What Stage Is Your Business In?
A business will go through various stages of the business life cycle. As a business grows its needs will change. From operations and financial to marketing and sales, strategies must change and adapt to meet the requirements of the different stages of business. Determining what stage your business is in can help you make the right decisions when planning your marketing efforts.
An example of this can be seen in normal life: Parenting strategies that work for toddlers will not work for teenagers.
Large brands like Apple, Coke, GE may be at a spot where they can focus on a more encompassing branding effort. While a small business may need to focus on strategies that generate immediate revenue.
The 7 Stages of Business:
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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.
Marketing: In this stage of business you may not yet be marketing for sales. The efforts for marketing include coordinating marketing research to understand how marketing and sales fits into the dynamics of your operations. Understanding the potential costs of marketing, how your competitors are marketing their business and estimating how the numbers may work can help you ensure you’re setting yourself up for success. A company that doesn’t properly budget for marketing their business may have real challenges to grow their business.
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 startup life cycle stage, it is likely you have underestimated money needs and overestimated 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: Startups require establishing a customer base and market presence along with tracking and conserving cash flow.
Marketing: Depending on your resources your marketing strategies may vary a bit. If you have little financial resources you may need to try some grassroots marketing strategies. If you do have some funds, you may be able to afford executing some additional marketing strategies.
At Rock My Image, we recommend following the 3 Pillars of Marketing approach here; Stage 1: Branding, Stage 2: Tools & Stage 3: Marketing.
Key Note: While it may be tempting to start marketing your business right away, investing money in getting your Branding professionally developed and getting some initial Tools to work with is highly recommended.
When you’re ready to start marketing, your marketing strategies may vary greatly. For most businesses that are starting up, it will be very important to focus on marketing strategies that are focused on generating immediate revenue.
Types of Marketing that focus on Generating Immediate Revenue:
- Product Launch
- Direct Response
- Strategic Partners
- Purchase Your Customers
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 possibly, a 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.
Marketing: Businesses looking to grow may need to widen their scope and visibility a bit. Trying new marketing strategies that may not offer the immediate return but are aimed at growing the company through time. This can be a bit tricky to coordinate because you may need to invest for some time before you see the return on your investment and you’ll need to budget for this.
By combining short term and long term marketing strategies together you can leverage the best of both worlds by generating the immediate return while at the same time planning for long term growth.
This strategy development can be looked at similarly to financial planning. When developing a financial plan for one’s life and retirement it is important to have a diverse portfolio. A portfolio that is flexible and can meet short term and long term needs.
Having your money in a liquid investment is great for short term flexibility. If you need the money for unexpected expenses it is available for you. Unfortunately most investments that have very little risk also have very little gain. Very little gain is not the best strategy for long term growth planning. If you’re looking to grow long-term it can work to your benefit to take some risk to get more gain betting on better return in the long run. While more gain is what we’re after, a good financial advisor will point out that putting all your eggs in one basket is too risky as there high risk that comes with high returns could put you in a bind in the short run.
In marketing, the same thought process applies: Having a diverse marketing strategy that focuses on short-term and long-term returns is advised to build a strong marketing presence through time.
Types of Marketing that focus on Cummulative Growth through time:
- Content Marketing
- Search Engine Optimization
- Social Media
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.
A business that has made it this far has many things going for it. They are an established company and most likely have made a name for themselves so they don’t really have to fight the same uphill battle in marketing that they did on their way up. Beginning brands need to establish visibility and credibility in their marketing to earn the trust of prospective new customers. They need to earn the trust of their customers and persuade them to do business with them.
Established companies typically have a track record of their prior marketing efforts and should have a record or a good sense of what marketing strategies have worked and what are effective.
The main focus here is to keep the Eye of the Tiger and remain relevant and keep your market share.
The competition is hungry, extremely competitive and may have an edge to them for being new. Smaller companies may also have an advantage for being able to be more flexible and try new things.
There are countless examples of companies who did not keep relevant and competitive and ended up being crushed by new competitors in the industry including: Circuit City, Radio Shack, Sears, Blockbuster, JCPenney, Gillette, Kodak, McDonalds, AOL to name a few. We all know of many other examples. Companies that grew to be giants that seemed once untouchable falling down to the depths due to change in market and loss of business to competition.
Main marketing focuses here:
- Market Research
- Testing, Measuring & Optimizing
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 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.
When a company is looking to expand to an even higher level, that’s just what they’ll need to do, expand. Expand not only in sales but also into other markets. Two main types of expansion are Geographic or New Target. Once a business has squeezed a market for more than their fair share they will need to branch out into new markets or verticals to expand their growth capabilities.
Marketing focuses for an Expanding company:
- More Research
- New product/service development
- Product diversification
- New market & new offerings
- Target expansion
Year over year sales and profits tend to be stable, however competition remains fierce. Eventually sales start to fall off and a decision is needed whether to expand or exit the company.
- Challenge: Businesses in the mature 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 back to the expansion stage or 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 mature stage.
Marketing focuses for a Matured company:
- More Research
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. If you decide to franchise your business, that will required it’s own marketing strategy as selling franchises of a business turns into a business of it’s own.
- 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.
Marketing focuses for an Exiting Company:
- Reporting & Analysis
- Documentation & Case Studies
- Strategies for Marketing Franchises
Determine your current stage of business and note the areas of importance your business needs to focus on.