The Evolution of an Enduring Business

Contrary to what some business leaders think, successful organizations were never meant to be stationary. They were designed to be ever changing, ever increasing and ever evolving. In fact, the natural progression of any business requires that it go through certain stages called, the business life cycle.

The stages of the business life cycle are essentially, Startup, Growth, Expansion and Decline. The startup stage is the fun, idealistic phase when business owners work hard and learn valuable lessons. The growth stage is exciting because the business begins to show a marginal profit. The expansion stage is when the business owner adds resources; be it people, products, or equipment, to stay ahead of the demand. The next stage of the business life cycle is decline. Decline does not equal death; however it does epitomize some level of loss or reduction that is not easily remedied.

A business can move between the stages of the business life cycle, or it can linger in one stage. For a well run organization with forward thinking management and sufficient internal controls, the expansion stage can be the longest sustained stage. However, more often than not, businesses get stuck in the growth stage and, as the business begins to plateau, it hovers between growth and decline, completely missing the expansion stage.

Forward thinking business leaders are not afraid of change. They are always evaluating the organization to determine how it can be better tomorrow than it is today. Here are a few areas business leaders can use to evaluate an organization and keep it progressing on the business life cycle.

Productivity – Has the organization leveraged efficiencies in product production or service? Is there room for the company to produce more, increase customers or offer new products without sacrificing service, turnaround or employee retention?

Goals – Is the organization setting challenging goals? Do the goals of each department easily fit into the goals of the overall organization? Are they measurable with realistic timetables for achievement?

Objectives – Does the company have reasonable objectives that, when achieved, lead to the accomplishment of stated goals? Does each objective have action steps that provide a roadmap for success?

Benchmarks – Has the organization set benchmarks as an indication that it is moving in the right direction? Do the benchmarks show steady movement towards the achievement of goals? 

Workload Distribution – Does the organization have the right people in the right job? Is there a need to bring on additional staff? Are the managers or employees headed towards burnout? Note, working long hours and sacrificing may be normal during the early years of a business, but if it is still the “norm” five or ten years later, this could be an indication that something in the management of that business is amiss.

Employee Retention – Is the company able to retain good employees? If not, why? What are the company’s practices for finding, screening and hiring employees? Employee turnover cost time, money and resources. It is much less expensive to value and retain good employees than to hire and train new ones.

Note it is also important to mention that profit is not an indication of sustained growth or expansion: but rather an outcome of it.

  Every business currently in operation is navigating through the business life cycle. A company can move between these stages several times during its existence. Neither growth nor decline is permanent, because business was meant to change. Yet, without proper planning and implementation, organizations can find themselves changing very rapidly from growth or expansion to decline.