What Phase of the Business Cycle is Your Business In?

When you start your business, you often begin with excitement, hope, energy, and big ideas. You get going, pushing forward and giving everything you have to your business, and you may start to wonder, is there a normal give and take in business? Sometimes things are great, with steady profits and dependable staff, and other times you may feel like you’re just hanging on. 

Businesses go through phases: launch, growth, shake-out, maturity, and decline. Which phase of the cycle are you in?

Launch: We all know what phase this is – this is when you come into the game with enthusiasm, high hopes, ideals, and ideas. You have unique services and approaches to those services, and you have your basic marketing needs met (logo, website, social media presence). You start posting on social media often, watching videos, and taking online courses to get better. Sales are low but steady and are slowly increasing. According to the Corporate Finance Institute, “In fact, throughout the entire business life cycle, the profit cycle lags behind the sales cycle and creates a time delay between sales growth and profit growth.” 

Growth: Even though initially your profits didn’t match your sales due to start-up costs, you see your finances starting to level out, and then you see rapid growth in profits. You have a solid idea of your business’s brand and marketing strategy, and you know what social media platforms work for engaging your customers and which don’t. Sales are still higher than profits. 

Shake-Out: In this phase, you may start to feel a little exhausted. You’ve been putting everything you have into your business: time, energy, money, and health. You may start to feel a little stale or comfortable and wonder if you’re still doing the right things for your business. You may begin to get lazy on social media and stop posting as often or as well. According to Corporate Finance Institute, “Although sales continue to increase, profit starts to decrease in the shake-out phase. This growth in sales and decline in profit represents a significant increase in costs. Lastly, cash flow increases and exceeds profit.”

Maturity: You may feel the need to reinvent yourself in this phase! Update your logo and website, create new services or approaches, or join some business groups you normally might not have. Maybe you’ll attend some classes or talks on business to inspire yourself! You’ll feel the stagnant shake-out phase looming over you and notice your sales are lagging and profit margins thin. Instead of giving up, you decide to rebrand. 

Decline: After the shake-out, you may not feel inspired or want to rebrand. You see sales, profits, and desire to fight fade away and decide to walk away from the business. Sometimes, this is needed to regroup and decide what you want your next moves to be. Maybe this is a time for reflection and introspection to determine what you want to do next. 

Which phase are you in, and what will you do next for your business?

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