July 1, 2014 in Articles
Businesses evolve just like humans; they progress from birth to death with life achievements along the way. As an entrepreneur, your small business is always in one of the life cycle phases. Whether you’re just thinking of a business idea, launching a new business, going to the next level with an existing business, or contemplating selling your business, the Alaska SBDC offers an array of options to assist you on your journey. Knowing where you are in the business life cycle will help your business thrive.
You are thinking about owning your own business, researching the potential of your idea. and looking for the resources to assist you in turning your idea into reality. During the think phase the Alaska SBDC will assist you in organizing your thoughts and vision into a viable business plan through our tools and workshops. We have the resources and expertise to help you to realize the entrepreneurial dream.
How do you develop your idea into something that may turn into a business model? Ask yourself the following questions: 1) what is your idea or your niche to stand out from competition? 2) Is the idea feasible or do you have the skills and resources to operate? 3) Who will be your market to sell to versus the competition?
You are in the “start-up” or “commitment” business stage (typically this means you have been open 2-3 years). The business has in place working capital, all the necessary operating documents, a working relationship with a bank, has generated sales, developed a customer base and is managing daily business operations. As an owner, you are building assets,and have a solid financial plan, competent personnel and a working marketing plan.
The next stage in the business life cycle is the grow stage. Typically, this means you have been in business more than 3 years and your increasing both your volume of sales and profits. In this phase you are planning to grow at a sustainable rate, developing your employee ‘A’ team, analyzing efficiencies, strategizing and setting goals to increase market share, and working on your financial plan to raise capital.
Fundamental changes in your business model are often inevitable…you need to plan for them. The reinvent stage is different for every small business owner. In order to recognize it, take time to understand your market, research new opportunities and think globally. Ask yourself if you should expand or remove existing products or services and make sure to do it at the right time. Analyze your financials and plan ahead!
Eventually a time comes to think about exiting the business. Do you: sell, merge, liquidate, divest, segment, transition, file for bankruptcy, or just close the business? Take the time to evaluate what your business is worth and what the best business valuation formula is to determine it. How much “good will” do you have? What are the legal and tax considerations to sell the business? Who will you consult during this transition?
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Last modified: May 20, 2014