Insights

Business Life Cycle Stages

3 Min. Read

While every company is unique and dealing with distinctive challenges, all businesses tend to follow a similar trajectory—the business life cycle stages. Over the course of 30 years of helping companies start up, manage high growth, expand, and hit strategic obstacles, we have seen this time and again. While not every company survives to go through every stage, those that advance are bound to hit a range of challenges that are familiar to consultants.

To be able to act quickly, companies can benefit from understanding what has worked—and what hasn’t—from the businesses that came before them. To start, you will want to be familiar with the stages of the company life cycle.

1. Startup Life Cycle Stage

This is where the entrepreneur life cycle begins—and the quick pace doesn’t ever quite let up until you enter the later business life cycle stages. Launch an idea, a prototype, a product, a business, and you’re off to the races, as you continue to layer on the foundations of what a successful company can look like.

There’s a balancing act here as you don’t want to grow too quickly, too fast. Outsourcing some functions can help to achieve a workable balance, while also giving you access to expertise the company could not yet afford to take on full time, such as guidance from a CFO and CMO on a part-time or occasional basis.

Mentoring from trusted advisors can help to get you through the inevitable growing pains that hit a startup, which tend to work against steep odds, as they work toward running the business in addition to positioning it properly in the marketplace, understanding its place amid the competition, building out a finance function, and deciding the best course of action when it comes to marketing.

Outsourced finance & accounting can help to lay this groundwork, with an outsourced accounting team swinging into action. Every step matters for the company’s success later on through the business life cycle stages. Then, as the company grows quickly, the small business life cycle stage will wind down—and things tend to get more complicated.

2. Growth Life Cycle Stage

There is a mix of positives (e.g., high growth) with some of the downsides (very, very fast pace) that can come with the success of hitting a nerve and gaining traction in the marketplace. At this point, your marketing efforts are paying off yet your finance organization may be overwhelmed.

The balancing act continues to be an everyday concern as you do not want to overhire yet you do not want to burn anyone out either. The need for CFO-level guaidnce becomes more constant, as the business and its strategic goals become more complex, and it may also be time to bring in an interim CMO as the marketing function becomes more prominent and more in need of attention.

3. Maturity & Expansion Life Cycle Stage

When a company and its brand is established, there is still work to be done. Accounting systems and the marketing technology (martech) stack may need to be revisited if they have not kept pace with the company. The sales and marketing teams may be on divergent paths—unless an evaluation can reveal ways they can be better aligned and working toward the same goals.

Effectiveness of how the company operates, and its output, should be questioned, to ensure that the operations among the finance and accounting, and marketing teams, are as efficient as possible and doing what they have set out to do.

At the same time, the company may be pursuing new strategic goals, such as a merger or acquisition, or an initial public offering. Is it ready? Could the underlying operations be streamlined, to get at better, mre decision-ready information? Outside expertise can help with the preparation leading up to such big events along with the after effects.

4. Evolving Through Challenges Life Cycle Stage

Amid an economic downturn, a change in strategy, or some other cause for headwinds, the company may need to revisit its current state and undergo a restructuring or divest a division. It may lean on marketing to help it through a new product launch that’s unique to the company thus far. Or it may need help filling leadership gaps after a big restructure. Whatever happens during this stage, there is often a need for expert advice to get through it.

What Are the Stages of a Business Life Cycle?

Typically, companies that are able to survive the startup phase advance through a period of relatively high growth, and then pursue a strategic change, such as an IPO or M&A transaction, before they enter a mature phase that may require a restructuring or divestiture. Along every stage, specialized experience can get a company through the tough times and help them maximize the opportunities that arise.

What stage is your company in its journey, and how can ZRG help you? Reach out to one of our experts today to find out.

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