Let’s talk life cycle, specifically your business’s life cycle, and how to get the most out of each stage while also extending your business’s lifespan. Many of you probably are unaware of the business life cycle.
I first heard of this concept while reading the E-myth by Michael Gerber. The book is filled with many great ideas, and one of those is thinking about your business as if it has life stages. He expresses there are three different stages:
I like to add a fourth business stage, Retirement.
We’ll talk a little about each stage, the characteristics, and how understanding where you are can help expand your business’ lifespan.
Geber would say you are in the technician’s phase. At this point, the relationship between the business and the owner is that of a parent and a new baby. There is an impenetrable bond that is necessary to determine the path your business will follow.
Your business is fragile, small, and mostly reliant on you to keep it alive. You spend long hours confused, doing everything. You’re intensely focused on survival and living day by day. Dropping the metaphor for a minute, here some characteristics of an infancy business:
- You have yet to hit your breakeven point.
- The owner and business are one and the same; if you disappear, so does your business.
The key is to know your business must grow by finding a way to replace your technician tasks. You cannot stay in this stage forever.
In this stage, you begin to become the manager; you need to start bringing your support staff together to delegate to and allow growth to happen. The first line of defense is your technical person, as they need to replace you or exceed the experience you brought.
This is the point in every business when business explodes and becomes chaotic. This is referred to as growing pains. It’s a good problem to have, but a problem nonetheless. You are often faced with many choices:
- Is it time to invest in bringing in the staff to grow your business or remain small
- Is it time to give responsibilities to your subordinates, trust them to care for your baby like you?
- Is it time to make long-term plans?
- Am I ready to embrace the change?
- What do I want my business to look like?
To progress to the next stage, you must move from the world of tactics to strategies. Start creating plans and commit to them. You need to find your inner business owner.
According to Gerber, the last cycle is maturity, though this doesn’t mean the end of your business. Your passion for growth must continue in order for your business to succeed. You need to keep an entrepreneurial perspective to push your business forward.
You need to become the business owner; you need to complete the transition from the everyday tasks to the long-term strategy. You need to establish the policies and procedures to have your managers manage, and your technicians build.
What does this phase look like? Well, you might have a picture of you kicking your feet up behind the desk, reviling in your success. This might be true for you. What it really is freedom; to choose how you use your time.
The final stage of life which Gerber failed to acknowledge is retirement. This the stage that most people don’t want to talk about. In this stage, you embrace that your business might no last forever, and you choose what to do with it.
- Should I pass the business on to my children or a worth employee?
- Should I sell the business?
- Should I take the business public?
This is your exit strategy; every great business has an exit strategy or more than one. It is essential to have this conversation with yourself and your team and make these decisions before you a forced to.
As you can see, the life cycle of a business is complicated. But knowing where you are is the first step to getting the outcome you want. I hope that this blog has given you some language to thinking about where your business is at.
If you’re having trouble putting together your business life cycles and figuring out which of the critical roles you fit into, feel free to email me, and I will be happy to chat with you.
If this was helpful to you please leave a comment below or share it with someone you feel will benefit.