Business Life Cycle Explained In Five Stages


Let’s examine business life cycle and business process re-engineering.

The business life cycle is commonly known as the progression of a business with a timeline after you have undergone the company incorporation. It may be divided into five distinct stages: Launch, growth, shake-out, maturity, and decline.

Launch: A company starts to operate as a business commonly by launching a new product for a specific market or niche market. In the launch phase, sales are rare and slowly. Entrepreneurs often would hope the sales are going to increase gradually and steadily over time. At this stage, revenue is often insufficient or close to nothing. With the relatively high initial startup cost, a business may be very prone to incur losses. The profit cycle lags at this point lags behind the sale cycle. This creates time delay from sales growth to profit growth. Marketing may be a focus at this stage to the target consumer segments.

Growth: Your company experiences rapid sales growth. Your business starts seeing profit when it has passed the break-even point. In fact, the profit cycle still lags behind the sale cycle.

Shake-out: Sales still continue to grow even it is now at a slower rate. One possible reason is that the product for the specific market may have been saturated. Growth in sales but decline in profit may represent a significant increase in turnover cost of the operations.

Maturity: Sales starts to slow down when the market matures.

Decline: At this final stage, everything declines (in the business life cycle) including sales, profit, cash flow, etc.

A process is a collection of activities over time. From start to finish, the process is identified by one or more types of input and output that can create values to both customers and corporate shareholders.

Business process re-engineering (commonly known as BPR) is a powerful approach to bring in extraordinary improvements for the output of a corporate. BPR focuses on the optimization of your business process. For example, the performance improvement in speed, cost, shareholder values, customer satisfaction, product quality, and more are all counted towards the optimization of your business process.

One aspect is that at some stages, business process re-engineering should be utilized in an organization to improve the satisfaction of the customers. This gives an edge to the business when competing head-to-head with major competitors in the same industry.

An example is a computer service processes in the computer center. BPR may be implemented in four stages including the discovery of the current process, the analysis of current process, the possible redesign process, and the application of a new process.

One successful process optimization is when BPR is able to reduce the actual number of process steps.