Business Life Cycle

Topics: Stock exchange, Steady state, Cost-of-production theory of value Pages: 3 (809 words) Published: September 13, 2008
The Business life cycle can be split into 4 main stages. These are- Establishment, Growth, Maturity and Post-maturity. Post-maturity can be split into a further 3 “options”. These are- Establishment is when the business is created. In the phase, it is vital to create a strong foundation and secure income. You must make sure the expenses do not outweigh your income. You find it difficult to getting finance, due to low profit and sale levels from poor customer awareness. This can be very problematic, as there are often high start-up costs for new businesses. During establishment, you must decide what structure to follow (sole trader, partnership...) Employ workers, find a facility to mass produce your product, factoring in production costs vs. Final profit, Work out the market value for your product, too high and you will lose out to your competitors, too low and you will not be able to cover the costs of production and generally functioning as a business. All this and you must work out how to let the public know about your product (advertising) and setting up the appropriate bank accounts, dealing with employee and business taxes and arranging insurance for everything. Growth is when long term plans for the business must be made. Sales increase, you have a solid customer base and you have larger production levels. These pose a problem, as more finance, employees and equipment may be required to meet up with supply-demand. During this time, the decision may be made to change business structure to allow for smoother running, or easier ways of getting money. This increase of just about everything creates a lot of management stress, and occasionally outside parties must be hired to deal with it. Maturity is when the company is established on the market and needs to innovate continuously to stay competitive, and your long-term plans are met. There is more competition, profits and sales level off and if you have...
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