Businesses have different lifecycles, and the strategies to support businesses can vary by business type, owner acumen, and lifecycle tools. It is important for entrepreneurs to know what lifecycle stage they are currently in, but it is absolutely critical for businesses to understand what to do as they enter into different lifecycle phases. If you don’t know where you are, and you don’t know where you are going, you are the textbook definition of lost.
In this week’s newsletter we will briefly describe the different stages of a business lifecycle, strategies to support businesses in each phase, and some self identification tools.
Startup- This is the easiest phase to identify, but it is a critical juncture to set up every other phase for successful transition. During the Startup Phase, entrepreneurs need to seek our educational opportunities like the Start Your Own Business Class, exercise support contacts like The Small Business Development Center & Emporia Main Street, find alternative assistance (zero or low interest loans, incubation spaces, mentors, etc.), and test products or services through pop up opportunities. Gaining access to honest expertise in the startup phase is very important (your friends/family may not want to hurt your feelings, and people may want to give you advice that may not be quality). Remember that businesses can reinvent themselves and effectively move back into “startup” mode if they make significant internal or rebranding changes.
Growth/scaling- Existing businesses that are managing growth need to break into new markets utilizing tools like Economic Gardening. New product development and the acquisition of products or services often requires access to new forms of capital (Emporia Main Street loans, Frontier Financial, Network Kansas assistance, Community Development Block Grants, etc.). Product and service development can require assistance from fabrication labs, higher education facilities, and affiliated mentors. During the growth phase, partnerships with employment entities like Kansas Works can make adding labor easier, but management and human resources skill sets often need to improve within the business. If mismanaged, growth phases can become stagnant and hurt the overall profit potential within the business.
Maturity- Mature businesses reach a point where everything is “fine” and that level of comfort isn’t a great place to be. Mature businesses should utilize events and other areas for research and development based “pop ups”, seek out emerging markets that allow for business model pivots, and find ways to expand the customer base and/or improve local market share. Hang out too long in this phase, and you will hit the next phase in the business life cycle (The Decline). Getting out of the static maturity phase and heading back to Growth/Scaling takes hard work, innovation, and a commitment to your core business. This is the phase in your business where you need to sit down with business advisors and mentors (like Emporia Main Street, the SBDC, your banker, your accountant, etc.) to figure out your next play.
The Decline- You should have a succession or exit plan when you start a business. If you don’t, the decline may be a difficult phase to extricate yourself from in a way that makes positive financial sense. At this point you need to look at new products and services that meet the needs of your customers. Find new functions for your existing equipment/products/services that can maximize your income. It’s difficult, but not completely impossible to sell a business in decline. Selling your business and building while functional is still preferable to simply shutting your doors. Decline is the time period where you need to ask for help. Reinvention can still occur, but the longer your business stays in decline, the more difficult (and expensive) the reinvention process. Shelve your pride, use your professional contacts, and reach out to your organizational partners like Emporia Main Street. BUT, you have to understand that you can’t keep doing the same thing and expect different results.
Death or Rebirth- At this point an entrepreneur either decides to close down, or they are forced to refresh under a different concept or refreshed brand. Closing up and simply walking away is the most expensive option for an entrepreneur. Once you lock your door for the final time, there is no blue sky you can sell, your customer lists aren’t worth anything, and any equipment/merchandise/or other assets go for pennies on the dollar. If the transition is dramatic enough, some businesses have been able to reinvent themselves and create a better model (heading back to Start Up phase). Those unwilling or unable to reinvent simply shutter. Rebirth means taking advantage of all the resources of a Startup. Death of a business means walking away from all of the business assets you own, putting the past behind you, and moving on.
The wonderful thing about the Emporia area is that there is a wealth of resources to aid businesses in each stage of their lifecycle. It’s important for entrepreneurs to think through each phase of their lifecycle as part of a holistic planning process, but know that you don’t have to go it alone. Reach out to Emporia Main Street and we can point you in the right direction for tools, resources, and strategies that can help your business continue a current successful path, or change directions to improve growth potential.