The Business Life Cycle: Establishment, Growth, Maturity & Post-Maturity

Updated on April 22, 2016

The Phases

The life cycle of a business consists of four “phases”. Each phase has its own special features and challenges. All successful businesses will go through these phases more than once.

The Phases are as follows:
  • Establishment
  • Growth
  • Maturity
  • Post-Maturity

Establishment


This is the birth of the business, where profit is negative. The owner has invested both time and money preparing for what is to come. Business are very venerable at this time. Both external and internal environmental factors can have a great effect on the future of the business.

The aim is to get the business onto a stable foundation of profitable sales and a consistent cash flow. Detailed planning during this stage can greatly increase the chances of success.

Growth

In this phase, the business is continually gaining regular customers. Sales should be increasing every week and cash flow is almost always positive. In the case of a small business; there is likely to be between 10 and 15 employees working on a consistent roster.

With growth comes complexity, responsibility and a need for long term planning. Advertisement is important during both establishment and growth, as is the need to make investments in relevant equipment or employees to ensure a good reputation. Owners must be careful not to expand faster than their business can adapt to the changes.

Maturity

Maturity begins when sales come to a Plato. The business is thriving with a good customer base and regular cash flow. Its now that a more formal, detailed approach towards planning should take place. During growth, it is more important to make quick decisions with a good chance of success. Now the rate of change has slowed; more detailed long term plans can be made.

It may be wise to re-evaluate the businesses mission and vision statements to match when the business is now. There is a good chance they will have changed since establishment; assuming the owner has been flexible to ensure success.

The goal at maturity is simple. To maintain profits at pre-existing levels. Your king of the hill, now you have to monitor your business to ensure you stay there. Marketing and financial management are center to this. A good example is McDonald's. I don’t even have to state that it's a fast food restaurant chain, because you know what it is. The majority of the worlds 6+ billion people have at least some idea what it is. The same goes for Coca-Cola.

What these two companies have in common is a consistency in both their marketing, and their advertisement. Despite their popularity, they still flood the market to ensure they stay number one in their domain and in the minds of their consumers. Personally I don’t morally like this marketing strategy, or the tricks of marketing at all. Hence why I keep a broom length between myself and the study where possible. However, I cant deny the fact that it works and it works well. Make sure no one forgets your there and your what they want.

Finances need to be monitored for one reason above all others. The numbers show you trends. Downward trends, upward trends, fluctuating trends. Where are your profits heading? This is your pre-warning to where you are headed in post maturity; allowing you to find out why, when and how to change it.

Post-Maturity

The final stage consists of three possible outcomes

  • Renewal: New areas of growth cause increased sales and profits
  • Steady State: A continuing state of maturity.
  • Decline: Profits begin to fall as a result of poor management; often a direct result of a drop in sales or excess expenses.



Renewal

Often a direct result of new markets being tapped to create new areas of growth, expanding the reach of products and services the business provides.

Steady State

To maintain a steady state, focus should be on what existing customers are currently demanding. This requires market research for accurate results. A steady state stops expenditure on research and development required for renewal. Be warned, a steady state cannot be maintained forever and will fall into decline if not forced into renewal.

Decline

Decline is difficult to reverse for the following reasons

  • Financial institutions are reluctant to lend money to high risk businesses
  • Suppliers will restrict credit facilities and may insist on cash payments
  • Products may have become obsolete
  • Well qualified employees may begin to leave to seek out better opportunities, without a strong workforce, the rate of decline increases.



The trick is to spot possible decline and prevent it before it manifests itself.

Comments

    0 of 8192 characters used
    Post Comment

    • profile image

      Venerable Plato 

      2 months ago

      Dear Erin,

      Please give the venerable author the respect which is owed for the effort and elbow grease invested into this highly useful, accurate and supreme learning source. So what if they made two mistakes, don't we all? The message of the author was still CLEARLY conveyed and if you cannot recognise its validity you should re-evaluate what you stand for. If you are simply one to point out the flaws of other how are we meant to grow as a people. WE ARE ONE. Your pessimism is damaging and your over developed sense of superiority is questionable (" yeah, I noticed"). PLEASE REFRIAN FROM MAKING SUCH COMMENTS AGAIN.

    • profile image

      Erin 

      13 months ago

      Author should work on their grammar and choice of words... Venerable does not mean the same thing as vulnerable and nor is Plato a synonym for plateau. Shouldn't be this hard to work out, especially when you're copying straight out of a preliminary business studies textbook. Yeah, I noticed. (See "Business Studies in Action: 4th Edition" chapter 4.2). :)

    • profile image

      Jay Bovis 

      14 months ago

      Excellent quality

    • profile image

      smartass 

      2 years ago

      Plato or Plateau ? Philosophers could be involved.... but I think not.

    • profile image

      Shien Mushanokoji 

      3 years ago

      I think you meant vulnerable, not venerable.

    • profile image

      Yeri Dennimmus 

      6 years ago

      This is wonderful

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, toughnickel.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://toughnickel.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)