Four Phases of Business. Which One Are You In?

 Pre-Phase

Before beginning the first step in starting a new company is developing the business idea. Many people connect with me to discuss the latest and greatest idea for a new business. If you are reading this blog and visiting my website, you already have a new idea and are searching for ways to launch or grow your business. Research and creation of a business plan begin here.

Phase 1:

The first phase of business is startup or launching. I call it “opening the business door.” This is the point in time your business is prepared to sell something, a product or service, and ready to accept payment from a customer. Whether you are selling directly to a consumer or to another business, the concept is the same. 

The business owner is excited, the company name is chosen and the new look and design for marketing have begun. However, many people never leave this stage of business or terminate their business before it grows.

Envision a pilot preparing a flight plan and taking off in an airplane towards its destination. Every business plan requires a cruise-level goal for the first year in business. What are your sales goals for phase 1?

Phase 2:

The second phase of business is growth.  Envision flying as a passenger in an aircraft and the pilot announces the plane is climbing to its cruise altitude goal. Your business is launched and each day you measure whether it’s on target for success. If the business continues to achieve the milestones along its climb, the plan is accurate. Just like a pilot correcting a plane that begins to fly off course, if a business strays off goal, the owner must apply a course correction. This process continues until the growth goal is reached and the company moves into the next phase of business.

Phase 3:

The third phase of business is maturity. Has it reached its max potential? Can the business continue to operate at a sustainable level? Just as an airplane that reaches cruise altitude, is the business continuing profitability at sustainable levels? Many businesses reach this target and presume the company will continue ad infinitum. This is the stage where an aircraft pilot knows the limit of the plane's range and prepares for landing. If the owner of a company can continue course corrections and strategy shows it can go for a long-range, the business just continues. Put a wise owner knows this is the time to evaluate exit strategies.

Phase 4:

The last phase of business is an exit strategy. There are many types of exits a business owner can consider. From selling, merging, liquidating, and planning IPOs or ESOPS to bankruptcy, the main goal of an exit is to know the value of the company at all times. Just like a pilot planning how to land the plane including an alternate landing site, wise business owners know the value of their business. Knowing this valuation helps adjust to changes in market conditions. It allows business owners to act quickly when market conditions are perfect for an exit. Business owners who ignore planning for this phase may result in liquidation or bankruptcy.

Key Lessons Learned:

•  Have a sales goal to achieve in the first year of business.
• Keep measuring each step of the business for success.
• Know if the market will continue to grow or if will sales become stagnant.
• Measure the value of the business as soon as possible in the business strategy. This allows for quick decision-making for any potential exit.

Written by Darlene M. Ziebell

Darlene brings a unique blend of effective enterprise strategies and the battle scars she acquired in four businesses, including startups, ESOP, acquisitions, partnerships, bankruptcies, and lawsuits. Her management consulting firm grew sales by over $40M advising more than 20% of the Fortune 1000. In addition, she mentors business owners, guiding them on successful growth strategies through her customized business methodologies. Nothing beats her experience.