There are six phases in the business cycle. Which phase is the business currently in and what needs to be done to continue maintaining a sustainable business?

Phase 1 is the introduction, market research is completed and the business plan is ready to be implemented. Capital is in place and the business is open and trading. It is one of survival, committing resources to promote the business and building and retaining customers. Best practice suggests using the business plan to check progress against planned strategies.

Phase 2 is all about growth. Every aspect of the business is under closer scrutiny. Check how effective the marketing strategies are going, business systems are evolving and changing in line with growth, monitoring financials including sales and profit growth. Resources are implemented in line with growth targets. The business is seeking new opportunities.

Phase 3 is the maturity phase. The business is experiencing constant sales and constant profits. This phase is also referred to as the comfort or complacency phase. Causes for this are many such as new competition, new products and services, market shifts in consumer demand, social and cultural changes and the owner’s objectives. The maturity phase still needs to be monitored regularly.        

Phase 4 is the extension phase whereby a businesses products and services have an extended life. Fashion and music are good examples of this.

Phase 5 is the decline phase. The business is experiencing a decline in profits; competition is more prevalent, staff problems, cutting costs, and generally turning into another statistic.    

Phase 6 is R.I.P. So why did this happen? There are numerous reasons why the business is dead; Lack of business skills and knowledge, personal extravagance, no markets for products and services, cash flow problems, no plans or goals, business running reactively, partnership problems and failure to seek professional advice( to name a few).