Understanding the Key Stages in the Business Life Cycle

Understanding the Key Stages in the Business Life Cycle

Reading Time: 4 minutes(Last Updated On: February 17, 2019)

Every growing entity, be it human, animal, plant or a business, needs to be nurtured and nourished according to age and stage. Before we can give our fledglings exactly what they need at the right time in order to grow, we need to understand every life cycle stage, set expectations, act accordingly, and most of all…breathe and be patient. Just as you wouldn’t expect a baby to suddenly stand up and start running, you can’t expect your infant business to do the same. It’s all about baby steps.

Opinions differ slightly on terminology and the number of business cycle stages, but we’re going with Forbe’s view, which is that there are four business life cycle stages – introductory, growth, maturity, rebirth/decline.

If you don’t maximize your activity in each stage and plan for the next, you may never reach that next stage.

How can you pinpoint which business life cycle stage your business is in? What actions should you be taking now? How should you be planning for the next stage? Keep reading to find the answers to these crucial questions.

1. Introductory Stage


The intro stage is all about meeting new people and coming up with new ideas. Your business won’t follow many processes, your employees will multi-task, and you’ll be constantly adjusting your business model. Sound like your business?

Our Financial Tips for Intros


Cash is usually tight in this phase so you’ll need to figure out how to keep the cash flowing in order to grow consistently, hire more employees, and ultimately get you to the subsequent phases of business cycle.

If your business is not yet eligible for business loans, you have a few options available to you. One of these is to apply for a business credit card. Read our article ‘Should you finance your startup business with credit cards?‘ to help you decide.

Whether or not you do get a credit card, it’s a good idea to bootstrap. ‘Bootstrapping’ means to get yourself into or out of a situation using existing resources, and it’s a good philosophy to follow when growing a new business. While you’re waiting to fulfil the inevitable ‘time in business’ criterion for a loan, you can make the most of the finances you do have by following these rules:

  • Bring in a steady income This could mean creating an introductory product that brings in steady income, keeping your day job for now, or bringing in some side income.
  • Network and swap – Connect with other entrepreneurs in the same boat, new businesses that offer complementary products and services. Something as simple as sharing each other’s social media posts will save you money and expand your marketing reach.
  • Offer A Minimum Viable Product (MVP) – Before you’re able to get business funding, you could launch a MVP, a product that has very low setup and operational costs. Once you have the funding you need, you can invest more in this and other products.
  • Keep within budget – When you bring in revenue, remember not to increase your expenditure accordingly. Stick to bootstrapping and business forecasting mode, so that you have funds ready when you most need them.

2. Growth Stage


In this stage, you probably already have steady relationships with clients, who are very familiar with your business model. Your pricing should pretty much be set, with just small increases for new customers. Staff turnover should be on a decline and paying employees should no longer be a struggle. During growth stage, your place in the market should be solid so you’ll be able to start focusing on internal improvements such as forming teams and setting up employee structures. Now is the time to strengthen customer relationships, motivate employees, grow your business and try to remove any barriers to growth.

Our Financial Tips for Growing Businesses


Businesses need investment to grow. If you prefer not to dip into your profits, an often preferred solution is to source external investment, in the form of investors or debt. Read our comprehensive business financing guide to help choose the best funding option for your business.

Many business owners prefer not to sacrifice equity to a potentially interfering investor and opt for business funding instead. Digital lenders are increasing in popularity due to their less stringent requirements, speed and transparency. Become can help growing businesses find the ideal funding solution.

3. Maturity Stage


Most businesses in maturity phase experience 5% annual growth and employees have generally been around for 8-10 years. Security, predictability, and steady revenue are terms that come to mind when describing a mature business. At this stage, your business would be run smoothly by a management team on a day-to-day basis. In maturity phase, you can easily defend your position in the market and your brand is widely recognized, enough to expand into new markets.

There is a big ‘but’ however. Mature business owners sometimes feel too secure that it leaves them vulnerable. You need to keep a constant eye out for indications that changes should be made, to avoid hitting decline.

Our Financial Tips for Mature Businesses


Mature businesses are usually very cash flow positive and manage to grow via acquisitions or product spin-offs.

If change is on the horizon, mature business owners can decide whether to cash out and enjoy the fruits of their labor, or reinvest in their businesses to experience further stages of business growth in the future.

4. Rebirth/Decline Stage


At this stage, your business could go either way, depending on the decisions you make. Most business owners don’t realize that they’re in decline until it’s too late. There are signs that indicate that your business isn’t as stable as you might think, for example, if you’ve experienced a decrease in revenue over three consecutive quarters. To avoid hitting decline, you would need to start innovating your product or service and invest in new employees, technology or processes.

Our Financial Tips for Declining Businesses:


There are two paths to take at this stage – cash out or reinvest. Reinvesting involves meeting the needs of the market by adjusting your offering to appeal to new customers or create an entirely new offering.


Do you know what stage your business is in? What are you doing to make it succeed? Let us know in the comments below.


Disclaimer: The information contained in this article is provided for informational purposes only, should not be construed as legal advice on any subject matter and should not be relied upon as such. The author accepts no responsibility for any consequences whatsoever arising from the use of such information.