Business, like life, turns full circle

"Business lifecycle", "Raising finance", "Business valuation", "Business strategy"

“Those who do not learn from history are doomed to repeat it”…an old but relevant saying.  The business life cycle theory is very much alive and kicking. At what stage of the circle of life are you with your business?  You may be just starting out or you may be getting ready to retire or maybe, you’re somewhere in the middle?  Whatever stage you’re at, it is important to understand the life cycle of a business and where strategy and finance can have the greatest impact.

Welcome to Lattice Capital’s blog, The Business Circle of Life.  Subscribe now and join us in looking at the Circle of Life from a business perspective and specifically the financial issues affecting business during the various stages of its lifecycle.

The Four Main Stages of the Business Life Cycle

We have broken this down into four main stages – Birth, Growth, Maturity and Decline.

"Business lifecycle", "Business Valuation", "Business strategy", "Raising finance"

Stage One – The Birth Stage

This stage represents the birth of a new idea or perhaps a new product or service offering. The birth stage could involve starting a business from scratch or possibly buying an existing one. This is an exciting time but you could be so wrapped up with your new baby that you may not have considered all aspects of the business.  The types of issues arising could include:

Stage Two – The Growth Stage

This stage is probably the most rewarding stage of the business lifecycle. It’s when all of your hard work starts to pay off but it’s also probably the period when you are most busy. So you know where your business is heading but the question now is how do you get there?  You could be facing one of many issues during this phase including:

Stage Three – The Mature Stage

The mature stage is when things typically start to slow down a bit. Your business is ticking along at a reasonable pace with acceptable growth, your financing needs are probably in place, your business vision has been bedded down and your systems and procedures are well engrained. This should be the time when you get to enjoy the fruits of your labour- a bit more fishing or golf perhaps, the first family holiday in a few years? There will still be some issues you will want to address for your future such as:

Stage Four – The Decline Stage

The decline stage is when you’ve had enough of being in business and it has run its course. Typically, during this stage, growth starts to slow down. Perhaps you start to lose clients or customers to competitors or new and better products and services are introduced by other businesses. The sooner you accept that you’re in this phase, the sooner you can do something about it, such as:

  • Re-innovate – find new products or services that are aligned to what you know
  • Sell your business and retire

A lot of these issues will recur during the various stages of the lifecycle, albeit in slightly different forms

Conclusion

The consequences of business failure are normally bankruptcy and unfortunately many of these issues causing failure are usually avoidable and come down to poor management and a lack of understanding of business fundamentals.

"small business failure", "Business circle of life"According to Insolvency & Trustee Services Australia the number of business related bankruptcies has been steadily growing over the last 5 years as seen below.

So unless you want history to repeat itself and before you become a statistic why not try and understand the business lifecycle issues more thoroughly and apply them in your business.

We’ve set the scene and now it’s time to delve into a little more detail and look at some of those business life cycle issues more closely. You probably noticed that a number of issues re-occur at various stages of the business lifecycle and we can broadly put them into the following categories:

  • Business valuation;
  • Business strategy;
  • Business finance (start-up, expansion and working capital);
  • Business Acquisition; and
  • Business exits.

We’ll be taking a closer look at each of these issues so subscribe either by email or RSS and get the latest topics directly to your inbox.

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About latticecapital
We are an independent Corporate Advisory business based in Brisbane, Australia. We established our company in 2008 in response to a gap in the Brisbane advisory market for independent corporate advice. Our principals collectively have in excess of 40 years of Corporate Advisory experience.

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