When you think about it, our businesses are a lot like living organisms: they seem to breathe in and out, they require feeding to grow, and sometimes they take on a mind of their own! They also have a life cycle: introduction, growth, maturity, and decline. Let’s look at each state and see what it means for your business.
Introduction: During the introduction of your business, sales are low, you can expect a lot of higher expenses as you build up the assets necessary to run a business, and as you make mistakes and test your products or services in the marketing place. Income is low but growing.
Businesses in this stage: Many high-tech companies that are developing next-generation web products.
To succeed in this stage: Continue aggressively marketing your products or services. It’s very difficult to market too much. Position yourself as THE provider of your products. Make sure that the assets you purchase to help you do business are not “good for now” but rather have added capacity for future growth.
Growth: During the growth stage of your business, you have acquired the assets you need to operate (such as manufacturing machinery, etc.) and you’re off to the races! Things are moving along at a fair rate: income is on the rise and so are profits. Expenses are going up, too, but not nearly as fast.
Businesses in this stage: Ipods, cell phones, HDTVs
To succeed in this stage: Continue marketing. Don’t try to run your business on your own; consider outsourcing or find someone to help you. Be sure to pay close attention to customer service since huge growth can sometimes push good service aside.
Maturity: During the maturity stage, your income continues to rise for a while, then levels off. Profits, for a large portion of the time, are at a peak, then they start to fall as well, perhaps because of increased competition or because you have to buy updated machinery to keep up with the times, or because you’ve had to take on additional staff to match demand.
Businesses in this stage: Laser printers, photocopiers
To succeed in this stage: This is the make-it-or-break-it stage. If you can sustain the maturity or even promote new growth, you’ve got a business that will last for your lifetime. If the maturity phase is left to run its own course, a decline may be inevitable. Help sustain maturity by reducing your spending to match income, redoubling your marketing efforts, refreshing your product or service, and introducing new products to keep up with the times.
Decline: During the declining stage of business (but hopefully not yours) income continues to drop as do profits. Slowly, they slide away as a competitor is able to entice away customers with better service and lower prices or more modern products.
Businesses in this stage: VCR manufacturers.
To succeed in this stage: Introduce new products or services and market aggressively. If you can’t reduce your price in line with your competition, find some other way to differentiation yourself. If you have to, sell your business at this stage and let someone else take it to new heights while you go create another business.
