Business Guide: The Business Lifecycle

February 1, 2024 Martin Walsh

Navigating the Business Lifecycle: Building Success with Sustainability in Mind

The journey of a business, from conception to its eventual exit, is often likened to a lifecycle. Every stage presents unique challenges and opportunities, and understanding these phases is crucial for navigating towards long-term success. However, in today's world, simply surviving isn't enough. Businesses must also strive to thrive while minimizing their environmental and social impact.

This guide explores the various stages of the business lifecycle, with a particular emphasis on integrating sustainable practices at each step. We'll delve into how sustainable business practices can not only benefit the environment and society but also contribute to your company's financial stability, resilience, and overall success.

Whether you're a budding entrepreneur or an established business owner, this guide will equip you with the knowledge and tools to navigate the business lifecycle

1. Perfecting The Idea

Every business starts with an idea. Sometimes it's a lightbulb moment, more often it requires quiet contemplation over a period of time.

Successful entrepreneurs devote time and effort to hone their idea into a vision. They may talk with others, for example a family member or friend; they may prefer to work it through on their own; or they may opt to consult a business advisor to get professional advice.

Working alone keeps things private and confidential. Talking with others provides an opportunity to bounce ideas around and perhaps do a bit of brainstorming.

Experienced business advisors will help you to clarify the vision. They offer advice about the type of business you should establish, the optimal structure (which will almost certainly change as the business grows), how to raise and employ finance; how to ensure you identify the target audience you wish to engage with, how to pitch your business to potential clients, and much more.

All three have their advantages and drawbacks, so take time to decide what is best for you in the specific circumstances you face at the time. It's not a 'one size fits forever' scenario, many use a combination of all three.

Whatever path you take, documenting the thought process, the critical decision points, and the reasons for accepting or rejecting actions is imperative if you are to clearly define your business objectives and the target market.

Your Vision

Your vision should be clear, concise, and make it easy for your target market to understand what value you can add to their business. Document it.

What is your Unique Buy Point for clients? There may be more than one depending upon your target market, but defining, documenting, and continuously perfecting it is vital. It is the foundation of your pitch for business, so it is worth frequently practicing your pitch to improve the presentation, and your confidence.

Use Visual Descriptions

Anything visual helps to focus the brain so infographics and mind maps are good for most people. Make them colourful, that stimulates the thought process.

Don't expect perfection every time, it is rarely attainable. We recommend trying different approaches, find out what works, change what doesn't.

It's not feasible to include all of our expertise on the website, and we would be delighted to demonstrate how we can work with you on any or all steps of your journey, so for a more detailed, no-obligation discussion please contact us by phone or email.

2. Before You Begin

The Infrastructure

Getting the infrastructure right is critical. It is highly unlikely that you will be able to do everything, so building a template of the workflow is a great way to understand the tasks, the risks, the skills needed, and the personal characteristics required to make your idea a success. Don't complicate the process, but make sure you have a comprehensive plan of action which includes, but is not limited to: decisions and actions.

Resources
Suppliers
Risks - framework and appetite

Business Strategies and Tools

Your strategy is unique to your business. Getting it right is vital for success. We work with companies in every economic sector to make sure the business strategy accurately reflects your vision and acts as your story for your stakeholders.

A strategy is meaningless unless it is implemented in an appropriate way. We have a wide range of tools which ensure your actions compliment the strategy to give you the best foundation for success at every stage of your business journey.

There is no 'one size fits all' methodology into which a business can be.

We are extremely creative in our approach, meaning that you benefit from our business experience to identify solutions to any challenge you face. We are not, and do not aspire to become, a corporate organisation, which means that we quickly adapt our approach to suit your specific circumstances at any time. This combination of experience, skills, and flexibility distinguishes us from the competition.

Obviously, it is not feasible to include all of our expertise on the website, and we would be delighted to demonstrate how we can work with you on any or all steps of your journey, so for a more detailed, noobligation discussion please contact us by phone or email.

3. Initial Steps

Decide the type of company you will have (Limited, Partnership, Sole Trader}.Register with Companies House. It's an easy and straightforward process.

Use this website and follow the links:

https://www.gov.uk/government/organisations/companies-house

Hint: Some people use an agent to do this. Our advice is to do it yourself unless the structure and/or Articles of Association are complex. Registering the company yourself is almost always much more costeffective.If you register a Limited Company, by law whilst you do not need the insurance cover to be in place to set up the company, you must have appropriate insurance cover before you start trading. You must register the company before an insurance company will accept you. In any event, insurance is critical should you incur a dispute with a third party.
Hint: Shop around. Insurance premiums are generally rising so find the best deal for you.Open a business bank account. Strictly speaking you can operate through a personal account, but few financial institutions will allow that. In any case, your accountant is almost certain to insist upon a business account.
Hint: Shop around. Bank costs vary considerably for business accounts (not only a monthly fee but also transactions costs where they are applicable}.

4. Getting Ready To Trade

This stage is often undertaken (either in whole or in part) in parallel with The Initial Stage'.

At this stage, it is vital that you gain an understanding of the needs and demands of your stakeholders. They incorporate a much wider demographic than just your clients. For example, HMRC, Companies House, your accountant, your web designer and many more fall into this category. Every stakeholder is important - they determine your reputation as a business and as a person. A good reputation must be earned over time, and it should always be nurtured. Conversely a bad reputation can be earned in one interaction, and it is hard to shake off. It costs business as clients will shy away from you.

It is essential to determine - and document - your Unique Client Experience. Market research is part of this stage; find out what potential clients want, research your competition, evaluate your pricing, and critically assess why clients should use your services. Perfect your pitch. Where possible, undertake 'dry runs' of your delivery, evaluate the results, and make any changes which will benefit your clients and your company.

Look carefully at your supply chain and distribution network- they are vital parts of your ecosystem. Ensure you have reliable and appropriate suppliers and identify alternatives that can be used quickly should that be necessary.

Consider what you can - and will - do in the event of any disruption to your business. Can you diversify, and if so how quickly? How many months of trading disruption can you experience with reduced/no income?

Document a Business Continuity Plan and communicate the details to relevant stakeholders. Make sure they understand what they are required to do should business be disrupted, including how they are expected to communicate with each other and the wider stakeholder community.

5. Trading

Whether you are a (non}profit-making organisation, a CIC, a charity, or any other type of business, interacting with clients lies the heart of your success.

Clients and other stakeholders look for quality, value for money, and sustainability. They want a guarantee that you can be relied upon to deliver what you say, on time and at the agreed price.

Knowing your customer is vital, so take the time and make the effort to understand their needs and expectations.

Knowing and understanding your suppliers is equally important. In addition, any contract with suppliers should be documented, and it should clearly define the roles and responsibilities each party is expected to discharge.

Continuously evaluate any internal or supplier resource gap(s} you may have and resolve the matter without delay. That cannot always be done immediately, so produce an action plan which clearly details each step of the process. This is particularly beneficial when you wish/need to delegate tasks to others - it ensures that they have a map to work to, and you have a means of monitoring progress.

It's not feasible to include all of our expertise in writing on the website, and we would be delighted to demonstrate how we can work with you on any or all steps of your journey, so for a more detailed, noobligation discussion please contact us by phone or email.

6. The Consolidation Phase

Your company has built a reputation. The client base is growing. Revenue has increased (has profit increased proportionately?} Your personal confidence is rising. You are an established company in your environment. People notice you.

What's next?

It's tempting to expand as quickly as possible. That may be the correct decision. But not often. Rapid expansion or expanding too early/quickly has destroyed numerous companies. Why? Typically because the infrastructure - including the cash flow - is insufficient to meet the extra demand. Mistakes creep in. Delivery is delayed. When that happens clients become dissatisfied with the service, and find another supplier for the products/services you provide.

The knowledge and skills needed to start a company are markedly different to those needed to expand. Therefore - despite the attraction of becoming a 'bigger fish' - most experienced businesspeople agree that taking the time to learn, study the market trends in more detail, evaluate the skills and characteristics matrix, ensure the supply is robust, and undertake a gap analysis is essential for the medium to long term future of your company.

Therefore consolidation is an important stage in the business lifecycle. Patience, planning, and the correct sequencing of actions to scale up are required to build an infrastructure that is robust and resilient, supported by a strong financial position which mitigates the risks associated with expansion.

Consolidation is not a backward step; use the time to plan and test the elements of your scaling-up proposition. Document 'Lessons Learned', and critically evaluate what could, and should, have been done better and/or differently. Hire a business advisor to help you with this review, another pair of experienced eyes will identify gaps in your thought process and give you a different insight of how to approach the future.

7. Scaling Up

In some ways this is akin to starting again, and the work that has been done during the consolidation phase will inform your decision making. It's a busy and typically stressful time. Research your alternatives, and seek the advice of knowledgeable, experienced advisors who will challenge and improve your proposition.

The experience you have gained from previous stages in the lifecycle remain relevant, but it is not merely a question of 'adding more'. Scaling up means increased volume of units delivered, possibly an increase of the product or service range you offer, an increased customer base, and typically increased demands from your clients. Administration increases. Time devoted to client communication increases.

You may need to hire more staff, or possibly part company with existing staff. Your competitive advantage may also change.

This phase will almost certainly require funding. The source of funding is important, for example using your own funds depletes your available cash; if you raise finance through issuing shares you give up a portion of control over the company; a loan will incur interest and a repayment schedule which will need to be complied with; whereas a grant - whilst it will have certain conditions attached - does not usually require to be repaid. A merger or acquisition is another possibility. There are many aspects to consider, and the advice/guidance of an experienced business advisor is almost always beneficial.

Any growth should be meticulously planned, and this usually requires a re-write of both your business plan and your Business Continuity Plan. Your risk profile will change, and the organisational structure may need revised. What is the impact on your profits? Consider the supply chain. How will your client base be impacted? These questions, and many others, require serious consideration, and you will benefit from having an external, objective, perspective to receive and bounce ideas against.

Mistakes at this stage can cause serious damage to your business. Experienced professionals will guide you through these critical steps and help you avoid the pitfalls.

There is a great deal to consider, so this brief description Is not intended to be an exhaustive list of actions. Each business is different, each scenario sheds a different light on the optimal decision for your company.

8. Exit

Your exit plan should be included in your initial strategic plan. This will not be a detailed analysis, but it should provide the basis of your vision to optimise your investment.

Bankers, investors, and successful entrepreneurs typically have an exit plan before they enter into a business relationship. It's not always perfect, it often changes due to changing circumstances, but it does provide the business rationale and the ideal timing for an exit.

Exits take many forms. At best the company value is such that you will become extremely wealthy. A great feeling: financially secure plus the satisfaction of having been successful. At worst the company has been placed into administration or liquidation - in which case you lose control but not necessarily liability for the actions which have led to that scenario. If it is the latter the court will appoint someone to oversee the process.

Exit strategies include but not limited to:

A straight total sale.
A partial sale, such as the sale of the majority of the issued and paid-up shares of the company.
Gifting the company to a member or members of your family.
An acquisition by a competitor.
A merger with a competitor.

Whatever the reason, it is critical that you obtain legal advice as you begin your exit journey. Contracts will be required, there may be residual legal or regulatory responsibilities conferred upon you, existing contracts with clients and suppliers will be wound down, ownership of assets and liabilities need to be apportioned. Clients and other stakeholders must be advised of the exit at the earliest possible time, and the communications should be frequently updated.

Your other stakeholders need to be advised, including your accountant.

There are many things to consider and complete before an exit can be finalised. Your risk exposure changes; there may be implications for employees. We have advised a number of companies about exit strategies. We do not purport to know all the answers, so we work closely with several local and national legal, financial, restructuring, and other companies to give you a comprehensive service backed by a team of professionals with a wide range of knowledge, skills, and experience in this field.