Unit 6 HO 6-4
STAGES OF FIRM LIFE CYCLESTAGE I EMBRYONIC/SEED STAGE
This stage is the conceptual pha~e of the business's development. Emphasis is on theidea generation, learning, research, interest and support
building. The major taskduring this phase is proving the feasibility or viability of a proposed new venture.STAGE 2 STARTUPAt
this stage, the business begins to move from concept to reality. Management isconcerned with gathering together all the resources necessary to begin operations.A strong and dynamic entrepreneur (or entrepreneurial
team) is essential to survivalat this phase in the cycle.ST4GE 3
EARLY GROWTHOnce the doors are open, the major emphasis turns toward increasing sales andimproving operational systems to support growth.
Capital requirements beyond thatraised for startup becomes an issue.STAGE 4 RAPID GROWTH
This stage is not achieved by all frms.
Millions of small, family-run businesses startsmall and never achieve sales growth beyond that needed to support
one or a fewfamilies. Rapid growth firms are typified by the Inc. 500 rated companies withannual
sales growth rates often exceeding 100-200 percent. Capital infusion iscritical
to maintain sales growth.STAGE 5
MATURITYOnce a firm reached maturity, sales growth
slows and eventually stagnates. Markets are usually saturated
and high.y competitive. It is critical that firms innovatein order to reverse a nearly inevitable
decline.STAGE 6 INSTABILITYA
frum in tihis stage may be undergoing a leadership transition, or could be facingother serious problems. Typical concerns would be an entrepreneurial manager
attempting to bring on a more professional management structure, or a solo entrepreneur (or his e.state) trying to find a successor to the throne.Ford, Roger H. Boards ofDirectors and the Privately
Owned Firn - A Guidefor Owners, Officers, and Directors. Fig. 3.1 p. 38.Copyright Quorum, 1992. R% oduced with permission of Greenwood Publishing Group,
Inc., Westport, CT.387