There are a few pathways a business can take over the course of its life. How the organisation ‘ends-up’ can significantly determine decisions made throughout the journey of the organisation. Equally, where you are in the ‘business cycle’ can influence decisions made.
Balancing both is important to the organisation’s success, offering stakeholders and owners significant returns on effort and investment – whether short or long term.
If the organisation is able to determine its pathway early on in the journey it can assist in how the organisation is developed and managed. When an organisation decides to;
Layered with the phase of the business cycle the organisation finds themselves in will influence the timeline in which you can execute the underlying journey (to build and keep, build and sell, build and list on the stock exchange).
It is core for business success to have a series of strategies and operational plans to get you through each phase.
Overall strategy will keep you focused on the end game (what ever that looks like)
Business Cycle ‘Sub-strategies’ will help navigate you through each phase to stay on track and identify what is needed to successfully get to the next phase.
Operational plans for each strategy and ‘sub-strategy’ will ensure that your day-to-day activities reflect and represent the strategies so the leadership team and the staff can make decisions based on the best outcome for the organisation.
No matter where you are in the business journey or what you want the outcome to be, staying focused and applying strategic thinking is the path to success.
Your business strategy is designed to outline what the organisation is about and what it is doing. It includes much of the ‘WHAT’ of an organisation’s existence. At any stage of development, keep track of your:
Taking a moment to assess the organisation’s strategy through the lens of; where you want the journey to end (under your rein) and where the organisation is in the business cycle will provide a renewed perspective on how to progress in the foundational business operations.
At this stage, the development of the business strategy should focus on the basics.
What are the short-term and long-term goals? Where will the organisation be in two months, six months, and a year from now?
Establish what the organisation stands for. Of course, all businesses aim to be profitable and successful, but true successes have an ethos.
When people hear the name of the organisation, what do you want them to think or feel?
What are the strengths and weaknesses of the organisation? What are the strengths and weaknesses of the leadership team (Directors or Managers)? Once you know these, you know what to leverage, and where to be cautious.
Determine what opportunities and threats are out there. Is there a particular time when your goods or services are in high demand? Are there barriers or is there heavy competition in your field?
What do you need to do for the organisation to enhance operations?
What actions and tasks need to be undertaken?
Working this out, step-by-step is the way to get things rolling efficiently.
Are you hiring staff for organisational growth or to offload tasks?
What cost efficient measures can you take, eg. outsourcing for a short time period?
Are you familiar with the organisation’s tax obligations? Are you keeping on top of them?
You will have to check in on how the organisation is going, so decide how you are going to measure your success. Keeping a record of the debits and credits, sales and losses is fundamental, but also consider things like market share, public image/reputation and customer/client engagement.
The MVP is operational, and the organisation is establishing commerciality. This phase is where you begin building brand recognition, establish creditability of product/service delivery in market. Make time to know the market intimately.
This is where you refine your marketing strategy.
This is where you see the organisation beginning to turn a profit. The strategy has kept you in good stead navigating the start-up path, and it has now led you to success. At this stage you know what your goals are (seeing as you have been achieving them), you know who you are as a business, and you have a steady customer base. So where do you go from here?
The growth phase is where you branch out, scale your current capabilities and diversify the service / product offer (if relevant).
There are two key pathways to grow during the ‘Growth Phase’.
The growth phase can be represented and executed by any number of methods, be it:
- Expanding into new markets
- Finding new audiences
- Offering additional products/services
Growing can be challenging, time consuming and a drain on the leadership team… not to mention the workers.
Putting together a plan for this phase of the organisation business cycle can provide guidance, direction and support throughout this phase to come out on top for the next phase, Maturity.
Collecting the right information at the beginning is the toughest step (and even that doesn’t have to be hard). Once this is done, the rest will naturally fall into place.
The maturity phase will see growth slow a bit. This is natural for this phase of the business cycle, it gives ‘grace time’ to recalibrate and review the previous phases to see how well the organisation has faired to-date and how true it has remained to the overall strategy.
Hopefully the organisation has maximised opportunities and either scaled to claim a substantial market share or diversified services / products to engage a broader market. If so, this would mean sales have naturally peaked, leaving three realistic pathways to consider for this business phase:
- do you continue to improve and innovate; moving with the market and audience desires broadening the capability of the organisation?
- do you maintain the current status quo and double down on building a loyal and committed community?
- do you leave it as is with the risk of seeing the organisation start to decline over 24-36 months?
The above answer might change based on what the earlier decision was in relation to the organisation’s endgame. Are you going to sell? Are you going to keep? Are you going to list?
If you were going to sell, you might leave as is and focus on seeking a business broker.
If you were going to keep, you might continue to improve and innovate.
If you were going to list, you might maintain status quo and engage a team to support preparations for an IPO listing.
During maturity phase, if you unsuccessfully exhaust all options to find alternative revenue streams, increase sales growth, or diversifying to grow, improve and innovate is not necessarily a ‘death sentence’ for the organisation. When in doubt, if the future of the organisation is unknown, your customer base is loyal and you have a firm hold of the market, maintaining the organisation and keeping it profitable would be the main goal.
With this in mind, it is crucial at this stage that you plan ahead and strategise for the chance of a decline, if not done so already. Whilst you are towards the end of the business cycle, there are external factors that can influence the progress, timeframes and even activity you can conduct within the business. Yes, we are talking about the ‘Economic Cycle’.
If the organisation does start to see a decline, this will usually take the form in sales decrease and loss of profitability. Knowing there is the possibility of the decline stage means you can create contingency plans that will allow you to walk away from the business, or save it, before it loses profitability.
Evaluate the pathway your organisation can, or should, take.
Is the organisation’s endgame; build to keep, build to sell, or build to list.
Review and assess where you are in the business cycle. This helps with long and short term decisions, if you know where the organisation is in the business journey you are able to effectively determine what you should be focusing on and respond quickly to market.
The business journey can be a combination of
You can also find more information on this topic to help get the house in order.
|‘When should I secure business expansion funding?’, a worksheet to help you figure out where your business is on the road to growth.|
|‘Ways Your Business Can Quickly THRIVE & SUCCEED’, a worksheet guide business growth and success.|
|‘Planning The Path To Diversification’, a worksheet to support how to diversify with ease.|
|‘Taking a Holistic Look at your Organisation’, a worksheet to support how to diversify with ease.|
|‘Capacity Building Your Organisation’, a worksheet to offer assistance in navigating the challenges faced with capacity building.|
|‘Strategy vs Operations: How You Can Manage Both Simultaneously’, a worksheet with tips in how to work IN the organisation and ON the organisation.|
Test this theory:
- Step 1: Grab a pen and paper.
Draw a horizontal line (timeline) with 4 points at even intervals on the line (starting at the beginning, 2 points in the middle and one at the end).
On the first point write strategy, second – start up, third – growth, then fourth – maturity.
Figure out what phase of the business cycle you are in by circling the position on the timeline you believe the organisation is currently.
- Step 2: Underneath step 1, write 3 phrases side by side.
Build to sell, Build to keep, Build to list
Which one is the organisation? Circle the most relevant answer.
- Step 3: Underneath step 2, draw another a horizontal line (timeline) with 4 points at even intervals on the line (starting at the beginning, 2 points in the middle and one at the end).On the first point write Growth, second – Peak, third – Decline, then fourth – Dip.
Highlight the phase of the economic cycle you believe we are currently in by circling the position on the timeline.
- Step 4: Take a look at all 3 steps.Make a brief assessment on where the organisation is overall.Write down 3 things you can do so all 3 steps are in alignment – for example, the business phase should match with the timeframe desired in reaching maturity to be so the endgame can be executed, ensuring the timeframe matches the economic cycle as this can (in most instances) slow down the timeline – at best – or see the decline of the organisation rapidly – at worst.