By: Mark Kleinschmidt
From Start-up to Exit Strategy
Over time, your business will experience different challenges and stages of growth. Each stage of the “small business life cycle” requires a different set of strategies to succeed. Check out the graph. Where is your business?
There are four distinct stages of business growth: Start-Up, Build, Expand and Exit. It is vital that you understand where you are in the growth lifecycle and implement the appropriate strategies in each stage for overall success and longevity. Let’s take a quick look at each stage and highlight some of the challenges and appropriate strategies.
You’ve decided that your business idea is worth pursuing and have now made your business entity legal. In this stage, you’ve finished developing the products or services that your business has to offer and will begin marketing and selling. This embryonic stage is high risk and many businesses do not make it past the first few years. You may struggle to make a profit or even operate at a loss. However, meticulous planning, strong market research, and effective financial management can increase the odds of survival. A well-crafted value proposition, a detailed understanding of your target audience, and a clear competitive strategy are vital at this phase.
In this stage, the priority must transition to developing your team, refining your business model, and employing tried-and-tested sales and marketing techniques. It’s crucial to lay out definitive operational procedures before initiating expansion plans. Moreover, turning a profit becomes critical at this stage to fund future growth. Key strategies during this stage involve superior customer service, the execution of a strong marketing plan, and continuous product refinement and enhancement.
Your business has been a thriving company and established its presence in the industry. You have now reached the stage in which your business will expand and spread its roots into new markets and distribution channels. To start capitalizing on the success of your business, you will need to capture a larger market share and find new revenue. Therefore, your business will experience a rapid growth in revenue and cash flow. The rapid growth stage takes advantage from the proven sales model, marketing model, and operations model set forth from the build stage.
Eventually, every business owner will face an exit – whether selling, merging, or closing the business. Planning for this phase is crucial from the very outset of your venture. That may seem counter-intuitive, but having an exit strategy provides a roadmap that can influence decision making and strategy at every prior stage. A well-thought-out exit plan ensures that the business transition is smooth, the value of the company is maintained or increased, and the business legacy continues even after the exit.
In conclusion, the key lies in recognizing the challenges inherent in each phase of the business lifecycle, and applying the right strategies to maneuver them. Each stage brings its own rewards and challenges, but with careful planning, sound decision-making, and a clear vision of your end goal, your small business can thrive through its entire lifecycle. Your journey through the diverse terrains of business growth may not always be smooth, but it will undoubtedly prove to be an enriching experience.