Every person who wishes to become a successful entrepreneur has the primary aim of making maximum profits out of business. However, merely wishing for the same is not going to reap the desired results as one has to work towards business success and profitability literally.
As per the Small Business Administration (SBA) Office of Advocacy, almost 80 per cent of small businesses survive the first year, and 90 per cent of startups do not succeed owing to the wrong choices made by their owners.
According to the Wells Fargo Small Business Index, US$10,000 is the average startup amount. As per a YouGov survey conducted on 503 business executives, 97 per cent of them cited customer service as the most significant driving factor for business success.
The largest valued startup at US$75 billion is ByteDance, a Toutiao maker.
There are a lot of roadblocks on the path to success, and one needs to have adequate solutions in place, along with a firm determination and positive attitude to taste success in the business world. So, let’s get started and understand the transformation of a business from the startup phase into the successful phase in detail.
Development of an idea
The very first stage of the business lifecycle is nothing but the development of an idea. It is the idea only that paves the way for success or failure for a business. You should clear every doubt in your mind through industry experts, friends, and colleagues before you proceed with planning for the idea.
Also Read: Good reads: Business books that influenced startup founders in 2019
Ideally, before you plan, you should get answers for the following:
- Is this idea filling a market need?
- Is my idea going to get acceptance in the market?
- What steps should I take to establish a business structure?
- Will this idea bring in any profits for me?
Startup
The next phase of the business lifecycle is the startup phase, which is considered to be one of the most stressful phases. The simple reason being it is the platform where your idea meets reality and may or may not meet the perfect execution.
Mistakes at this stage may leave an effect on the company even in the later stages of the business.
Some of the major challenges faced by business owners at this stage include:
- Looking for investments (raising money)
- Looking for quality staff
- Handling expectations from cash reserves and sales
- Establishing market presence and customer base
- Management of financial accounting
Establishment
This is the ground state for your business’s success. If you have reached this far, you must be having an adequate amount of customers and positive cash flow. Your expenses should be easily adjusted against the net income generated by your business.
The challenges which the business owners face at this point include managing time for operations and customer service, adopting new strategies for client acquisition, dealing with the competition, and more.
Also Read: 10 business building tips for a successful freelance career
Growth and scalability
This is the stage where your business is growing at a steady pace and is ready for scalability. There are a different set of challenges faced by business owners at the growth and scalability stage which are discussed below.
Business growth challenges:
- Dealing with increasing revenues and customers
- Increasing the volume of the profit
- Dealing with competitors
- Streamlining operations, and more…
Business expansion challenges:
- The never-ending challenge of competition
- Dealing with additional services and stocks
- Entity expansion
- Competitor acquisition
- Strategic decision making, and more…
Maturity
This is the final stage of a business lifecycle, which every owner wishes to reach as this is the stage where the business has flourished thoroughly during the initial stages and is looking to evolve itself into a brand.
However, this type of business expansion involves multiple risks owing to the competition from the established brands and the management’s ability for scalability. At this stage, the same questions repeat themselves that existed at the initial stage of expansion. These include:
- Are there subtle opportunities?
- Is the business financially stable for such a risk?
- Does the business have the potential to sustain further growth?
- What is the exit plan in case things do not work out the planned way?
Also, a number of companies opt for new leaders like having an additional CEO for dealing with the new set of challenges.
Also Read: What early-stage startups should know when fundraising with VC’s
Top ways to tackle challenges
As per research by CB Insights, problems with cash pave the way for the exit for small businesses. In order to deal with this challenge, businesses should:
- Focus on the sales and profits strategy to bring in more cash flow revenue
- Use technology to process invoices quickly so as to start the payment process quickly
- Collect account receivable ASAP to aid revenue
- Extend the date of accounts payable as long as possible to maintain a positive cash flow
- Negotiate with vendors or partners to save money and reduce unnecessary expenses
Also read: 4 ways to boost your preparation for a startup pitching competition
Competition exists at every phase of the business lifecycle. The only difference that is seen is in the form of intensity at every level. However, it is imperative that businesses are prepared to tackle their competitors at every phase. They should continue doing what they are best at and also adopt new strategies for gaining an edge over their peers. These include:
Learning when to delegate
During the growth stages of a company, owners are faced with multiple responsibilities. It is important to understand the importance of that responsibility and its overall impact on the growth and operations of the business.
This means owners need to delegate some tasks to their leaders, which can be managed by their expertise. Also, it is imperative that they make some strategic business decisions by themselves, which demands their immediate attention.
Dealing with the market changes
Every industrial sector experiences market changes owing to technological advancements, customer trends, or an enhanced demand for product or service quality. Irrespective of which business lifecycle stage you are at, you are required to keep compliance with the market changes if you wish to retain current customers and acquire new ones.
For this, it is imperative that you train your employees against the latest technology use regularly, and work on marketing strategies that boost your customer base, along with leaving no stone unturned to have unmatched product/service quality.
Deciding on strategy abandonment
There are times during the initial stage when businesses are looking to experiment to create an early impact. This type of strategy may work or may not work. So, it is important to assess the forthcoming possibility of success or failure and make decisions regarding the continuation and abandonment of the strategy.
This brings us to the conclusion that every business witnesses the startup phase, but only a few of them are able to turn themselves into a brand. It is important for businesses to work on strategies that aid business growth and profitability at every stage of the business lifecycle, to meet customer demands and be at par with the competitors eventually.
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