Oftentimes I get briefed on a project that will be to either grow market share or improve the company’s profitability through operational adjustments. One of the first tasks is to understand the business relative to the market and the direction in which they would like to grow. 

To do this, I favour the approach of performing a health check on the company. This isn’t an industry-standard term although you’d be able to hazard a guess as to what it may involve. I won’t go into too much detail about that at the minute as this piece of writing is to explore the different stages of the business lifecycle, but in a nutshell, we want to address the current state of the business.

So why is that important?

As businesses evolve patterns emerge. This may not be apparent from the inside but typically there are phases in which businesses develop and if fortunate, will advance to the next. 

Each of these different phases will affect all dimensions from operations through to sales and marketing and as a result, your growth strategy will be specific to both your positioning within the market and stage within the lifecycle.

What are these stages?

It is worth mentioning that you will find variations, but largely they fall under similar categories. Within this article I will classify these stages as:

• Start-up 
• Growth
• Maturity
• Decline

Well, that begs the question: what happens at each phase? Let’s explore.

Start-up

New to the market. During the start-up phase, the business is looking to find its position either within a new market or one that has already developed (The emerging vs emerged market debate). When cashflow is managed correctly, the start-up can face some of its best performing years in profit margin % as a result of low operating costs. 

Sales will often be slow, especially if the venture is bootstrapped with an organic growth plan, and will require a fair deal of elbow grease to build momentum. Resources will be limited and so might be funding. 

As far as brand positioning goes, it’s not the best strategy to attempt to outcompete or outbid some of the bigger players in the market (it’s an uphill battle against large finances). Instead, a turn towards low-hanging fruit or to find your niche is a better-advised strategy. From personal experience, I have found to focus on one vertical by refining your offering, developing it, working out the kinks and moving on to the next is advantageous. 

Growth

The growth phase of a business is reaching to the point of stability. The business has had some time taking their product/service to market, gained essential feedback and developed not just their offering but their value network accordingly. 

You may have heard “cash flow is king”, well in this regard it holds true. Within the growth phase, a business has the opportunity to expand. Expansion can fork in different directions, a company could invest back into its current infrastructure to improve its offering with the likes of specialised hires, the integration of new tech, product development or even embark on a brand refinement strategy which opens up the possibility to target new markets or new segments within existing markets.

Now clearly, the above requires resources and resources require capital. So what if your company has great growth numbers, yet there isn’t enough additional funding to explore the talked-about developments, does it mean you have to wait until you reach the required excess through profits? Fortunately, no. At this point, companies can seek investment and what would be required is for you to get your ducks in a row and plead your case, what you have at your advantage at this stage is this – investors are aware that the best time to invest in a business is at this exact phase, before maturity. High risks = high rewards, however, you want to justify the reasoning for investment and convince them this venture is secure.

Maturity

When a business reaches maturity, it has served years in the industry and has hopefully established a name for itself. The stability that comes with maturity faces a trade-off which is – you are less capable of taking risks in market exploration and oftentimes less nimble during market volatility than you would be in the preceding phases. Your organisation will have a lot of moving parts governed by systems and processes built together to form what is now a ‘mature’ business. 

So at this point how would a mature business look towards targeting new markets or even new segments within existing markets, after all each may require a new offering (or at least a new communication strategy to define the same offering in a different way), and resources to fulfil the needs of the new market or segment.

There are three main ways in which mature businesses can strategically go after new or emerging markets, a) they can form a separate entity outside of the business b) they can build a sub-division internally using existing and develop new resources or c) mergers and acquisitions. At a later date I will look to explore the three of these and expand on the pros and cons typically faced – so keep an eye out!

Decline

Lastly, decline. The word alone doesn’t sound too great does it… well, the average lifespan of a company is shortening, currently set at 17 years (taken from a report on the S&P 500 from Statista). There are of course the outliers where a company may last several decades, but these are rare. So what happens at the point of decline and what are the causes? Well for one rapidly changing markets, especially now with accelerating the advancement of tech, require different needs. 

Businesses reaching the point of maturity aren’t nimble enough to pivot in a new direction rapidly and in environments where there is a rapid shift in sentiment, wants and needs, emerging businesses within the growth phase or even start-up phase are well-positioned to infiltrate and penetrate with great succession (for more information on this topic I would highly recommend reading Clayton M Christensen’s work, or at least read the innovators dilemma). 

One of the crucial underlying top-level objectives all executives consider is to forecast where the future opportunities lie and position themselves accordingly. 

A great recent example is Facebook now turned Meta. Facebook has seen year-on-year growth when looking at the MAU (Monthly average user), for reference in ‘22 they had recorded its highest yet MAU at a staggering ~3 billion users, and there are no signs of it slowing down. 

So why has the company rebranded itself and transitioning its model towards the metaverse? Well for the gamble that the metaverse establishes itself and reaches it’s own point of maturity facebook will be uniquely positioned to leverage first-mover advantage and be a pioneering piece of tech in the space. The market opportunity forecast clearly appeals to Zuckerberg and could be the pivot in strategy that sees the company transition out of decline.

Closing comments

Understanding the stages within a business can give context to your positioning and should inform your strategy. I have worked with start-ups whose goal unknowingly lies a couple of phases ahead in the business’s evolution. 

In order to make ambitious targets achievable, the strategic roadmap should consider what tools we have at our disposal, what budgets and how we fit within the market relative to our stage within the business lifecycle. In one such case I stopped a client from spending ~50k a month in marketing spend fighting a goliath, the first point of action – stop battling. Think like a chess player and play the long game. 

This has been a top-level overview and I will look to expand on some of the discussion points within this piece but I believe for now this has been lengthy enough! 

If you have read all of this, thank you and leave a comment!