Where are you in the business life cycle? (And what does it mean for your future success?)

In our last blog, we talked about the power of anticipation.

Leaders anticipate. Losers react.

Anticipation can be the difference between going under (like 90% of businesses do within their first 10 years) or building a massively successful company and creating the life you want.

To accurately predict and identify the problems that threaten your company’s continued growth and success, you have to know where you are now.

Why? Because certain business stages have predictable problems.

If you know where your business is now, you can anticipate problems and make adjustments.

There are 10 stages in the life cycle of a business. Like people, businesses are born, grow, develop, decline and die. However, unlike the human body, a business life cycle doesn’t have to be finite. A business can live and thrive indefinitely if it continues to reinvent itself and adapt.

Twinnings has been around since 1706. It is still thriving at over 300 years old. Colgate was started in 1806, and you probably have a tube of its toothpaste in your drawer right now. The key to longevity? Anticipate and adjust.

The life cycle of a business

Let’s take a look at the 10 stages and the common problems you might face in each stage.

1. Birth

This is the moment you take a risk—rent some space, take out a loan or make an investment. It’s exciting and terrifying. The biggest challenge is having the courage to take that first step.

2. Infancy

You are just getting off the ground. Infant companies take a lot of energy and attention. Cash flow is a constant struggle.

3. Toddler

Just like a real toddler, a business at this stage can get into a lot of trouble. Your company feels wobbly, perhaps lacking in purpose or vision. You’ve brought on new people, but they might not be the right people. You are wearing too many hats and doing too many things.

Toddlerhood is messy. Your challenge at this stage is to create systems and cultures that can grow. You can’t scale chaos; you need to build a company with people, systems and operations that work without you.

4. Teenager

Teenage businesses are overly confident and take big risks. Does that sound like any 16-year-olds you know? The fearlessness that got your company off the ground is now a liability. This is where most businesses are most vulnerable. Cash flow isn’t a problem anymore, and you’ve got a great product, but if you get carried away by your previous success, you’ll be stuck with an unsustainable business model. You might struggle with inefficient systems, financial instability or an uncertain vision in this stage.

One example of a business in the teenager stage is WeWork in 2018. WeWork was founded in 2010 on the idea of flexible, shared office space leases. The idea took off, with valuations reaching $47 million and offices all over the globe. CEO Adam Nuemann was charismatic but could never clearly articulate details. WeWork was growing exponentially but lacked a sustainable business model and was hemorrhaging money. When WeWork filed for an IPO, investors uncovered serious issues. The IPO failed, and their valuation plummeted.

After the crash, the board of directors and SoftBank ousted Adam Nuemann. New leadershipscaled back non-core business activities, rebuilt operations and focused on business fundamentals to help transition the business to the next stage—a young adult business.

5. Young adult

A young adult business is maturing, full of promise and possibility, but still needs guidance. It’s time for professional management and scalable systems. A young adult business learns when to say no, and leaders will sometimes scale back operations. It is also at this phase that a company can plateau. Things are going well, so you aren’t driven to innovate or take bold moves. This is where good businesses start to thrive or fade away. If you stick it out here, hone your systems and processes, and keep progressing, you’ll move onto the next stage.

6. Prime

This is it. You have arrived. This is the zone of optimization that you’ve worked so hard for. In this zone, you’ve connected your business to a clear purpose. You have a professional team that understands the company culture and vision with enough clarity to make decisions without you. They are empowered to lead with confidence and authority. It trickles down to your clients, and you enjoy a loyal customer base.

Businesses can fall in and out of this zone, but this is where you want to be.

7. Mid-Life Evaluation

Things are still good at mid-life, but companies here are susceptible to disruption. You are a mature, profitable company, but you've lost some flexibility and drive to innovate. Like many adults in mid-life, this can be a wake-up call, a sign that it’s time to reinvent yourself and come back stronger than before.

If you don’t innovate or add more value, your company will continue declining. Coca-Cola and IBM are examples of mid-life businesses trying to reinvent themselves and invest in innovation.

If you’re not growing, you’re dying.

8. Aging

Sales continue to drop. Legacy systems bog the company down. People are beginning to point fingers, and the company culture suffers. You are riding on the fumes of brand awareness and respect, but innovation is essentially non-existent. Companies at this stage have been so successful for so long that they are afraid of change. But without change, the company will die.

It is still possible to come back from this stage, but it requires the company to completely reinvent itself and chart a new path forward.

9. Institutionalization

At this stage, a business is not profitable on its own. It’s not adding value to the consumer, and only kept alive because external forces prop it up.

An example of a company in this stage is Boeing. It’s one of the world's most important aerospace and defense companies that’s been around for a hundred years. However, in recent years, it has had its share of challenges—manufacturing and safety failures, a lack of innovation, and a culture that some believe to be toxic and bureaucratic, ignorings the concerns of engineers. It is leaning heavily on its legacy and the support of government aid to prop it up.

10. Death

Businesses that fail to adapt and innovate will eventually die. This can happen quickly, or a company can fade slowly.

Where do you want to go?

Can you figure out what stage your business is in now? Can you anticipate which stage is next and what challenges you might face?

Charting a course toward where you want to go is impossible if you don’t know where you are now. Being honest about where you are and where your company needs to improve is the first step toward growth.

Business results coaching is an invaluable resource for leaders who want clarity on where they are and where their business is headed. Once you know where you are, a coach can help you create a MAP—or massive action plan—to guide you to your goals. A MAP differs from a business plan in that it aligns with your company vision and anticipates the challenges you’ll face in the stages ahead. It holds you accountable to your goals while still allowing you the flexibility to adjust and adapt to changing market conditions.

You can also take part in business accelerator training to immerse yourself in systems and mindsets that keep your company out of ruts and poised for rapid growth.

You don’t need to be afraid of the future. Your success is in your hands. If you are honest with yourself about where you are, you can adapt to your current challenges and anticipate the obstacles ahead. Every obstacle is an opportunity, so go out and make the most of it.