Starting a business is easy, seeing it through the different stages of its lifecycle is the difficult part. Beyond knowing the length of time you have been in business, it’s important to know it’s lifecycle too. After all, age is just a number. It’s important to be aware of the lifecycle your business is in. There are accounting and financial implications you must take to see it through the next stage. Let’s examine them in this article, post the launch period.
It’s the most exciting stage for any business. Seeing your products flying off the shelves is gratifying. At this stage, you’ll likely experience positive cash flow as sales rise. From an accounting and financial perspective, it is probably the best time to repay as much debt as you can. In addition, it is also the best time to raise further capital to take your business to the next stage.
Sales will continue to grow, albeit, at a slower pace. By now, you would have attracted competition. As a result of this, there will be price and cost pressures. Profits may decline as the cost of competition begins to creep in. However, with sales continuing to rise, cash flow remains positive. Being financially prudent is the order of the day.
Maturity is a phase every business will go through, even the best. By this stage, it can’t be business as usual. Its where the great will be separated from the good. Declining sales is not an unusual occurrence. Cash flow may be stagnant. But if the fundamentals of the business are strong, access to capital may not be difficult. This will come in handy as it is imperative for the business to reinvent itself.
Decline is a phase that most businesses try to avoid by ensuring they take on the earlier phases well. Although it is a recognized phase in the lifecycle of the business, it doesn’t have to be an eventuality.
Navigating a business through its different phases is part of your business strategy. Speak to us to learn how we can help.