7-stages-of-business-life-cycle-thierry-janssen.pdf

7/27/2019 7-stages-of-business-life-cycle-Thierry-Janssen.pdf

1/10

Just in Time Management Group Avenue Louisalaan 149-24 B-1050 Bruxelles/Brussel

2013

WHITE PAPER THE 7 STAGES OF

BUSINESS LIFE CYCLE With the passage of time, your company will go through various stages of the businesslife cycle. Learn what upcoming focuses, challenges and financing sources you will needto succeed.


2/10

2 Just in Time Management Group Avenue Louisalaan 149-24 B-1050 Bruxelles/Brussel

Business Life Cycle Your business is changing. With the passage of time, your company will go throughvarious stages of the business life cycle. Learn what upcoming focuses, challenges andfinancing sources you will need to succeed.

A business goes through stages of development similar to the cycle of life for the humanrace. Parenting strategies that work for your toddler cannot be applied to your teenager.The same goes for your small business. It will be faced with a different cycle throughoutits life. What you focus on today will change and require different approaches to besuccessful.

The 7 Stages of the Business Life Cycle

Source: http://www.winonanationalbank.com/BusinessBanking/BusinessLifeCycle.aspx


3/10


SeedThe seed stage of your business life cycle is when your business is just a thought or anidea. This is the very conception or birth of a new business.

Challenge: Most seed stage companies will have to overcome the challenge of market acceptance and pursue one niche opportunity. Do not spread money andtime resources too thin.

Focus: At this stage of the business the focus is on matching the businessopportunity with your skills, experience and passions. Other focal points include:deciding on a business ownership structure, finding professional advisors, andbusiness planning.

Money Sources: Early in the business life cycle with no proven market orcustomers the business will rely on cash from owners, friends and family. Otherpotential sources include suppliers, customers, government grants and banks.

Just in Time Managementfacts learned during assignments

In the seed stage, we have noticed many times that completion of abusiness plan is the biggest success factor for an emerging company. Agood evaluation of the need of cash for the coming months is critical.During the first months, the company is going to develop its businessmodel without getting revenue from sales.

There are multitudes of good ideas when attempting to launch a company.But in order to be successful, the young company will need visionarymanagers with assiduity and flexibility in order to dynamically adapt thebusiness model to stay in line with rapid market evolution.

Launching a company and assessing the business model will oftenconsume the equity invested by the owners. During the seed stage, theyoung company could readily prepare a tree year plan in order to convincenew shareholders to support the next phases of development.

Just in Time Managementservices to consider

Market research to keep in pace with the market demand

Business Plan design

Support the young company in its negotiations with the banks or otherfinancial sources.

Back to top


4/10


5/10


Growth

Your business has made it through the toddler years and is now a child. Revenues andcustomers are increasing with many new opportunities and issues. Profits are strong, butcompetition is surfacing.

Challenge: The biggest challenge growth companies face is dealing with theconstant range of issues bidding for more time and money. Effective managementis required and an updated business plan might be needed. Learn how to train anddelegate to conquer this stage of development.

Focus: Growth life cycle businesses are focused on running the business in amore formal fashion to deal with the increased sales and customers. Betteraccounting and management systems will have to be set-up. New employees willhave to be hired to deal with the influx of business.

Money Sources: Banks, profits, partnerships, grants and leasing options.


The most successful entrepreneurs are masters in finding knowledgeable brains tocomplement his/hers DIY approach. They team up with a kindred spirit leavingeach other enough space to maneuver in a common agreed upon strategyresulting from business facts. It requires maturity to surround oneself withbrighter actors in less mastered domains & providing empowered strategicframing.

To stay ahead of the competition, innovation will need to find a breeding ground,as this together with sales & marketing are the only moneymakers & growthbusters in any one company no matter seize. It is a fact though that 67% of innovation stems from outside input either by addressing opinion leaders as asoundboard or external advisers helping to implement new ideas.

Sales & Marketing are like fire and water and need to be blended throughbusiness development, which is the missing link to, a successful go to marketcommercial strategy. Using an external business development organization willdazzle competition and amaze & exceed customer expectation.


External assistance with proven return of joint initiative will boost your R.O.I.

Back to top

Established


6/10


Your business has now matured into a thriving company with a place in the market andloyal customers. Sales growth is not explosive but manageable. Business life has becomemore routine.

Challenge: It is far too easy to rest on your laurels during this life stage. Youhave worked hard and have earned a rest but the marketplace is relentless andcompetitive. Stay focused on the bigger picture. Issues like the economy,competitors or changing customer tastes can quickly end all you have work for.

Focus: An established life cycle company will be focused on improvement andproductivity. To compete in an established market, you will require betterbusiness practices along with automation and outsourcing to improve productivity.

Money Sources: Profits, banks, investors and government.


It is difficult to accept for successful CEOs, who have had confirmation that theiroriginal ideas worked well, now need to reassess whether

o their original project is still optimal to satisfy customers needso their operating model is still the most efficient to maximize profitability and

long-term development

This rethinking the model phase is essential before additional growth is possible.

The company has changed significantly due to business volumes: what wasinformal yesterday becomes now more formal, what has been achieved with a fewpeople is now achieved by a larger staff, requiring more complex communication

channels and some delegation of authority. Motivation from the staff also evolved:the ambitions/expectations from the 1 st time joiners are not identical to those of newcomers.

The child is now becoming a young adult and the operational rules are different.Entrepreneurial CEOs are usually not well prepared to address such situations andexternal help from experienced peers might be very useful.


CEOs need quite a lot of courage to accept the advice from peers to help them think out of the box while everything worked well before further growth.

This is why the help of peers will demonstrate rapidly how their seniority will be areal added value to prepare the next development phase of the business

Back to top


7/10


Expansion

This life cycle is characterized by a new period of growth into new markets anddistribution channels. This stage is often the choice of the business owner to gain a largermarket share and find new revenue and profit channels.

Challenge: Moving into new markets require the planning and research of a seedor start-up stage business. Focus should be on businesses that complement yourexisting experience and capabilities. Moving into unrelated businesses can bedisastrous.

Focus: Add new products or services to existing markets or expand existingbusiness into new markets and customer types.

Money Sources: Joint ventures, banks, licensing, new investors and partners,profits, banks, investors and government.


It is not because you are successful in your home country that this can be copy-pasted into any other. Same goes for product and service. Many horror storiesexist with financial atrocities in consequence. It is recommended to learn fromthese mistakes to shorten the distance between expansion challenges and itsolutions as well as addressing European subsidies where possible & available.

Just in Time Management services to consider

Consider the impact that the size and nature of your business can have oninternational business. Then gauge commitment and resources available withinyour company to begin expanding (-porting). There are some tricky questions toanswer: Have you done market research on target markets? Are you aware of current opportunities of marketing your demand on the export market (s)? Areyou sure there is an export market for your products or services? What is yourknowledge of your potential export market competition? Has there been asufficient production / staff to meet growing demand? To what extent are yourproducts / services to be adapted to the export market? Do you know the existingconstraints (licenses..) for your products / services? Does your product / servicehave any competitive advantage in the target market? Any idea how competitiveyou export will be? What Incoterms will you offer? Have you selected a paymentmethod for your export offers? How do you deliver products locally? Did youcalculate the cost of transportation (by type)? Which distribution channels do youthink of? Do you already know which mix of promotional methods you can / willuse? Do you have appropriate export documentation for the target market (s)? Towhat extent have you decided to maintain your personal contact with thecustomers and how? Do you have your own website in English? Do you receiveexport questions or export orders via your website? Do you accept payments viayour website? Does your team subscribe to the expansion? Are target marketlanguages understood, spoken and written?

Back to top


8/10


Mature

Year over year sales and profits tend to be stable, however competition remains fierce.Eventually sales start to fall off and a decision is needed whether to expand or exit thecompany.

Challenge: Businesses in the mature stage of the life cycle will be challengedwith dropping sales, profits, and negative cash flow. The biggest issue is how longthe business can support a negative cash flow. Ask is it time to move back to theexpansion stage or move on to the final life cycle stage...exit.

Focus: Search for new opportunities and business ventures. Cutting costs andfinding ways to sustain cash flow are vital for the mature stage.

Money Sources: Suppliers, customers, owners, and banks. Profits, banks,investors and government.


The maturity level of a company is a key stage of the life cycle of any company,which will need the highest level of capital to go further, and then what acompany has ever engaged into.

Such a key momentum shows how lonely a CEO can be, even with a strongManagement Team and Board besides him.

It is surely the stage where the CEO mostly needs the help of a peer, not onlybecause of the amounts taken into consideration (banks are well acquainted tohelp and to make profitable business . for them) but as a captain of industry,there are lots of decisions that need a sound discussion which an experiencedpeer can share with the CEO.

One of the main difficulties for any CEO is managing the short-term daily businessand simultaneously addressing very long-term issues related to either acquisitionor sales of an activity. This depth of expertise is really complex to manage whereit is not acceptable to only focus on the long-term objectives, for it is requiringlots of time and management attention, as targets set might not be realizedwithin the expected time frame.


Macro market analysis related to who are the players you are competing with andunderstanding their business model and their level of (un)compliancy with yourcompany

Define a clear strategy of the development of your company (JV, acquisition, sales)

In case of acquisition or sales of the companyo set up details of targeted companieso anonymous market approach of targeted company to assess feasibilityo managing the whole trade process in order to allow the CEO keeping managing

the business

Back to top


9/10


Exit

This is the big opportunity for your business to cash out on all the effort and years of hard work. Or it can mean shutting down the business.

Challenge: Selling a business requires your realistic valuation. It may have beenyears of hard work to build the company, but what is its real value in the currentmarket place. If you decide to close your business, the challenge is to deal withthe financial and psychological aspects of a business loss.

Focus: Get a proper valuation on your company. Look at your businessoperations, management and competitive barriers to make the company worthmore to the buyer. Set-up legal buy-sell agreements along with a businesstransition plan.

Money Sources: Find a business valuation partner. Consult with your accountantand financial advisors for the best tax strategy to sell or closedown business.


Owners of middle size companies often overestimate the value of their company.The real value, and the only value of any firm, is the check an entrepreneur isready to put on the table to acquire the company. Most of the owners have put alltheir energy and time in their company without cashing too much during companylifetime. At the exit time, they might be disappointed.

Family companies with a charismatic owner are usually unprepared for a transferwhere they have to stay in the company for a period of time (MBO or training of the new owner). They are not used to delegate nor seldom inclined to shed theirpower gradually.

When no candidates are willing to pay the amount hoped for, e.g. in order toavoid the foreclosure of the company, they will prompt a MBO through a memberof the management team.

Advisers can help owners of family companies and mid-sized companiesconsiderably during the preparation of a transmission.

When an entrepreneur, a fund, or venture capitalist, want to acquire a company,all will spend much time to evaluate the financial results. All the banks will do thesame. Very few analyze the non-financial aspects of a company: quality of themanagement, IT, production means, distribution networks, staff motivation,

perfect fit between products and market demand. These non-financial elementsare nevertheless essentials for a complete evaluation of any new acquisition.


Support & coaching of the vendor

Preparing the company to be sold in the best conditions

360 audit including all the valuable aspects of the company for the buyer

Back to top


10/10


Whether you are Chairman of the Board, CEO, Managing Director or General Managerwithin your company, we know that, like all executives, you are alone in the decisionsyou have to take. Because even if you practice participatory management, there are

certain elements of your decision-making where it would be too sensitive to share withyour board.

We know from experience, that many company heads would like to be able to challengetheir ideas with someone who has an identical level of responsibility and comparableexperience in company management.

We know that they would like to be able to confide specific assignments to consultantswho speak the same language as them.

Just in Time Management Group provides you this opportunity.

Peer to Peer: you will not have in front of you consultants who simply carry outbenchmarking and who will advise you to apply standardized solutions. We are aconsultancy bureau exclusively composed of Partners who have proven experience ingeneral management and consulting services. Having occupied various positions as boardmembers, CEO, CXO and heads of company, our Partners have chosen to share theirknow-how, to assist and advise other executives.

More information available from

Thierry Janssen, Associated Partner, +32 478 98 33 61 [email protected]

7-stages-of-business-life-cycle-thierry-janssen.pdf

Documents