A Business Lifecycle
Generally, each business has a lifecycle or a certain pattern that determines its success. From its inception to its end, a company requires its founders and their employees to be capable of fulfilling the necessary responsibilities to succeed. Therefore, organizations must be able to freely discuss business lifecycles and assess their position in a company’s lifespan (Solesvik et al., 2022). As a result of this process, it is possible to make more informed and effective business decisions throughout an organization’s development. This work will discuss the general life cycle of a company.
Startup
The first stage of the lifecycle is the startup. This is where an initial idea of a business is born, where individuals gather to bring some kind of value into the world. Be it a tech company, a cleaning service, or an entertainment center, any business must first define what it wants to be and how it wants to operate. Companies such as LinkedIn, Lyft, and Doordash managed to gain success specifically on this stage, growing and quickly competing in the international arena (Gilmanov, 2023). This stage requires planning and a considerable amount of prior connections to succeed. Hundreds of businesses fail in the startup stage, either by remaining too obscure or being unable to attract investors. By creating a sense of scope and making connections necessary to launch a business, organizations gain the ability to initialize their growth. Organizations may experience challenges such as difficulty attracting investors, limited access to resources, and high levels of competition. For example, a tech startup may struggle to attract investors with a similar idea to existing companies.
Growth
Right after a business manages to secure funding and find its niche, it starts to grow. Growth is necessary to fulfill the missions of a company, bring profits to the stakeholders, and stay afloat within a fluctuating market (Wang et al., 2020). Businesses are not allowed to stagnate for long periods, lest they be outperformed by their competition. By slowly improving its capacity to fulfill business objectives or expanding its outreach, a company obtains more funds and better market standing. Scaling organizations face quality control challenges, cash flow management, and adaptation to market trends. For example, a famous service company may struggle with quality as it hires more staff.
Maturity
Maturity is where an organization truly comes into its own and finds its unique market value prospects. Typically, this process includes a stable rate of growth throughout the years and promises financial security to both workers and the upper management (Wang et al., 2020). In addition, the leaders responsible for managing the internal affairs of an organization gain an opportunity to free up their schedule, focusing on overseeing the work of others. Specialists such as managers, human resources personnel, and committee boards commit to the process of running the company. The staff and leadership are well-established at this part of the lifecycle, which allows the entire organization to function as the best version of itself. Organizations may face challenges of complacency, change resistance, and increased competition from new entrants. For example, a long-standing product company may struggle to adapt to changing preferences and technologies.
Decline
As new competitors emerge, social trends change, and leadership shifts, companies eventually enter their decline period. If an organization is no longer able to increase its revenue, it is considered to be in decline (Mosca et al., 2021). In this state, an organization will be increasingly unable to meet the demands of stakeholders, and eventually lose its customer base. Alternatively, a decline can also be signified by internal tension within the company itself or a bad corporate climate. The main goal of most leaders and managers is to delay the potential decline of a company for as long as possible. Organizations may face challenges of competition, market trends, and change resistance from stakeholders. For example, a company with an obsolete product may struggle to find a new market or need to lay off employees.
Renewal
Alternatively, an organization can enter a renewal period. In this case, a business manages to introduce changes that help it stay afloat, or answer to the demands of customers better (De Carvalho Araújo et al., 2022). While it is impossible to truly make a company last forever, smart business decisions and well-established connections can allow some companies to come back from the brink of collapse and continue to serve their communities. Renewal improves company revenues and gives it a chance to succeed for a longer period. Organizations may experience challenges such as resistance to change from employees and stakeholders, limited resources, and the need to compete with established companies in the market. For example, a declining company may invest in R&D to meet changing customer needs.
References
De Carvalho Araújo, C. K., Bigarelli Ferreira, M., Salvador, R., De Carvalho Araújo, C. K., Camargo, B. S., De Carvalho Araújo Camargo, S. K., De Campos, C. I., & Piekarski, C. M. (2022). Life cycle assessment as a guide for designing circular business models in the wood panel industry: A critical review. Journal of Cleaner Production, 355, 131729. Web.
Gilmanov, A. (2023). The most successful startups you could learn from. TMS. Web.
Solesvik, M. Z., Torgersen, M., Andersson, G., & Valter, P. (2023). Green Business Models: definitions, types, and life cycle analysis. Forum Scientiae Oeconomia, 10(4), 199–217. Web.
Mosca, L., Gianecchini, M., & Campagnolo, D. (2021). Organizational life cycle models: A design perspective. Journal of Organization Design, 10(1), 3-18. Web.
Wang, Z., Akbar, M., & Akbar, A. (2020). The interplay between working capital management and a firm’s financial performance across the corporate life cycle. Sustainability, 12(4), 1661. Web.