Understanding the Life Cycle Stage of Your Business

Speak to one of our consultants to find out how we can support you.

The second that brilliant business idea forms inside your head, your business enters a framework known as the life cycle stage of your business. The life cycle stage of your business is made up of five stages which your business will most likely go through as it matures. Much like life itself, each stage has its own unique challenges. To evolve and grow your business, you’ll need to adapt to each stage to become truly successful.

Knowing and understanding where your business falls in the business lifecycle spectrum keeps you ahead of the curve. It prevents you from being part of the 90% of startups that fail. You’ll be able to identify and anticipate challenges and obstacles before they become an issue and adapt your thinking and strategy ahead of time.

So, let’s discuss the five stages of the business lifecycle so that you can grow and develop your business and get ahead of the game when your aims, objectives, and priorities need to change.


Stage 1: Seed and development


This stage is also known as the launch or startup phase. This is when your startup isn’t even officially in existence; it’s when you will need to consider the feasibility of your idea. An average of 10% of startups fail within their first year. It is the work that you do at this time that will prevent this from being the case.




The financial foundation


This is when sales and profit will be at their lowest and the risk that your business may fail is at its highest.


Entering the market


This phase is when you would be working on identifying and marketing to your target audience. It is also the time that you develop your value propositions, network with others, and devise effective strategies to sell your products or services.


Our advice: Garner advice and opinion


During this stage, it is best to get as much input as possible on your potential business idea. Reach out to your professional network or any industry experts you have access to and run your idea past them, taking any feedback they may have on board.



Stage 2: Growth


This is an exciting phase, it’s when your startup comes to life. It is, however, also the riskiest part of the lifecycle and mistakes that are made at this point may impact your company for years to come.






The key to successfully making it through stage two is adaptability. You’ll most likely have to shift your thinking and you’ll spend time tweaking your products or services based on the initial feedback you receive from your first clients. 




At this point, you should be maintaining your pricing level with modest increases for new clients. Your turnover should be decreasing, and you should no longer have to worry about making payroll and keeping employees on board. 


Our Advice: Power through


The best thing you can do at this stage is to keep pushing forward. No matter how many times you need to design and redesign your product or service offering, know that this will save you time in the future and ultimately contribute to your success.


Stage 3: Shake-out and establishment



Sales and clients


During this phase, sales will continue to increase, but at a slightly lower rate. This is either due to approaching market saturation or the entry of new competitors in the market. You should be taking on new clients regularly.


Profit and expenses


Your profit may start to decrease in the shake-out phase. The growth in sales and decline in profit may lead to an increase in costs. It’s also quite likely that your cashflow will increase and exceed your profit.


A busy time


The biggest challenge for entrepreneurs in this phase would be dividing your time between a variety of new demands that require your attention. From managing increasing levels of revenue, attending to clients, and dealing with competition, you’ll have a lot on your hands.


Our Advice: Hire smart


An essential consideration here is hiring smart people with complementary skillsets. As your focus will be split between all the tasks mentioned above, you’re going to need skilled people to take over certain responsibilities from you. At this point, you may want to consider the benefits of hiring virtual employees


Stage 4: Expansion 


This is the phase where your business begins to mature.




Sales and profit margins


You can expect to see a slow decline in sales at this stage. Your profit margins may get thinner and cashflow will stay relatively stagnant.




At this point things will start to feel routine-like. You’ll have staff in place to handle areas you no longer have time for, and your business will now have firmly established its presence in the industry.


Our Advice: Reinvent and refresh


Many businesses extend their lifecycle during this phase by reinventing themselves and investing in new technologies and emerging markets. Now is the time to reposition your company and refresh your growth.


Stage 5: Maturity and possible exit


We know this sounds awfully negative, but this stage of the business lifecycle can be the decline phase. This is often where businesses lose their competitive advantage.




Two choices


At this point, you can either push for further expansion or exit the business. If you decide to expand, you’ll need to start asking yourself the same questions you did in the first stage.




Sales, profit, and cashflow all decline in this phase. Usually, this is when companies accept failure and extend the business lifecycle by adapting to a new environment.


Not all businesses will experience every stage of the business lifecycle and not all businesses follow them in chronological order. However, for most companies, there will be some similarities between the stages we’ve outlined and where your business is. Knowing where you are in the life cycle stage of your business can maximise your chances of success and help you make the right decisions at the right time.


Work with the best of the best, for less

Many businesses struggle to find high-quality support at affordable rates, slowing their growth.

Since 2015, we’ve empowered thousands of businesses to scale efficiently and optimise their operations with seamless access to a pool of quality remote talent through a flexible subscription model.

Download our free guide to find out more.

Download our Guide

By submitting this form, I consent to contact via phone and email, as per Outsourcery's Privacy Policy.

Want to join the team?
This field is for validation purposes and should be left unchanged.

Get virtual support

Join our team

Don't leave without exploring all your options!

Let's have a no-strings-attached chat
about what you need.

By submitting this form, I consent to contact via phone and email, as per Outsourcery's Privacy Policy.
This field is for validation purposes and should be left unchanged.

Get 5 free hours with your Virtual Employee in your first month - match guarantee!