Business Life Cycle

Question 1

List the five stages of the business life cycle

Answer 1

• Seed
• Start-up
• Growth
• Maturity
• Post-maturity

Question 2

List some features of the seed stage

Answer 2

• The very beginning, when a business is just a thought or idea
• Initial testing, research into the industry and feedback from friends, family or other industry specialists to help develop the idea
• Viability is determined and stakeholders are identified and engaged
• Legal structure for the business is registered and a business plan is written
• Funding for prototypes, production, property and staffing is sourced

Question 3

List some challenges of the seed stage

Answer 3

• The time, energy and money required when there is no revenue stream
• Vague or unclear business plan
• Product not ready for the marketplace at anticipated start-up date

Question 4

List some strategies for the seed stage

Answer 4

• A complete business plan is the biggest success factor for a start-up business
  - Clear vision, goals and objectives
  
  • Heavy reliance on the skills of the founders and/or employees
  • Business owners may upskill in key areas or consult with professionals where gaps exist that are required to maintain growth

Question 5

List some features of the start-up stage

Answer 5

• The idea has developed into products or services that the business is ready to market and sell
• The business may adjust its idea in response to feedback to ensure the meeting of stakeholder expectations
• Trading has commenced, employees are hired and trained if needed

Question 6

List some challenges of the start-up stage

Answer 6

• Often considered the riskest stage in the lifecycle
• Entering the market and seeking to attract a customer base
• Customer base is always important, but without the cash flow at this early point, the business can collapse

Question 7

List some strategies for the start-up stage

Answer 7

• Efficient and timely responses to feedback
• Adaptability
• Stakeholder engagement: suppliers, support networks, advice and governmental development offices

Question 8

List some features of the growth stage

Answer 8

• Movement into either an established or expansion state
• Business will innovate and refine its products or services for sustained growth
• Revisiting the business plan is important at this stage to evaluate goals and objectives
• Development of new ideas, acquiring of other businesses and creation of new organisational structure is common

Question 9

Define established

Answer 9

A state in which the business is consistently generating revenue and adding new customers and should be generating a consistent source of income

Question 10

Define expansion

Answer 10

A state in which the business adopts strategies to move into new markets and distribution channels, either geographically or demographically

Question 11

List some challenges of the growth stage

Answer 11

• Getting too comfortable in the market
• Overextending the resources of the business in order to expand, negatively impacting cashflow
• Avoiding new markets that are too small to support competing businesses
• Neglecting current customer base in favour of new markets
• Dividing attention between established and expanding aspects of the business

Question 12

List some strategies for the growth stage

Answer 12

• Dependence on staff and procedures
• Implementation of quality practices
• Heavy involvement in the recruitment process
• Delegation and distribution of responsibility
• Investment in research and development, as well as the professional development of staff

Question 13

List some features of the maturity stage

Answer 13

• Business reaches the top of its industry and is considered to have matured
• The longest stage of the life cycle
• There may still be some growth, but not at the same rate as previous stages
• Yearly profits are stable

Question 14

List some challenges of the maturity stage

Answer 14

• Environmental factors and changes in the economy, society or market conditions
• Emerging technologies and innovations in the industry
• Increasing competition from other businesses still in the start-up or growth stage

Question 15

List some strategies for the maturity stage

Answer 15

• Cost-cutting
  
  • Outsourcing
  • Adjusting supplier chains to reduce costs

Question 16

List some features of the post-maturity stage

Answer 16

• Can go in 3 possible directions:
  
  • steady
  • decline
  • renewal

Question 17

Define receivership

Answer 17

A process carried out by an independent and suitably qualified person, known as a reciever, who is appointed by a secured creditor, or sometimes by a court, to take control of some or all business’s assets

Question 18

Define administration

Answer 18

: A process whereby an insolvent company is placed in the hands of an independent person who assess the options available and generates the best outcome for all stakeholders including the business owner and creditors. Administration can be initated voluntarily by the business, or involuntarily by the creditors who are owed money

Question 19

List some challenges of the post-maturity stage

Answer 19

• When choosing an exit option, the challenge is determining the business’s real value in the current marketplace
• The financial and psychological challenges of a business loss
• Strategic planning for renewal or change management can present financial, human resources and operational challenges
• Negative cash flow or investment in innovation and renewal required for the reignition of growth

Question 20

List some strategies for the post-maturity stage

Answer 20

• Seek out professional specialists
• Formulate a transition business plan
• Invest in research and development
• Secure injections of revenue by reducing costs
• Market research strategies that enable the satisfaction of unmet demands