In previous posts about the business potential energy, I write that the methodology of business improvements must contain the business life cycles. It is important because we have different business elements with different business potential energy in different business life cycle stages.
So, you need to use these stages to describe some business elements in correlation with the business potential energy and business performance.
The Relation Between Business Life Cycle and Business Performances
I use 6 different stages of a business life cycle for all businesses, and they are covered in this post.
In this figure are presented business performances (vertical axis) and time on the horizontal axis. As you can see, at the beginning of the dreaming and startup stage, business performances are at the lowest level. But, as the company goes through business life cycles, the performance is increasing. However, when a business comes into the aging level, business performance goes down.
The Stages of Business Life Cycle
Let’s see what is happening in different stages of the business life cycle and business potential energy.
Stage #1: Dreaming Stage
Every business starts with a business idea. I named this level of dreaming because here, we really dream about something. You, as an entrepreneur or a future entrepreneur, start dreaming about your business. At this business life cycle stage, you develop several business ideas, analyze them and select one of them. Simple, you try to find the best or optimal business idea for your next business.
You don’t have too many business elements with different business potential energy at this stage of the business life cycle. Here, the only business element that can have potential energy is your business idea. If you have better business ideas, the more business potential energy, you will have.
Stage #2: Startup Stage
Successfully finished the first business life cycle stage is moving to the second stage, or as I call it, the startup stage.
At this stage, an entrepreneur takes the first steps (actions) to legalize their businesses. This stage transforms the business potential energy stored into the business ideas through a business plan into the real business.
Now you have more crucial business elements that are important in this stage. One of the most important elements you need to focus on is selling and finances.
Stage #3: Problematic Period Stage
At this stage, in many cases comes falling of the morale of an entrepreneur.
You will realize the complexity of running and managing your own business. Why is this stage called the problematic period?
When you start a business, you will start feeling also first real problems like lack of finances, low sales level, and higher costs. This stage will require real decisions from you. One of the most important business elements in this stage is selling, marketing, finances, sales team, quality, etc.
Stage #4: Devilment Stage
If the business survives the previous stage of the problematic period, it will get into the devilment stage. At this stage, an entrepreneur starts feeling that finances are stable and sales numbers continuously rise.
But, here exist the risk of crazy behavior from an entrepreneur. This behavior is characterized by uncontrolled money spending on many unnecessary things and investments. If this continues for some period of time, the business can easily return to the previous stage of a business life cycle. The most crucial business elements will be management, development, finances, planning, and so on.
Stage #5: Top Form Stage
When an entrepreneur overcomes or passes the previous stage, he will get into top form. At this stage, income and sales numbers are at the highest possible level. Management and sales teams are formed. Everything operates really well.
Here is a dangerous situation when a business starts moving in one of the two worst stages. The first one is devilment (previous stage), and the second one is aging (the next stage).
Stage #6: Aging
This is the stage when all things start moving at some decreasing line. An entrepreneur and their business don’t have enough energy to return things in the right way. This stage requires big organizational changes. Changes are the only thing that can bring fresh energy into the business. These changes, more importantly, will return the required business potential energy that was spent on the most important business elements.