know about the firm, its location, and its owners. The business owner may revise his budget at this time.
At this time, consider the following:
The business owner may see increased revenues and consumers. Growth has created new opportunities and problems. Profits are rising with the competition. The current corporate life cycle stage involves financing and investment. Effective management is needed. This level requires the business owner to train and delegate. At this stage, the business owner focuses on efficiency to grow sales and consumers (Laitinen & Laitinen, 2018). Better management and fresh hires are needed. At this stage, the business owner may seek bank financing and use profits, partnerships, government grants, or leases. The owner must maintain strong relationships with all business stakeholders, internal and external. At this point of the corporate life cycle, the company can produce profits without repaying investments. The company gains market share. Innovative business owners may boost sales and profitability. Customers can assess the company's product or service. They will use and refer the business or cease utilizing the services. This will help trust. The business owner may now create relationships with clients and suppliers (Hornberger, Konig, Zerr and Baltes, 2017). The business owner must boost output to fulfil client demand. The proprietor may contribute his expertise, talent, and experience to the business. To save time and money, hire some experienced pros. Owners must handle funds wisely.
Refining the market, creating a brand, tracking records, identifying business partners, expanding the customer base, matching employee needs, increasing operational finance, forecasting sales, automating payroll, reviewing insurance, revising the business plan, and hiring experienced employees are all critical at this stage.
Plan d ‘action
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The new corporation has matured and grown. It has gained market stability and devoted clientele. Sales growth is modest, and the business is regular. At this point, the business owner must focus on more significant goals and analyse his plan. The market is competitive, and challenges originating from changing competition, client taste, etc., can be managed with expertise (Hasan, Al-Hadi, Taylor and Richardson, 2016). The business owner must improve services and productivity. To compete, the business owner will automate best practices and outsource to boost efficiency. Profits, bank loans, investors, and government subsidies will fund operations. Depending on his demands, the business owner may create a new branch. The firm must examine shifting needs and improvement opportunities to meet client requests. New goods and services may follow existing ones.
The business owner seeks new prospects, markets, and distribution methods during expansion. The firm owner decides whether to increase his market share. He must determine whether to seek new revenue and profits. Identifying new market prospects is a problem. Opportunities to expand the business's experience and capabilities are considered. Uninformed business entry can be devastating (Carnes, Chirico, Hitt, Huh and Pisano, 2017). Expanding company prospects can take time and effort. Therefore, the business owner must choose the new venture's site carefully. The business owner should introduce new items and services or expand into other markets to attract new consumers. Joint ventures, bank loans, gaining licences, engaging new investors, and partner funding might be used to raise help. The marketing plan must be modified, and clients must be serviced with enhanced products and services.
Changes in the economy, society, and market might hurt a company's sales and profitability. It may be why small businesses are declining. A deteriorating firm may suffer reduced sales, poor earnings, and negative cash flow. Negative cash flow is a major corporate challenge (Huang, 2016). At this point, the business owner may contemplate shutting down. The business owner may focus on fresh prospects or new enterprises. He must reduce expenses and improve cash flow. Suppliers, owners, and customers control funds at this stage.
At this point, the firm may profit or close owing to losses. The business owner should obtain the needed value for his work if he wants to sell. The firm held aside more value when it was growing, but not now. The owner must cover financial and psychological damages if he wishes to close the firm. At this point, the owner must determine the company's sale price (Huang, 2016). The owner should emphasize the business's main elements so the buyer may receive a reasonable valuation. Company purchasing and selling require legal agreements. At this time, the owner may look for a partner to value the business or seek guidance from his accountants on selling or liquidating the firm.
The processes above may happen in random order. Some firms wind when they start, while others wind after they are established. Any business's success depends on how it handles problems. Business owners should focus on the future, not the present. When a business leader knows his company's stage, he can forecast obstacles and make wise decisions. Firm life cycle theory is vital when starting a business.
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