“Just because every business goes through a common life cycle doesn’t mean a one-size-fits-all approach will work for you,” said Chris Falco, a founding partner of Redmond-based accounting firm Falco Sult. “Your business is unique and brings its own set of challenges, so the considerations needed to navigate each phase should not be faced alone.”
Although honoring every detail is important, looking at the life of one’s business from a broad perspective is key to achieving long-term success. With a desired outcome in mind, business owners must approach their goals by considering each phase in the life cycle of their company.
“Much like the life of an individual, the experiences, values, and strategies of a company determine its path and result,” Falco said. “The same way parenting methods for a toddler cannot be applied to a teenager, cash-flow planning is much different for a startup than a company in its expansion phase.”
So where are you in your life cycle?
“At its conception, your new business is an exciting idea full of unlimited potential,” Falco said. “Proper planning is critical, and you must take the right steps at this delicate stage. Your business plan development is critical at this stage.”
Your doors are open, operations have started and you have your first customers. You want to grow. “Unfortunately, many new businesses — no matter how good the product or how well funded — may fail in their first years because of unwise cash management,” Falco added. “Your cash will need careful tending.”
Congratulations, you’ve made it through the toughest times, and opportunities to expand are presenting themselves every day. But how will you know where to devote your time, energy, and resources? “This is where you will start to build an effective management team and implement more enhanced systems,” Falco advised.
Now thriving with strong market share and a loyal customer base, you have arrived. What comes next? “The market is relentless and competitive, and you need to keep the big picture perspective to adapt and grow in an ever-changing economy,” stressed Falco. “You will spend more time with management and employee development, and build better business practices and technology.”
While expanding into new markets and distribution channels is an exciting step, it requires careful analysis and strategy. “Your team will need to spend extensive time outlining goals and creating the blueprints to guide the business into new territory with sure footing,” Falco said. “You will also be looking at strategic M&A opportunities.”
The company is on autopilot, yet competition is relentless and the landscape is always changing. Now is the time to consider whether to pivot, explore expansion options, or perhaps exit and let the next generation take the company to a new level. As in any life cycle, things ultimately return to the beginning. “This is when you will be positioning your company for a future transition of the business,” Falco said.
It’s time to reap the benefits. This is the time to consider all aspects of the business and explore every possible outcome. How will you transition the business to maximize your value? Navigating one’s business life cycle is not easy and can take many different paths, depending on how one reacts to the market and its conditions. “It is always a good idea to constantly assess where you are in your cycle and make sure you are being proactive when it comes to managing these stages,” Falco explained.