Recent News

Understanding the Business Life Cycle

depiction of business life cycle start-up to growth, maturity, and decline

Here at Pioneer B1 we want to do everything we can to help our clients succeed, whether that’s deep dives on the Inventory Management capabilities of SAP Business One or explaining what ERP software even is. Our clients might be in any one of the different stages of the business life cycle and what can help them varies. Heck, some readers might not even understand the business life cycle! Let’s get into that some more shall we?

There are a ton of different stages in the business life cycle, depending on where you look, but for our purposes, you can distill them into the following groups.

The Stages of the Business Life Cycle

The Beginning

This early stage can be further broken up into even more distinct stages including Seed and Development, but for our purposes, we’ll look at them all together. This nebulous time is all about the initial idea and work being put into it. You have an idea, a service, a product that you think will be well received at market, the next thing to get your hands on is the capital to bring it to life. 

During this stage, it is also critical to get as much wisdom as possible to ensure that you are coming right out the gate as strong as possible. Thousands of people have walked this path before you, to miss out on their experience and knowledge would be foolish.

You have the funds, you have the plan, everything is ready to go it’s time to…

Launch

people celebrating a business launchCongrats! The business exists, products are being made, services are rendered – you have your first customers. Don’t rest just yet. For most this is perhaps the most difficult stage of their business’s life as any mistakes made here will become a part of the foundation of the business going forward, leading to problems down the line.

Numbers suggest one-fourth of businesses don’t make it to the five-year mark. (There’s a reason we talked about getting as much advice as possible.)

In this phase, it pays to be adaptable, and you should be! The business is young and limber, nothing is set in stone. Tweak, refine, and make changes that will benefit you in the long run, the sooner you do so the sooner the business benefits and is ready for…

Growth

The business has a solid foundation. Clients and revenue are increasing and new opportunities are developing. Here one of the biggest challenges people face is learning to handle the range of issues that are all competing for your time and money to fix. Good management is critical to ensure growth is possible. Better systems (for accounting as well as management) are needed, employees to handle more business.

When your company has grown to meet its demand it becomes…

Established

The business is now thriving, it has its solid space in the marketplace, a loyal customer base. Growth is no longer explosive, but manageable. Everything is settling, becoming routine. It feels safe. Which is also a great challenge! Relaxing and getting comfortable is a surefire way to find yourself in the Decline state. Marketplaces are constantly competing and evolving, businesses can’t afford to stagnate.

Expansion

Pushing the company into new markets or distribution channels brings your business out of the Established stage and into Expansion. No longer stagnating, the challenge here is pushing the company past the comfort zone, researching and planning the campaign to bring new products or services to market and meeting new needs, and what have you. The business has worked before, but it doesn’t mean it will work flawlessly in the new market – having the tools to analyze your data and provide fine-tuned forecasts is an incredible help.

A business can go through from the Expansion stage back to Established, to go on to Expansion again. It can fluctuate between these stages for some time. The other possibility is it leads to a Decline.

Declineboardroom of people doing business

There are so many different possible reasons for a business to go into decline. Societal changes, poor management, economic pressures. These changes can be turbulent and smaller companies might not be able to withstand it.

When in Decline the difficulty is knowing how long your business can stand to weather the poor outlook if it can make it through the storm to come out the other side and become profitable again. Finding new sources of revenue, keeping budgets tight, and being as efficient as possible are all necessary to make it through. The decline doesn’t have to be the end.

Exit

The Exit stage can be one of two very different outcomes. It might mean cashing out on years of hard work and moving on to other things, the business itself still profitable and afloat. It might mean shuttering the doors because the company has gone bust. Whichever it is, it is the final stage of the business life cycle.

Here the company gets accurate valuations, finds buyers, or begins the process of closing down, liquidating assets and handling any final obligations.

Now note, not every business will go through every stage. Some will be happy to stay in the Established stage, some startups are made to launch and quickly Exit.

Wherever your business is, you need knowledge. Accurate data allows you to make the best choices to reach your goals and to run your business efficiently.  Helping businesses excel is what Pioneer B1 is all about. The SAP software solutions we provide help businesses in all sorts of industries thrive.

To find out how SAP can help you navigate the challenges, whatever stage you are in, reach out today. One of our expert SAP consultants will show you the ropes in no time.

Pinterest
LinkedIn

Leave a Comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Previous Post

Data Import and Update Options in SAP Business One

Next Post

SAP Business One Tips and Tricks 9.3

FREE SAP Business One Demo reveals...

How you can Grow Your Business with ERP