Looking around the world, every boss wants his enterprise to become a century-old shop, but my opinion is that it is better to pursue the present Excellence than to pursue the everlasting foundation. In my opinion, everything has its own law of growth and decline, and so do enterprises and people. The company will better consider how to have sustainable profitability, thoroughly understand the life cycle of each stage of the enterprise, and then formulate countermeasures according to local conditions. This is also the challenge and core focus of my next content.
Stage 1: The seed stage is in its infancy, and it is only an idea or a pain point in the market that you want to start a company.
Challenge: Most start-up companies will have to face the market acceptance of their ideas and need to seek a niche opportunity to focus their money and time on a core pain point.
Focus: The focus of this stage is to match the market opportunity with one's own ability, experience and passion, determine the business scope, find professionals and make business plans.
Source of funds: Self-raised funds from the founders, cash from relatives and friends, or grants from other suppliers, customers and the government.
The second stage: in the initial stage, your company exists in a legal form, registered a new enterprise and has an office, products or services are being produced, and you have the first customers.
Challenge: Don't run out of cash in the initial stage. You need to know what customers need, conduct small-scale market verification and see if your products are recognized by customers.
Key points: to cultivate customer trust and market position, track and maintain cash flow.
Sources of funds: founders, friends, family members, suppliers, customers or grants.
Stage 3: The growth period is accompanied by many new opportunities and new problems. The income and customers are increasing, and the profits are rich, but the competition is becoming more and more fierce.
Challenge: New problems are constantly emerging, and a large amount of capital is invested, which requires effective management and possible new business plans.
Focus: We should focus on operating enterprises in a more formal way to cope with the increase in sales revenue and new customers, establish a more comprehensive financial management system, and hire new employees to cope with new business.
Sources of funds: banks, profits, partnerships, grants and leases.
The fourth stage: during the incremental period, your enterprise has occupied a place in the market and has some loyal customers. Sales growth is not explosive, but stable and controllable, and the business environment is getting better and better.
Challenge: The market is ruthless, which requires us to focus on the overall situation and understand the changes in macroeconomic environment, competitors or customer preferences.
Focus: focus on improving products and strive to improve their core competitiveness. In order to compete in the established market, we need to focus on core business and improve production efficiency.
Sources of funds: profits, banks, investors and the government.
Stage 5: The expansion period enters a new era of new markets and new distribution channels. Business owners usually choose this stage to gain greater market share and seek new revenue and profit channels.
Challenge: entering a new market requires planning and research, and your focus should be on using your existing experience and ability to broaden your existing business.
Focus: add new products or services to the existing market, or expand existing business to new markets and add new customer types.
Sources of funds: joint ventures, banks, new investors and partners.
The sixth stage: the changes in economic environment, society or market conditions during the economic recession will reduce sales and profits.
Challenge: saturated business will be challenged by falling sales, falling profits and negative cash flow. The biggest question is how long the negative cash flow of enterprises can last.
Focus: Looking for new opportunities and business models, it is very important to cut costs and find ways to maintain cash flow during the economic recession.
Source of funds: suppliers, customers and founders.
The seventh stage: the closing period is a good opportunity for your enterprise to benefit from all the efforts and years of efforts.
Challenge: If you decide to close some businesses, the challenge is to deal with financial losses and psychological disappointment.
Focus: Make an effective valuation of your company and understand the existing business operations, so that the company can buy higher prices. Then make a legal sales agreement and business transition plan.
Source of funds: looking for new business partners.
Summarize a few thoughts:
1. At all stages of development, enterprises should establish the entrepreneurial thinking of pursuing short-term and long-term benefits and efficiency in the most efficient way.
2. The length of enterprise development depends on the energy and profit integrated in the system. The more energy, the longer the enterprise will develop.
3. As long as there are changes, there will be problems, and all problems are caused by differentiation.
4. The role of the company's top management is to lead the change. Integration will inevitably lead to development, and lack of integration will inevitably lead to decline. Only through integration can the problems arising from the change be solved, and enterprises can prepare for the next differentiation brought by the next change.
Part of this article is taken from the book "Enterprise Life Cycle", which needs a paper version: poke here.