All businesses go through different life cycles — just like a person. Just like a person goes through infancy, childhood, and teen stages before they reach adulthood, companies several life cycles before reaching maturity. Understanding each organizational life cycle and tracking your company as it progresses through each stage helps you set achievable goals to continue your company’s growth.
Why Organizational Life Cycle Stages are Important
Businesses go through four different life cycle stages: birth or incorporation, growth, expansion, and maturity. Each stage is defined by specific characteristics, which you should use to determine which life cycle stage your business is in currently. The organizational stage your business is in is important because it tells you what type of goals you need to set and achieve to move to the next stage. Basically, it’s like a road map to your success — if you don’t know where you’re at and where you’re going, you can’t determine how to get there.
Birth (or Incorporated) Stage
If you have a brand new business or an idea for a business that you haven’t implemented, your business is in the birth stage. During this stage, business owners are typically testing new ideas and products. You might find yourself tweaking your products, your packaging, and your business processes a lot during this stage of business so what you’re offering fits the needs of the people in your target market. To prepare yourself for the next stage of business, you should set goals to help you perfect your product and/or service. You also need to determine what type of resources you need to add to your company as it grows. Do you need to add more employees? Are there software options or apps available to streamline your operational processes? These are the type of things you should be thinking about to advance your company into the growth stage.
During the growth stage, you should be adding resources to your company as your sales increase. So as your income increases, you might hire an assistant or invest in new cloud-based software. With each jump in income, you add the next resource until you have all the resources your company needs to succeed and you’ve streamlined all of your operational processes. Once you’ve achieved this, you’re ready to advance to the expansion stage where you’ll start scaling your business.
When you enter the expansion stage of your business, you might feel like running your business has become routine. You have your staff and processes in place and your business is firmly established within its industry. You know which aspects of your company are quick and cost-effective to replicate. And it’s time to expand and scale your business.
If you’re in the expansion stage, your goals might include
- Automating specific business processes
- Launching in new geographic areas — for example, you might start selling products in the UK or the United States
- Adding a new line of products
Your business has reached its maturity stage when you see steady profits year after year. During this phase, you won’t see dramatic growth. It’s all about stability. Because of that, many entrepreneurs think they only have two options at this stage: further expansion or exiting the business. But you don’t have to make any drastic changes at all. As long as you take measures to ensure your company remains competitive within its industry and doesn’t become outdated, you can sit back and enjoy the fruits of your labor.
When you set your business goals based on the stage your business is in, you’ll find yourself creating realistic goals that keep your company moving forward. So continue tracking your company’s organizational life cycles. They’ll help you create your own road map to success.