Comparing The Stages of a Business to a Human Life
We asked one of our staff writers to come up with a simple description of the business life cycle. You may have heard of the seven common stages most businesses have to undergo. She took it further, and compared your business’s lifespan to a human one. Here’s her take. . .
Just as a human life has a cycle from birth to death, each with its own set of characteristics and needs, a business has a life cycle too.
Once you realize that they are not far removed from that of a human life, you will treat each stage differently. Just as you cannot talk to your teenager the way you would your 6 month old, each stage needs to be treated appropriately.
The Seven Stages of a Business Life Cycle:
Stage 1: Seed ……………Conception
Stage 2: Startup…………Early Years
Stage 3: Growth………….Teenage/College Years
Stage 4: Established……Adult Years
Stage 5: Expansion………Creating a Family of One’s Own
Stage 6: Decline……………Retirement
Stage 7: Exit………………….Death
Stage 1: Seed = Conception
At this stage of the business cycle, it is just an idea and the development stages begin. In human terms, this is the time of conception.
There are a lot of big decisions to make and a lot to get into place before it is time for the business to be born. Just as parents don’t know if their child will grow up to be a business executive, teacher or an artist, new business owners have to rely on funding for a business with no proven track record and have to rely on the faith and support of friends, family and savings.
Stage 2: Startup = Infancy and Early Childhood
Once the business is officially born, registered and named, it is time to nurse this infant and get the basics going. Just as a fragile and impressionable toddler needs constant nurturing, attention and guidance, so too does your young business need to be nurtured and encouraged constantly. It is fragile and needy at this time in terms of its cash flow and branding.
Stage 3 : Growth = Teenage to College Years
The infamous teenage stage of your business has arrived. Your business child is too old to be pedantically told what to do every second, but too young to be fully independent. At this point, profits and cash flow will be more steady and you will be able to let go and delegate and sub-contract certain tasks.
It is important to allow for growth by:
- Employing more staff
- Taking out loans to allow for expansion
- Considering new avenues
Now, it is no longer about basic survival as your teenaged business can get dressed and fed without you, but you are not out of the woods. You have to protect your teenaged business from bad influences and competition lurking everywhere.
Stage 4: Established: Moving Out as an Adult
Your business is officially an adult. It is self–sustaining and thriving. All your hard work raising it has paid off as you watch it go from strength to strength. This does not mean that you do not keep a constant eye-out in case it needs some guidance or protection. Cash flow and reputation are solid at this point. Congratulations! You raised a good one.
Stage 5: Expansion: Growing One’s Own Family
The time has come when your business will want to grow and expand into newer markets. Distribution and profit channels will present themselves. This is the time when your business child wants to reproduce. As a business owner, you are going to be a grandparent. The business cycle grows into a new generation.
Stage 6: Decline: Retirement
This may be the part of the life cycle that no business owner wants to experience, but sometimes all good things must come to an end.
Even the best businesses may experience decline as the business runs its course and negative cash flow, a bad economy or an obsolete business model brings the end of a business era. Sometimes downsizing and re-evaluating the model may be an option, but when it isn’t, the seventh stage in inevitable.
Stage 7: Exit: Death
Unlike the human life cycle your business can seek immortality. Realistically, not many succeed. It is important to know when to hang on to your child and when to let go. If you become blinded to technological advances, and don’t adapt to competition and changing markets you may be forced to see the business fade away. We would like to believe, however, that this can be avoided. An exit strategy is key. You can do it!