Just like many things in life, businesses go through multiple stages of development. Although each stage is unique, all are vital to the ongoing success of your business. It’s also important to remember that many businesses don’t start off thriving. In many cases a business has growing pains during the start-up phase
, yet they still go on to become successful and profitable.
Let's take a closer look at the major stages of business development:
Launch of a New Business
Opening a new business is exciting, but that excitement can be quickly washed away if you are not aware of everything that goes on behind the scenes. Preparing to open your doors to the public takes a lot of planning on many fronts. Some tasks you should consider when prepping to launch your business include:
- Apply for necessary business loans or other funding
- Analyze the competition in your target market
- Decide which products and/or services to offer
- Develop a marketing campaign to attract early customers
- If needed, create an organizational chart and hire employees
- Locate suppliers, negotiate wholesale prices, and obtain inventory for companies selling physical products
- Open a business bank account
One of the biggest reasons the launch process can take so long is that many people cannot afford to quit their current job
as they build up a new business. Some new business owners may even need to hold onto their day job after launching a business. This may be the case If you don’t have enough savings
to sustain yourself until your new business turns a profit.
Early Profitability and Growth
Because every company and its financial situation is unique, the start-up phase can vary in length. Once your revenues and expenses have somewhat stabilized and your business is consistently profitable, you’ve moved into the growth phase
of business development. In this phase:
- Your business has established itself in the community and with its customer base
- The demand for your products and services grows
- Your business practices and operations are stabilized and effective
Higher demand will likely bring both new opportunities and challenges. One of the most challenging aspects of early business growth is that many business owners have not yet acquired enough capital to keep up with the demand for their products and/or services. If you find yourself in this situation as a business owner, meeting with a financial advisor
would be a wise move. They can advise what the best choice would be, and possibly suggest options you were not aware of. The growth and expansion
phase can be difficult for business owners, especially if you reach this phase quicker than expected.
Business Maturity or Business Failure
People who have poured their time and resources into launching and nurturing a new business often see a reward at the business maturity stage if they have managed their company and its finances well. Signs of business maturity include:
- Financial stability
- Your business is well-respected and known in your industry or community
- The business does not demand as much of your constant time and attention as it did during the initial start-up phase
Unfortunately, not all businesses reach the point of maturity. Sometimes businesses fail before they can mature. Common reasons for a small business failure
include lack of available funding, poor management, industry changes, unsuccessful marketing, or a weak business model. The most obvious signs of pending business failure include declining sales and decreased profits.
Business Development Strategy
The term business development strategy
describes a process where a business owner identifies new opportunities. The business must then follow through on generating sales and acquiring new customers. A business development strategy
should describe how your business will accomplish several small specific goals to reach your larger goal of business maturity and maximum profitability.
Business development is not quite the same as marketing or sales. While those functions are narrow and specific, business development is broader and merges a company’s procedures and processes with its pre-determined goals. The overarching goal of creating a business development strategy is to obtain valuable clients and customers who trust your business to deliver the products and services they need. Here are several proven business development strategies used by companies of all sizes:
Being aware of the various stages of business development and having an idea of what each phase might look like can help ease the stress of managing your business. No matter what stage your business is in, BankFive is here to help. If you’re a business owner in Massachusetts or Rhode Island and would like some guidance, don’t hesitate to reach out
to our dedicated Business Banking Team