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The Life Cycles Of A Business

The Life Cycles Of A Business

We all know that there are multiple cycles that a business goes through. This is one way to put into context the life changes and the cycles that your business is going through, to not only understand the context of where you’re at in the cycle, but to understand the next stages that are coming up. To understand where you’ve come from, to understand where you’re going and to ultimately understand what the end game is.

I read a really good book a long time ago by a friend of mine named Judge Graham and the book is called Scale With Speed. In the book, he talks about understanding your exit strategy or your end goal with the business. I think that for a lot of businesses, not understanding your end goal is super powerful or can be super limiting to the business practice.


It’s a lot like your life goals. When you don’t understand where you want to go, you tend to work in circles with no outcome in mind.

Business is a lot like that.


When you can understand your outcome, whether or not your outcome is to sell off or to run a lifestyle business that one day you will eventually retire from and maybe sell what little inventory you have and just close it down, it’s good to understand the cycles that you go through during the process and what the end goal is.


Also, it’s important to understand throughout this process that we’re always going to be morphing and adapting and pivoting and potentially changing things as we go.


That’s part of the business. That’s part of course correction. That’s part of being a business owner, constantly being malleable and willing to make change along the way.


You may be in different stages, in different cycles, or even in different companies. If you’re running multiple companies, that’s also a good thing to keep in mind as you go through here.

Which One Are You In?











So let’s start off. Stage one is the starting stage. We call this infancy.


In infancy, your brand new company needs a lot of loving care and nurturing, right? It’s totally new to the world. It needs a lot of your focus. It needs a lot of your attention.


At this point, it’s all you or maybe a very small group of you. So a lot of things are developing. Things are constantly changing. We’re constantly trying to figure out how do we eat? How do we sleep? What does our rhythm look like? What does our day to day look like? What does our schedule look like? How do we fit into this world?



Stage two is what we call the toddler stage.


In the toddler stage, we start to become curious.


We’re still not savvy about what it is that we do, but we’re kind of running around and we’re lifting up rocks and we’re trying to, again, feel our way out in the world, but we’ve started to establish a little bit of a footing.


We’re walking around. We’re kind of testing introductions between other people and other processes. We’re starting to kind of put two and two together. We’re starting to understand the difference between right and wrong. We’re beginning to understand what we’re really about as a business.


Now, these two stages, number one and two, are what we call the start phase.



The third stage is what we call the “10 Year Old” stage. This is when you start to learn what the value is that you provide that makes you money.


Up until this point, you may have been kind of throwing stuff against the wall to decide what your value is in the marketplace. You may have been testing some different products and trying what the market responds to, what the market finds value in.


In a 10 year old stage, you might have finally figured out what starts to make you money.


Maybe you’ve found that one product that pops off and starts to have some traction in the marketplace. Something gets so popular you have trouble keeping up with inventory. Your clientele or your customer base starts to react. You start to evolve your avatar and understand who your buyer is and how you create and provide value to them in the marketplace and how that equals more revenue for you.



Number four is what we call the teenage years. In the teenage years, we start to get a little bit reckless and irresponsible, right?


At this point we’ve started to have a little bit of money and now what do we start to do? We start to try to solve problems with money.


We see the money in our checking account, so we decide, I’ve had this problem too long, I’m going to throw money at it and hope that’s the solution. Most of the time it doesn’t take long before you realize money’s not going to solve all of our problems.


Maybe we have to regress back into hard work and execution.


Sometimes the irresponsible teenager does things that become really good life lessons. This is a good place to reflect and realize that life doesn’t always happen to us, but sometimes it’s happening for us.


In our teenage years in business, we’re making some of those mistakes, but those mistakes need to be made so that we learn not to make them again.



This is what we call the “Young Adult” stage. The young adult stage is when we start to bring in people. We realize we need to begin investing in human capital. We start to realize that when great people come in and excel at their roles, those great people help accelerate our business at a rapid trajectory.


For a lot of people, unfortunately, especially small businesses, they never get to this stage or they only dip their toe into this stage.


They hire some people, they have a bad experience, and then like PTSD, they never go back.

They never go back and hire more people because they feel, well, I made a mistake once, I’m not going to do that again.


This is where you hear people say a lot of times, “If I want it done right, I’ll do it myself.” They tend to just make it more difficult and more complicated for themselves.


So one of the best ways that I see people get out of this stage and into the next stage is, they hire mentors or coaches that allow them to find the A players out in the world. These coaches help push them through this phase so they don’t get stuck in stage five or yet, regress back into survival mode because they’re fearful or they’ve had a bad experience at hiring people.



Stage six is what we call the “Adult” phase. In the adult phase, this is where our company starts to actually make predictable and consistent money.

The systems and processes we’ve put in place are working. The people that we’ve hired in our young adult phase in stage five have actually started adapting to the work and started making consistent income. All of the moves we’ve made are pushing the company forward.

This is where a lot of business owners start to travel. They start to broaden their horizons. They start to come up with bigger ideas.

The company is starting to work a little bit on autopilot so you come up to breathe maybe for the first time since you’ve started. You start to have some more free time. You start to have the ability to think bigger. You start to have the ability to think about linear growth or horizontal growth.

You start to think about, “Well, what am I going to do with this consistent, predictable money? How will I invest it? How will I expand? What does it look like next? What is on the horizon for the company? Do I expand with more people? Do I expand with more resources? Do I expand in different industries? Or do I keep my company vertically integrated? Maybe I will start to buy out some of my affiliate companies that I work with, or my subcontractors that I work with in order to create bigger margins on our projects or my products.”



The seventh stage in the lifecycle is the “Mature Adult” cycle. In the mature adult cycle, this is where most companies start to make seven figures. They start to make millions. They start to have enough consistent, predictable income where they’re making that money on autopilot and they start to create impact.


This is where they start to think about the “mature adult” conversations of the companies actually starting to have more kids. They start to grow and develop.


Again, instead of just thinking about it, now they’re actively buying other companies or they’re actively building other companies to support the main company.


Or maybe they’re just buying other companies that are good investments outside of the industry to diversify the company’s income or to diversify the entrepreneur’s income so that they’re more insulated across multiple industries.


Again, in the mature adult stage, this is when we start to multiply our ability because we have the seven figure income to be able to do that.



Stage eight is our senior years in business. Our senior years can last a very long time, right? Since we’ve let this business mature, these years from Stage 7 to 8 can last decades.


We built a business that’s consistent, that’s predictable, that’s making a lot of money, but then we get into our senior years and we start to wind down. We start to look for the exit. We start to question, are we going to sell or do we want to just kill the company off? Is it something that’s generational? Do we have kids or do we have people that we have inside of the company that we can actually pass the company down to?


This is where you’re estate planning and you’re making decisions about the longterm tax benefits and the longterm use of the company.


We start to think about what’s next, what’s on the horizon, what we can do after this.


Again, this is where the entire lifecycle of the business completes. At some point, there’s either a sell-off, death of the company, or a transition of the company into the next generation.


Now, it’s important to remember, again, during this entire thing that we’re always adapting, we’re always morphing, we’re always pivoting. Sometimes these companies, this entire cycle happens very fast. Sometimes you get into the survival stages of a company and you realize it’s not a survivable company, it’s not a scalable company. It’s not something that I really want to take to market. So maybe we just kill it off sooner and focus our attention on a different company that’s more profitable, that’s more systematic, that’s easier to manage, that’s easier to scale, that’s easier to build a team around.


So remember, as an entrepreneur, there are always multiple outlets. If 100% of your focus is in one company, that’s amazing if you can take it past the young adult stage. If you’re confident that you can take it past the young adult stage and you can scale and grow it, even better, right?


But it’s important to understand, again, all of these different stages of the cycle exist so that you can make confident, informed decisions as you go to work through the life cycles of your business.



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