All businesses, regardless of size, go through similar stages of development during their lifetime or life cycle. While the terms used by researchers, consultants and experts to identify and describe each life cycle phase may vary, the events, mindsets and strategies employed at each phase that the founders, managers and teams experience are similar.
Not every business traverses the growth curve exactly as indicated on the business life cycle graph. We have found over the past three decades in working with business owners and companies, basic trends form. The framework allows business leaders to become aware of:
- Where their business fits on the curve based on their current situation
- The impact the phase has on them individually as a company owner and on their business
- How to proactively plan for what comes next
The four-phase model uses business size as one dimension and company maturity or years in business as a second dimension. Here is a summary for the four phases:
- Start-Up: The entrepreneur and perhaps some family members, friends or former colleagues start the company; ownership focuses on proving-out a business model concept.
- Growth: The company experiences significant if not exponential development or growth in sales, people, processes, and procedures; organization retains agility and flexibility. Ownership transitions from control to empowerment.
- Maturity: The company settles into a comfortable rhythm; operating in “the zone” or experiencing its “sweet spot.” Organic growth is still good but is less dramatic. The company may make targeted acquisitions.
- Transition: The company will be faced with a decision: either re-invent or maintain the status quo. Through re-invention the enterprise expands into new markets either organically or inorganically. After some period of time maintaining the status quo and absent of any new energy, the odds are the company will decline.
For the full story see The Business Life Cycle: Understanding the Implications of the Business Life Cycle for the Business Leader