The small business lifecycle has 5 different stages from start-up through maturity and possibly an exit. As you establish and grow a business, each has unique pain points to be aware of. We explore each stage, its challenges, and issues you might face. Our actionable tips offer tools to help you navigate the lifecycle.
Do you have a business idea and are ready to jump on it? This is the time to take a look at the big picture and determine if you’re ready to take the entrepreneurial plunge. Do you have what it takes? Your strategy at this point should be to get as much quality feedback as possible. In addition to family and friends, consider reaching out to business and financial professionals.
- Raising funds
- Choosing business structure
- Writing a business plan
- Determining the profitability of your business idea
Consider working with a Small Business Development Centers (SBDC) – a comprehensive small business assistance network.
SBDCs are hosted by leading universities, colleges, state economic development agencies and private partners. There are nearly 1,000 local centers available to provide no-cost business consulting and low-cost training to new and existing businesses. Best of all, many of their services are free. Search by zip code to find your local SBDC here.
After lots of blood, sweat, and tears, it's time to start-up the business! During this stage, the business owners are getting everything off the ground like purchasing inventory and equipment, setting up bank accounts and accounting procedures, hiring and training employees, and establishing a customer base.
It’s a lot of work, sleepless nights, and financial uncertainty. Many entrepreneurs realize their dreams aren’t going to come to fruition and bow out during this stage.
- Putting systems and processes in place
- Researching competitors
- Market penetration
Flexibility is key here. Customer feedback will be invaluable as you tweak your products and services. Be ready to adjust how your business operates and makes money. Remember that your business plan is a living document that should be adjusted as you move through the business lifecycle. If you don’t have an effective business plan, take a look at our post: How to Write a Business Plan for Your Small Business (Without Going to Business School).
During the growth stage, companies usually experience higher sales, better profit margins, and increased market visibility. It’s a time when businesses need more time and more money to keep up with growth. Owners know busy times and slow times and have a handle on cash flow. They also have a great idea of the issues that face their business and are very familiar with their marketplace and how to succeed within it.
- Managing increasing customer base
- A/P and A/R management
- Streamlining operations
Keep your credit scores high if seeking outside funding. Having high scores means you are less of a risk to lenders. You’ll be able to get lower-cost funds with longer terms. If you have high scores, have been in business for 2 years or longer, and have cash flow to support monthly payments, consider an SBA loan.
Known as the “gold standard” in small business funding, proceeds from an SBA loan can help accelerate your business growth. Use funds for inventory, equipment, hiring, marketing, debt refinance, and more. If you’re not quite ready for an SBA loan, there are lots of other options like a bank term loan or AR line of credit.
Businesses owners who have reached this stage have survived the stressful and very busy time of establishing a business from scratch. Business owners are exploring additional distribution channels in order to capture a bigger market share. Business plans are still extremely important at this stage as they offer a roadmap for moving forward.
- Increasing market competition
- Adding inventory and services
- Exploring new marketing channels
If you need to hire during this stage, consider bringing on specialist with targeted skills to step up your marketing efforts. For example, the ever-changing social media landscape can be tough to navigate. Bringing on a specialist can help elevate your brand reputation, increase your customer base, and ultimately help your bottom line.
Review our article for tips on how to choose the right fit for your unique company: Small Business Marketing Tip: How to Hire a Social Media Strategist.
Mature companies don't automatically grind to halt and embrace the status quo. Businesses in the maturity stage may still pursue growth strategies, although at a slower pace. If you're not happy with this stage of the lifecycle, you might need to revisit your business plan, back-up, and put successful expansion strategies back in place. Running a business, no matter what the structure, is complex.
At the maturity stage, you probably don’t need to funnel all of your energy into every facet of your business so delegation is key. For some entrepreneurs, an exit strategy is the path they want to follow after surviving the previous stages.
- Expanding the business
- Creating an exit strategy
- Increasing market competition
Step back and take a good look at your entrepreneurial journey. Do you have the energy and resources to go for it again? It’s a good idea to consult with a small business professional and explore your options whether that means expansion, selling the business, or shutting it down. Be aware of the personal and financial impact of your decision.