Business Development Models

Abstract

In human and animal life there are cycles from birth to death. Business has similarities in that there are various stages of the organization lifecycle. It is great to have a desire to have an idea for a product to develop or the desire to start or buy a business however, funding is necessary for any business. In order for an entrepreneur to increase their opportunities for funding and success it is necessary to understand the stages of a business life cycle and what stage the entrepreneur is in with their potential or existing business.

There are several stages of the business life cycle. Many of the models have different numbers of stages from four to seven. The seven stage model is the most detailed and beneficial for the entrepreneur's comprehension. The lifecycle begins with the Seed Stage and is completed with the Exit Stage.

The first phase for a business is the seed stage. At this point the business is just an idea. This is the conception point for the organization. During this time research and development occurs for a brand new product or service as well as considering all aspects of manufacturing, distribution, and support process. Many seed companies must overcome entering the market and acceptance. The entrepreneur should attempt to find a niche market by conducting markets tests. Some of these tests include surveys of end users, field trials, and focus groups.

During this stage of research and development there is not a regular staff or any revenue, only developmental costs. Early entrepreneurs must be careful not to spread themselves to thin financially. In this stage finances generally are derived from cash from owners, friends, and family since the business is not in the market yet and there are not any customers.

The business is born and legally exists in the second stage which is the start-up phase. At this point products and services are in production and the organization has customers. It is important to make sure the customer's needs are being met and the organization is on the correct track. The organization must continue establishing a customer base and market presence along with tracking and safeguarding the cash flow.

The entrepreneur may have overestimated their money needs concerning time to market. There are business costs for research and development, market testing to production, sales, shipping, accounting/billing, customer support, and front-office administration. The priority is to avoid spending the small amount of money the organization might have earned.

The third stage of the business life cycle is the growth stage and at this point the entrepreneur's business has advanced from toddler to child. The business has increasing number of customers and revenue. However, now the business is facing competition. During this phase there is a constant battle to find more time and money. It is imperative for a growth phase organization to have effective management. It also may be necessary to formulate a new business plan.

In this stage the entrepreneur seeks money from banks, partnerships, grants, and profits. They are more focused on a more formal approach to dealing with their customers and sales. There will also have to be more sophisticated accounting and management systems and more employees will need to be hired.

Facebook and Twitter are currently considered to be in the growth stage. In the social networking arena, growth means that the network has reached enough mass for businesses and marketers to notice. At this stage, people start using these networks for commercial purposes, such as business networking, sales promotion, customer relationship management, and general marketing. (Varghese, 2010, para. 5).

The fourth stage is the established or maturity stage. At this point the entrepreneurs business is thriving and there is a loyal customer base. The organizations sales growth may not be volatile but it is manageable. The business has become routine and many times businesses become too comfortable because they have worked very hard to achieve their success however, competition is contently knocking on the door.

A company in the established stage must focus on improvement and productivity and their means of funding is from profits, banks, investors, and the government. In order to maintain the competitive edge the organization may require better business practices, automation, and outsourcing to improve productivity.

Starbucks was in the maturity stage and was attempting to extend their time in the phase. Subsequently, Starbucks changed the atmosphere of many