A business goes through stages of development similar to the cycle of life for the human race. Parenting strategies that work for your toddler can not be applied to your teenager. The same goes for your small business. It will be faced with a different cycle throughout its life. What you focus on today will change and require different approaches to be successful.

The Seven Stages of Business Life

1. Seed Stage: The seed stage of your business life cycle is when your business is just a thought or an idea. 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 and time resources too thin.

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

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

2. Start-Up Stage: Your business is born and now exists legally. Products or services are in production and you have your first customers.

·         Challenge: If your business is in the start-up life cycle stage, it is likely you have overestimated money needs and the time to market. The main challenge is not to burn through what little cash you have. You need to learn what profitable needs your clients have and do a reality check to see if your business is on the right track.

·         Focus: Start-ups requires establishing a customer base and market presence along with tracking and conserving cash flow.

·         Money Sources: Owner, friends, family, suppliers, customers, or grants.

3. Growth Stage: Your business has made it through the toddler years and is now a child. Revenues and customers are increasing with many new opportunities and issues. Profits are strong, but competition is surfacing.

·         Challenge: The biggest challenge growth companies face is dealing with the constant range of issues bidding for more time and money. Effective management is required and a possible new business plan. Learn how to train and delegate to conquer this stage of development.

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

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

4. Established Stage: Your business has now matured into a thriving company with a place in the market and loyal customers. Sales growth is not explosive but manageable. Business life has become more routine.

·         Challenge: It is far too easy to rest on your laurels during this life stage. You have worked hard and have earned a rest but the marketplace is relentless and competitive. 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 and productivity. To compete in an established market, you will require better business practices along with automation and outsourcing to improve productivity.

·         Money Sources: Profits, banks, investors and government.

5. Expansion Stage: This life cycle is characterized by a new period of growth into new markets and distribution channels. This stage is often the choice of the small business owner to gain a larger market share and find new revenue and profit channels.

·         Challenge: Moving into new markets requires the planning and research of a seed or start-up stage business. Focus should be on businesses that complement your existing experience and capabilities. Moving into unrelated businesses can be disastrous.

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

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

6. Decline Stage: Changes in the economy, society, or market conditions can decrease sales and profits. This may quickly end many small companies.

·         Challenge: Businesses in the decline stage of the life cycle will be challenged with dropping sales, profits, and negative cash flow. The biggest issue is how long the business can support a negative cash flow. Ask is it time to move on to the final life cycle stage…exit.

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

·         Money Sources: Suppliers, customers, owners.

7. Exit Stage: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 been years of hard work to build the company, but what is its real value in the current market place. If you decide to close your business, the challenge is to deal with the financial and psychological aspects of a business loss.

·         Focus: Get a proper valuation on your company. Look at your business operations, management and competitive barriers to make the company worth more to the buyer. Set-up legal buy-sell agreements along with a business transition plan.

·         Money Sources: Find a business valuation partner. Consult with your accountant and financial advisors for the best tax strategy to sell or close-out down business.

Each stage of the business life cycle may not occur in chronological order. Some businesses will be “built to flip”; quickly going from start-up to exit. Others will choose to avoid expansion and stay in the established stage.

Whether your business is a glowing success or a dismal failure depends on your ability to adapt to it’s changing life cycles. What you focus on and overcome today will change in the future. Understanding where your business fits on life cycle will help you foresee upcoming challenges and make the best business decisions.

A mission statement defines an organization’s purpose. Market definitions of a business define the company’s mission in terms of satisfying the customer’s needs. Mission statements must be realistic and specific. Make the statement workable, designed to use as an analysis with you business plan. It must guide you along. For example, a mission statement asserting you want to be the best in the industry, producing the highest quality products at the lowest price, does not provide much value in helping you make tough decisions in the future. It is too generic and does not define your unique products/services and who your customers are. The mission statement must say something about what business you are in, your customers, and how you are positioning yourself in the marketplace.

A marketing approach to business begins with understanding you customers and their needs. It involves designing the entire company around fulfilling those needs, beginning with the product or service. Decisions that involve pricing, services, advertising and even sales are developed with the customer’s needs and desires.

Simplified, marketing starts with the customer. You work backwards from there.

Needs, Wants and Demand

Without a basic human need, there would not be a desire to purchase products or services. It is a “need” or a state of desire that drives marketing. Humans have many needs: physical needs, food and clothing; safety and social needs, shelter and a secure environment; the need to belong and feel loved; and individual needs that revolve around self-esteem and self-actualization, meaning we need to achieve some sort of status, such as a reward on the job and or self-development such as education. What is important to remember about needs is they are not created; they are part of who we are.

Wants describe the objects that will satisfy the needs. For example, two people are hungry. One wants a hamburger the other wants lobster. Marketers respond to these wants, which are triggered by needs, by providing a variety of products and services.

People want to be satisfied in different ways (hamburger vs. lobster) and will choose what products or services they buy based on their wants and resources. You are hungry (a need), you desire lobster (a want) but you can only afford a hamburger (demand).

What further complicates the process is that customers typically view products and services as a ‘bundle of benefits’ and choose those that give them best value (or bundle) for their money.

Why is this important for small business? Because marketing begins and ends with the customer, you must understand what drives customers to buy products in order to understand how you can best communicate your offerings.

Defining Products and Services

There are a multitude of choices for products in the marketplace. Products are generally thought of as tangible objects, e.g. computer, furnace. But, products are not limited to physical objects. Services, persons, places, organizations, activities and ideas are all “product” concepts. Basic marketing concepts apply to all.

Determining your Target Market?

A target market is a group of customers who have a similar need for a product or service, money to purchase the product or service, and willingness and ability to buy it. Typically markets are divided into two broad categories:

Consumers: Individuals who buy or acquire products or services for personal use or

consumption.

Businesses: Products and services purchased for use in the development of other products or

services, or for the purpose of reselling or renting them to others at a profit.

Tim Hortons

Tim Hortons

Total investment required: Up to US$50,000

Investment Range: $46,100 - $498,300

Industry: Coffee Franchise

Century 21

CENTURY 21 

Total investment required: Up to US$100,000

Investment Range: $12,000 - $523,000

Industry: Home Services Franchise

Subway

SUBWAY

Total investment required: Up to US$100,000

Investment Range: $86,000 - $250,000

Industry: Food Franchise / Food: Fast food Franchise

Home Instead

Home Instead Senior Care

Total investment required: Up to US$30,000

Investment Range: $35,100 - $47,500

Industry: Health Care Franchise / Senior Care Franchise

Quiznos

Quiznos Sub 

Total investment required: Up to US$250,000

Investment Range: $190,000 - $260,000

Industry: Food Franchise / Food: Fast food Franchise

Success in today’s complex economy requires a solid foundation of knowledge from which sound business decisions can be made. For most people considering or involved in creating a new business venture, this foundation is built from a formal business plan. Even if you believe your business does not require a formal plan, most business experts highly recommend that you conduct at least some preliminary research prior to committing yourself legally or financially to your business enterprise.  The strategic value of a business plan is derived from the information you collect and the knowledge you acquire during this process. That is, the exercise of preparing a business plan is critical in helping you gain an understanding of how your business venture will operate in the marketplace. Financial lenders and other potential investors and advisors will use your business plan as a tool to assess their level of support for your enterprise. As such, it is important to ensure your plan is as complete, reliable and timely as possible.  Although it may seem an intimidating or even an impossible task at first, a plan that does not capture the most relevant and appropriate data for your venture will only serve to undermine your efforts. This is not to say, however, that there will always be the kind of information available that your business plan requires, just that an effective business plan will make the best use of what is available at the time your plan is prepared. At present, there are a number of organizations, both government sponsored and private, operating in BC, who are prepared to assist you in the creation of your business.

What kind of information to look for?

Your business plan is designed for two purposes:

first, to demonstrate the feasibility of your business venture, and second, to serve as a strategic planning tool for your current and future business development. It ultimately must answer the following question: is there or will there be sufficient demand for the product or service you will supply?

Your research must demonstrate support for your belief there is a share for you in the marketplace.  It is important for you to gain an understanding of the general economic conditions that will affect your chosen business. This will require an examination of the industry your product or service falls into, and the market you will access.  All business within the general economy is described within at least one industry sector.  Once you have determined your sector you can undertake sector analysis. This will provide information ranging from the performance of this sector within the overall economy, as well as information on the kinds of products/services that are extracted, manufactured, imported/exported, etc. You can also research current industry conditions, including overall market analysis, forecasts and growth trends. This kind of information will give you a broad understanding of how your business may fit into the economy in general over time. It can also give you a sense of how developed or populated the business market might be that you are preparing to enter.  Once you have gained a general understanding it is time to focus more specifically on your market. This will include both business and clients. The business market you need to research includes business competitors and suppliers. You will need to know who your competitors are, their location, and their current market share. This will require information on their customer size, number of employees, the products they produce, their profitability, etc. You will need to know who your suppliers are, their location, how long they have been established, their distribution and other operating methods. An understanding of the business market will allow you to gain some perspective on how your business may or should develop, and how to manipulate the existing market to your best advantage.

The most critical information you will require concerns the potential clients of your business.  You will need to know who they are, where they are located, what they buy, and why they might utilize your products/services. To find who they are requires demographic (population counts, age/sex breakdown, languages, etc.) and socio-economic information (employment levels, income, occupation, education). You will want to know where these prospective clients live, work, and play, and what they buy now or have bought in the past. Finally, you need to research consumer characteristics such as spending habits, and other consumer profile data to help you understand why they might want your product.  With this information you will be able to develop a more precise picture of the target market you need to attract to support your business. Note that the clients for some businesses are not final consumers but other businesses.

Where to find information?

There are many federal and provincial programs available to help you establish commercial ventures at home or abroad. Some agencies, such as Business Development Canada, and the Canada-BC Business Service Centre, will offer active help in researching and preparing your business plan. Many agencies offer extensive information through their internet web sites (Industry Canada, Human Resources Development Canada) or by producing publications and maintaining libraries of information that can be accessed through inter-library loans (Canadian Tourism Commission, etc.). BC STATS maintains a reference library in Victoria as well as providing data through telephone, e-mail and web services. A table below lists some of the agencies and organizations that may contain the information you require to research your business.  You cannot reasonably expect to find your business plan written somewhere, just waiting to be unearthed. Some parts of the economy are well documented and tracked. To find these you will have to familiarize yourself with the jargon and coding schemes of statisticians and economists. However, many ideas fall outside the normal codification of the economy (or are lumped in with so many others that the information is without value for your specific need). In either case, through thoroughness or necessity, you should reach for other sources from which you can infer information.

Purchase a sample Business Plan 

<!- wp_paypal_payment ->

Unique designs for your business that best represent your profession and to put your fingerprint on the web Flexibility to include powerful business functions like online shopping, Client Management, Employee Intranet, Online Catalogs and much more…

• Sign-up for a leading-edge website that will increase profits, reduce costs, improve operational efficiencies and provide ongoing ROI (Return on Investment)
• Offer your customers a fully customized online shopping experience
• Be found by major search engines with an SEO-ready website 
• Easy to interpret website traffic and analysis reports that help you track your online business ROI, 24/7
• Make it simple for your customers to do business with you

As a business owner you might be facing challenges related to marketing, financials, office administration, business expansion, or just about anything. Please email us the biggest support challenge your company is facing and our experts will evaluate and suggest economical ways to solve it. If you have a unique challenge we will not only address it but will also feature it in our newsletter. (No charges for suggestions!)

Click Here to send in your Business Challenge

Establishing an Effective E‑Business

The purpose of this newsletter is to introduce you to a new era of business which you might be familiar with already. As a business owner you might be facing challenges related to marketing, financials, office administration, business expansion, or just about anything. In our company we intend to give you solutions that can help you overcome recent challenges from Marketing, Financials and general Administration of your business. I have kept in mind a quote from Cisco Systems that “One day, a business that is not on internet will not be in business.” (2001 Annual Report)