When it comes to running a business whether it be small or big, understanding the 5 stages of business life cycle is essential. Many entrepreneurs are taught these 5 phases of business cycle from the very beginning because it gives them an idea of what the business goes throw over time. The 5 stages of the business life cycle gives you a clear image of what to expect as you start your business and what to expect when you feel you’ve accomplished everything. There are ups and downs in every business, a business life cycle gives you an overview of the life cycle of a business and what it looks like.
Logo Agency is one of the best business promoting agencies in USA. Therefore, we comprise a team of excellent and experienced business strategists. This enables us to help our clients in any scenario which may help their business grow. Today, we are going to be helping you understand what the 5 phases of business cycle are.
What are The Life Cycle Stages of A Business
Well, the 5 phases of business cycle basically represent the progression of a business in “stages” over time. This progression is commonly divided into 5 stages or cycles. These 5 stages are launch, growth, shake-out, maturity, and decline. Of course, some people might give these stages another name. However, the meaning remains the same. We’ll go into more detail of the life cycle stages of a business later on.
The 5 stages of business life cycle are mainly shown as a graph with a horizontal axis as time and the vertical axis as dollars/currency. Now, let get right into the 5 stages and what they mean.
When starting any business, the company must launch their product or service. This is the first phase of the 5 phases of business cycle. During this stage or cycle, the sales are low but gradually increase. With the help of good marketing strategies, the increase in sales becomes easier. A business that doesn’t focus on marketing, might stay in the first stage of the business cycle stage for a long period, and might be unable to move on to the next.
During this life cycle stage, many businesses face low revenue and have higher costs to bear. Therefore, this phase is quite a struggle for any business and often businesses face loss. During this stage, a business may ponder whether the struggle will result in growth or not. However, with continuous efforts, the business will move on to the next stage.
During this life cycle stage, a business experiences an increase in sales. This means in this stage the business begins to make profits and pass the break-even point set in the first stage. Reaching the growth stage of the business cycle means your business has successfully established its business strategy and is now settling quite well with customers. This stage of the business cycle stage is seen as the most promising because the business has a strong cash flow and low turnover.
However, problems such as meeting the new demands of customers and the business itself can become difficult. As the business grows, more workforce is required. Other than this, maintaining high-quality services or products in order to keep customers happy can be challenging.
During this stage of business life cycle, the business reaches its sales peak. This means the business’s sales continue to increase. However, the speed of the increase is slow. This is mainly because during this company life cycle the demand for the product or services decreases. It can also be due to stronger competitors arising in the market.
Even though the sales continue to increase, the profit decreases during this stage of the business life cycle. This increase in sales along with a decrease in profits represents an increase in overall costs.
As the business reaches the maturity stage of the business life cycle, the sales decrease and the profit margins become thinner. Along with this, the cash flow of the business remains stationary. This is the stage in the business life cycle where the business will begin to “change” themselves. This means they will invest in new technology or engage themselves in different markets. Ultimately, a business in the maturity cycle will try to adapt to the new demands of customers.
This is the final stage of the life cycle. During this period the business begins to see a gradual decline when it comes to profits, sales, and cash flow. In this phase of the life cycle, the business understands it won’t last any longer in the market. The business accepts the failure and knows it’s time to back out of the competitive market.
During this phase of the company life cycle, the owner may set up strategies to gain as much benefit as they can from the business before finally exiting the market. However, some businesses may take a different approach such as the same one during the maturity phase (Reinventing the business).
Logo Agency Is Here To Help
Logo Agency is always ready to help clients grow their business successfully. If you’re in need of advice or help, visit our website or call us at (800)314-4049. Regardless what business life cycle stage your business may be in, Logo Agency will help you! We have different strategies for businesses in different stages of the business cycle.