There are several models and stages of development in each business before it is turned into a well-established business; each Business have life cycles that go through at some position in the course of its full life. Businesses are like an organism which passes through several biological stages of development and decline for a full single life cycle, a business also passes several initial phases prior to becoming a recognized entity. A business just like the existing organism, do not conclude its cycle at full-grown stage, after attainment its optimal phase of development and growth, each business passes through a phase of stagnancy then a decline. Every stage that characterizes the life cycle of a business from commencement to decline these are jointly acknowledged as the phases of business development. The five major stages of business, which are generally recognized globally are; the conception of business idea, materialization of the concept, the growth of the business, establishment and expansion, and lastly maturity and decline of the business (Reilly & Milikin, 1996)
The stages are significant to the healthy development of every business and thus it is almost impractical for the business to skip any stage and advance to the next one. The initial stage of business development is the conception of the idea, the business idea is conceived in the mind of entrepreneur, and then the plan is developed. There is no business project devoid of an idea conceived in the mind of the entrepreneur. Similarly, the business idea is the seed, which, when propagated in capital and nurtured with entrepreneurship and labor, develops into a munificent tree the economic outcomes of which are distributed among the stakeholders (Reilly & Milikin, 1996).
On conceiving a business idea, several features of the economic background are considered such as the level of competition, accessibility of resources, specific industry, customers and market among other characteristics (Hisrich, Peters, & Shepherd, 2010). In this stage of business development, there is also a financial approximates, they assist in getting information on; the amount of earnings anticipated, the essential level of investment, and the ratio between earnings and investments. Examples of organization in this stage include all those business, which are commencing their operations such as Apple computer Inc.
The second stage of Business development is the materialization of the concept; this is basically the startup stage. In this phase, every essential measure for converting the envisioned idea of business into reality. All lawful formalities like incorporation, registration, depending on the of business enterprise, for example, the formalities for startup in partnership business and joint stock companies are different. The legal formalities in business offer a legal status to the business entity and thus formalize its venture and arrival in the market (Rainey, 2006). At this phase, prior to going for the inauguration legalities, provisions ought to be made for attaining factors of production, which includes; labor, capital and land, immediately after legal business instigation, their functional connections ought to be commenced. Generally, at the time of validation of its entity, a business should be completely ready to start production immediately after the legalization formalities are concluded. Examples of such organization are automobile companies.
Growth of the business is the third stage of development, in this stage of its life, businesses undergoes growth of its activities and enrichment of its consumer base. Its services and products are getting recognition in the market, and consumers are patronizing them in growing figures. Profit proceeds also tend to rise in this stage (Rainey, 2006). The business also necessitates infusion of supplementary capital to purchase capital equipment to enhance production, to institute supplementary service network or acquire more goods for the business. In this growth phase, the management of the business research on means and ways to obtain the greatest achievable number of consumers. It examines the industry developments and the tactics of its competitors. It seeks to incorporate some differentiating features in the business products and services, to induce clientele to make a purchase.
The entrepreneur employs aggressive marketing and advertising methods to attract more customers. As the level of production of the business enlarges, the business will obtain what is technically and economically known to be economies of scale. Perhaps, this takes place when optimum use of storage, transportation and production facilities occurs with an augment in the level of production. This will lessen the general cost of production and thus business will be capable of selling its products to consumers at a cheaper price. Most banking organization are in this stage, banks like Barclays bank are in this phase.
The fourth stage of Business development is the establishment and expansion stage, the business commence making profits, and at the same time enjoys economies of scale, the management also put more efforts to obtaining much of market share. At this level, the presence of the business is felt by the customer in the market and thus enhances its brand and name. On becoming a key player in its local market, a recognized business should institute the search for expansion opportunities (Reilly & Milikin, 1996). This will assist on periods when the business goes on the decline in its local market since it can still create profits alternative markets where its income centers are recognized. In addition, spreading out the business at this stage is the best thing to do as the institution of its brand name offers it a positive influence even in new markets. Examples of such business in this stage are the communication companies like zain, safaricom, Yu among others.
The fifth stage is maturity and decline, in this stage the business is a recognized player in the market in maturity. It has created a loyal consumer base and its cash flows steadied. The business has all its plans, systems and practices in place. External connections, like the channel of distribution are firmly established in this stage. By now, the business also has lesser problems in allocating funds for its operations. In this stage, entrepreneur may think of diversifying and expanding the business (Hisrich, Peters, & Shepherd, 2010). On the other hand, each business has a certain period of which it grows. In the decline stage, the business succumbs to challenges associated with business operations. There is massive pressure from the marketplace that the business cannot fight.
The clientele may have changed to superior and more enhanced versions of similar product from competitors. In the face of rising rivalry and the lower prices given by the new opponents, the business undergoes a decline in operation cost and competitiveness (Rainey, 2006). The business faces a huge financial crisis and losses are increasing daily. At this stage, the business has two alternatives: either it fades out, or it changes to newer lines of business operations and commence afresh. Example of the business in this stage is Performance Point Corporation in Toronto.
Hisrich, R.D., Peters, M.P., & Shepherd, D.A. (2010). Entrepreneurship (8th ed.). New York, NY:
McGraw-Hill Irwin
Rainey, D. (2006). Sustainable Business Development: Inventing the Future through Strategy,
Innovation, and Leadership. Cambridge: Cambridge Press
Reilly, M.D. & Milikin, N.L. (1996, August). Starting a small business: The feasibility analysis.
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