Four Stages Of Business Development.

 Four Stages Of Business Development.

Four Stages Of Business Development.

By Said Ul Amin | Submitted on September 21, 2022

Getting started Step 1:

There may be various reasons for starting a business but the core values ​​in running a business are the people who are the founders.

We can see that the company reflects the founder's core abilities in its soul, for example, if the founder is an engineer, he will emphasize production rather than sales and marketing which should not be neglected.

Major efforts are focused on product acceptance in the market. If the owner can provide the requirements of the business i.e. time, energy, and finance, he can move to the second stage.

Otherwise, it will have to wind up its business as the company has limited time to stay at one stage. Here the main focus changes to establishing the company and making profits.

With this financial pressure, the company will need to start formalizing systems and record keeping, an unskilled manager cannot handle it all. Then the increased activity in his business would call for a change in management style.

Step 2: – Growth:

The moment a company moves into the expansion phase it should be able to make a reasonable profit, but this profit will not go to the owner. This is because it will be invested in the business to meet the capital requirement of the company.

It takes time to coordinate functional management activities. This calls for complex organizational structures that focus primarily on functional lines. Research and development will now be established to expand the product range.

Initially, it will be on a small scale due to a lack of capital. If management continues to change its environment, the company may remain at this stage for some time. In many cases, owners sell their businesses at this stage for substantial gains.

Expansion into new markets and products will demand more finance. In this stage, there are big competitors who deal with the situation by putting pressure on the emerging firm. This stress can also occur in the form of very low prices.

Overtrading is the biggest risk at this stage and if not handled properly, it can lead to business disaster. As the company grows it needs to expand geographical trade and distribution, so 'supervised supervision will be required at this stage.

If new competitors enter the market and the owner wants to maintain his share, he will have to invest more capital himself or attract some partners.

Step 3:-Extension:

This phase calls for proper management reports, budget control, and decentralized authority, along with a formal accounting system. The primary adaptation at this stage is to manage the managerial roles that are key to survival through this stage.

The expansion phase calls for stable long-term funding which will be critical and should be considered now if there is no plan for partners. Although retained earnings are major forms of funds, dividends are a particular attraction for investors.

At this stage these are inevitable. Now the track record of the company will help in getting long-term loans but the company has to give security in the form of assets.

Step 4: – Maturity:

The key issues at this stage are cost control, exploration of growth opportunities, and productivity. Authority may be directed toward functional lines or reorganized along production lines.

Since there is intense price competition, the production department should be the center of attention and the authorities should emphasize innovative measures for improvement.

Now the main investment is in sales and marketing efforts and maintenance and plant up-gradation. The company grows to a level where earnings are sufficient to cope but occasionally a higher long-term burden is helpful.

At this level, the firm may limit its operations or proceed to become a larger corporation, usually through acquisition or flotation.

Whatever the situation, managers are under pressure from shareholders to safeguard the firm's future.

However, the time of great trial comes upon the founder. He built his business through hard work and sacrifice, and now he's being asked to give it away.