KENYA TECHNICAL TEACHERS COLLEGE

COURSE: HIGHER DIPLOMA IN SECRETARIAL

MANAGEMENT
SUBJECT: ENTREPRENEURSHIP EDUCATION
ASSIGNMENT: THE BUSINESS LIFE CYCLE
(Meaning of business life cycle, Stages in the business life cycle, challenges faced by an
Entrepreneur at stage of the business life cycle and strategies that an entrepreneur may
Adopt at each stage of the life cycle)

SUBMITTED TO:
NAME:

MRS. NJENGA

GRACE KAMUNGE -2014BE30004

RUTH J. ROTICH - 2014BE29920

G R O U P EIGHT

BUSINESS LIFE CYCLE

It refers to the various stages of development of a small business. A business goes
through stages of development similar to human race; parenting strategies that work for your
toddler cannot be applied to the teenager. A business will also require different financing sources
as it grows.
The following are the stages of a business life cycle.
1. STAGE 0 THE ASPIRATIONAL STAGE.(SEED) People in this stage want to start
a business and like the idea of it, but they havent committed to becoming entrepreneurs.
2. STAGE 1 ESTABLISHMENT.(START UP) People in this stage have decided to
start a business and are actively building their market and offers. They might not have
many or any customers, but theyre no longer sitting on the fence about being an
entrepreneur.
3. STAGE 2 THE GROWTH STAGE. Entrepreneurs in this stage have a business plan
and are growing their revenue streams with new clients and customers. These
entrepreneurs are not booked solid or running at full capacity yet, but theres no longer a
question that they have a viable business model.
4. STAGE 3 MATURITY. Entrepreneurs in this stage are at the delightfully frustrating
point at which theyre booked solid and working at full steam, but the demand for their
goods and services outstrips their ability to meet it. Something has to give, but
entrepreneurs often dont want to let go of the business activities that have gotten them to
this stage.
5. STAGE 4 POST MATURITY. Entrepreneurs in this stage have figured out what it
was that kept them bottlenecked and constricted at Stage 3, have fixed it, and are now
running full steam ahead. They have the team and support they need in order to focus on
their core competencies, or if they dont, they have a specific plan in place to get those
resources.
CHALLENGES PRESENTED AT EACH STAGE OF THE BUSINESS CYCLE.
STAGE1. ESTABLISHMENT
The challenges facing the entrepreneur at this stage are;

High costs associated with the setup of the business.

Difficulties in obtaining the necessary funds for the business.
Slow growth in sales putting pressure on cash flow.
Difficulties in attracting staff with appropriate skills.
High costs associated with the promotion of the business.

If the business can conquer these challenges it will experience growth, move into the
second phase of the business cycle and be confronted with a whole new set of
decisions to be made.
STAGE 2.

GROWTH
The challenges for business operators during the growth phase include:
Ensuring the quality of service or production is maintained as output grows.
Developing appropriate accounting and financial information systems which
provide management with detail about the business.
Managing the cash flow and being aware of the financial requirements
involved in expanding the business.
Sustaining growth and not letting the successes of the business create a sense
of self-satisfaction or laziness.
Redefining the role of management so that the managers workload is not
overwhelming.
Recruiting new employees and delegating responsibility.

STAGE 3:

MATURITY

STAGE 4:

The challenges for business operators during the maturity phase include:
Staying responsive to changes in consumer demands.
Identifying opportunities for innovation in products and services.
Rationalizing business operations and minimizing costs.
Sustaining the motivation of management and staff and avoiding laziness and
complacency.
POST MATURITY

Understanding the changing tastes and needs of the customer base.

Shifting into new or related markets where there are greater growth
opportunities.
Orienting the management and staff towards change.
STRATEGIES THAT AN ENTREPRENEUR MAY ADOPT AT EACH STAGE OF THE
LIFECYCLE

During the Introduction phase, there will most-likely be heavy promotional and
advertising activity designed to raise awareness of the new product, and to seek sales
among early adopters adventurous consumers who like to own cutting edge products.
Depending on the nature of the product, it will either have a premium price so that its
development costs can be recouped quickly (this is the approach used with most high-

tech products) or be priced low to encourage widespread adoption what marketers call
market penetration.
Moving on to the Growth Phase, promotional activities will tend to focus on expanding
the market for the product into new segments usually either geographic or demographic
and supporting this by expanding the product family, for example with new flavors or
sizes (cartons of fruit drinks specifically sized for kids lunch boxes, for instance.
By the time a product reaches its Maturity Phase, the company producing it needs to
reap considerable rewards for the time and money spent developing the product so far.
The products features may continue to be refreshed from time to time, and there will still
be some promotion to differentiate the product from the competition and increase market
share. However, the marketing activity and expenditure levels may be much lower than
earlier on in the lifecycle.

Finally, once the product begins to Decline, marketing support may be withdrawn
completely, and sales will entirely be the result of the products residual reputation
amongst a small market sector. (Elderly people, for example, may go on buying brands
that they started using forty or even fifty years earlier.)
By this stage, the most important decision that needs to be made is when to take the
product off the market completely. It can be tempting to leave a declining product on the
market especially if it served the company well in its time, and theres a certain
sentimental attachment to it. However, it is essential that the product is not allowed to
start costing its producer money, and this can easily happen if production costs increase
as volumes drop.
More importantly, the old products very existence can absorb managers time and energy,
and can discourage or delay the development of a new, potentially more profitable
replacement product.

Reference: Internet
Free On-line Dictionary