The Business Lifecycle: An Overview

What business stage are you in? And, more importantly, what business stage are your customers and clients in?

I’ve been working on this model for a while now in the Forge and out in the field with my clients and friends, but it’s time to share it with you. If you’ve read Martha Beck’s Finding Your Own North Star, you’ll see many parallels. I had been incubating the model for awhile and her framework crystallized it into something more concrete.

There are five distinct stages in the Business LifeCycle. I’ll start with a picture and then move to a brief discussion:

1. Stage 0 – The Aspirational Stage. People in this stage want to start a business and like the idea of it, but they haven’t committed to becoming entrepreneurs.
2. Stage 1 – The Entry Stage. These are people who have decided to start a business and are actively building their market and offers. They may not have many or any customers, but they’re no longer sitting on the fence about being an entrepreneur.
3. Stage 2 – The Growth Stage. Entrepreneurs in the growth stage have a business plan and are growing their revenue streams with new clients and customers. They aren’t booked solid and running at full capacity yet, but there’s no longer a question that they have a viable business model.
4. Stage 3 – The Crucible Stage. Entrepreneurs in this growth stage are in the delightfully frustrating point in which they’re booked solid and working at full steam, but the demand for their goods and services outstrips their ability to meet it. Something has to give, but many times they don’t want to let go of the business activities that have gotten them to this stage.
5. Stage 4 – The Cruise Stage. Entrepreneurs in this growth stage have figured out what it was that kept them bottlenecked and constricted at Stage 3 and are running full steam ahead. They have the necessary team and support that allows them to focus on their core competencies, or, if they don’t, they have a specific plan in place to get those resources.

The reason this is a lifecycle is because many entrepreneurs get to Stage 4 and do one of three things:

• Implement a new business model or brand dynamic. For instance, they may write a book and become a public speaker, in which case they have to start all over again because the biz path for a public speaker is dramatically different than their old path. Or they might create a franchise of their business model or ideas which has different challenges that come with the increased revenue.
• Lose a critical resource in their current business. Perhaps a competitor unexpectedly outcompetes them or their Chief Operations Officer dies or leaves the company. This may not bump them down to Stage 0 or 1, but it definitely might hamper their ability to deliver solutions to their customers or clients. (Think of what happened to Yahoo when Google hit the scene.)
• Sell the current business only to start another. Some entrepreneurs are serial entrepreneurs by choice, seeing building sellable businesses as a great business model. Others are serial entrepreneurs by accident – they sell their business for whatever reason only to find themselves unexpectedly bored, excited, or ready to do it again.

The model works well in many situation, but there are a couple of things that makes this model a little more difficult to use.

Where This Model Gets Tricky

Some serial entrepreneurs that are running multiple businesses simultaneously have a hard time placing themselves in a stage because they have businesses at different levels of growth. In their case, it’s best to default to their own capacity when deciding what they need to enable more simultaneous business growth. That said, their individual businesses may have needs based on the stages they’re in that are different than what the entrepreneurs need. For instance, a new business venture may need its brand to be established, but that brand is distinct from the brand of the entrepreneur. The further away the business brand is from the entrepreneur’s personal brand, the more she’ll have to separate what the business needs for growth versus what she needs for growth.

Still other people have a problem separating their position on their holistic personal lifecycle from their entrepreneurial lifecycle. You see this when entrepreneurs develop a lot of experience, confidence, and skills as an employee and then become entrepreneurs. While you can map employee experience over to entrepreneurial experience, it can be tricky to do – many experienced former-employees spend a lot of time beating themselves up for having to learn so many of the entrepreneurial lessons that they thought they would know already. (If this is you, it’s okay that you are where you are. You couldn’t have seen the reality that you’re living now, so the sooner you embrace the learning opportunity and challenges, the easier it’ll be to build some momentum and to start flourishing.)

That’s All For Today, But There’s More Coming…

I’ll be fleshing this model out in the future, but I wanted to put the overview on the board so you can start thinking about it. I’ll leave you with some additional food for thought in the form of a picture:

Have fun chewing on that!