There are several stages of business development. This applies to small businesses and to big one as well. Of course, not every business goes through the all stages because of various reasons. Some of them are ruined immediately after the start of business, some are crashed on the stage of maturity, and some firms do not reach up to the first stage, the stage of the base business. The knowledge of these stages of the companies’ development helps to identify at what point the business is in and what business development is set out above. This in turn will help to prolong the life of the business.
The first stage of any business creation is its foundation. At this stage, the company is created and formed. For many businesses this is the only stage that they are passing. This is the most difficult and crucial stage in the life and development of any business. A lot can go wrong, as it should be and, accordingly, it may happen that the continued existence of the business would be impossible. The success of the business is highly depended on the business plan and model that were used in origin of business creation. Without good business plan it is not actually possible to properly start a business and then move to the next stage of its life cycle in order to develop company. The best example of the company that fits to this stage of the business development is the “Apple Company†in the middle of 1970s. This company demonstrates the period of the first time idea implementation and the company foundation. This stage was crucial for the company, because it showed is the company compatible at the market it is going to enter.
The second stage of the business development is connected to the business growth. At this stage the business is growing and strengthens. The main reference for this stage is the early achievement of break-even point. This stage is closely connected to the time when the working capital is still growing by the outside investments usage. It also honed business management system. Much of the success at this stage depends on the professional management of the business. The way the business is run, how it competes within its market, these are the main factors that will determine the fate of the business and the ability to get to the next stage of company’s life cycle. During this stage company is struggling with the competitors in order to survive. The best example of this stage can be described by the example of Pepsi and Coca-Cola struggle that had origin from their creation. In the early beginning of the beverage industry development Pepsi Company struggled for every peace of market share in the origin of its existence.
The third stage is the stage of expansion. At this stage the business has reached a break-even point, and began to make a profit. This stage is connected to the factors as soaring revenues, capture the market, increase sales, and of course there is profit. This is the most enjoyable stage for the owner. During this period there is a return of investment spending, and the beginning of the profit generated by the business (Sahlman, 1992). For the expansion stage is characterized by an increase in staff, office extension, expansion of channels and outlets. It is very important to correctly form a team of employees, those with whom you can safely move to the next stage. As an example it is necessary to speak about the Sony Company that had faced this stage in the time that the decision to produce “Walkman†and CDs was made. This decision drove the company to expanse its business performance into the markets that are closely connected to the radio one.
The fourth stage is maturity stage and it is characterized by its resistance to all kinds of business contingencies. By this time, the company has already gained enough profit to survive the hard times, when suddenly the market becomes unstable or begin to decline. At this stage it is also possible management restructuring, development and introduction of new products. This is the stage when it turns to pick a major profit from the business. The duration of this stage for different kinds of business is different. However, over time the market is changing, and new technology, businesses, competitors are appeared in the market and at the end of this stage it smoothly comes into the final stage of life cycle of the company. Kodak Company is the best example of the maturity stage in business. Technologies are improving from day to day and the company that does not catch new tendencies, especially, in the electronic markets are, firstly, meet the consumption decline and as a result – the decline of profits.Â
The fifth stage is the stage of decay. In the life cycle of the business, this stage is the most simple, and any special effort to achieve this stage, is not required. Moreover, the majority of businesses opened, according to statistics, the transition from the first stage once in the fifth, that means that some of business cease to exist as soon as the beginning of their business life development. Sooner or later, this phase includes all the businesses. But this does not mean that everything is fatal and the business will be also sent into this stage and stop. To avoid this, people come up with such a thing as a strategic management. A successful businessman, using the science of management, is able to view all of these stages and take educated and timely decisions. Classical event in business management is the transition from the fourth to the second stage and, as well, to the fourth and again into the second. Such transitions occur through the development of new products and services, the beginning of a new kind of business, expanding an existing one, etc. Even when you are already in the fifth stage, everything is possible to try to fix another revive business. The Comet Group is the best example that demonstrates who the fifth stage of the business development can turn to the company. This group had faced a lot of problems that were caused by the economy crisis, therefore, this company now is ran out of business.
Knowledge and understanding of these stages of life cycle development of the company would clearly help in business management. Carry out the analysis of the situation in which business is now. As a result, this understandings and knowledge will give the opportunity to do business more effectively for the managers and owners of the particular company.