Business Life Cycle and the Current Economic Climate

Strategy Plan One

March 17, 2012 

Business Life Cycle

In the normal context of the business life cycle, a business, product, service or idea will progress through development, growth, peak and decline phases.

This cycle normally repeats over and over again as businesses usually adapt and change with the environment, close to the peak or into the decline phases.  The resulting graph of a fairly healthy, adjusted business looks like waves increasing in height from left to right on the graph.

Current Business & Economic Climate

In addition to the phases of the normal business life cycle, other factors such as economic or global issues can alter the business life cycle.  In the current economic climate over the past couple of years, those business cycles have either peaked or declined earlier than projected.  In a recessionary period, many business cycles may be on the declining side, but as economies pull out a recession, cycles hit a low stabilization period and another growth period begins.  Many businesses in 2012 are coming off the declining phase, reaching a low and are starting on the growth incline again.  Some stock graphs sometimes mimic the business cycles of many corporations.

Business Cycle – Development Phase

This phase is the stomping ground for new product and business development.  It is the research and development phase behind ventures, with heavy emphasis on planning, testing and piloting projects.  In a repeating cycle this is a period of stabilization (as indicated by the trough on the graph), as companies have adjusted from declining phases and have stabilized operations and finances from a potential loss period.

Business Cycle – Growth Phase

Following the development or stabilization period, companies and businesses enter a growth period, where new revenues grow from new products & services, or improvements made in operations.  The growth, inclined phase indicated on the graph could be a result of efficiencies made in operations, to make businesses more competitive.

Business Cycle – Peak Phase

As products, services, ideas, and business reach maturity, they hit a peak phase where no further growth occurs.  Peak phase may indicate no further revenue can be generated from products, or that the business has reached its maximum market penetration, or that the business may have reached maximum consumer interest.  If you are keeping accurate, timely track of your finances and analyzing your trends, this would indicate that you may have to start making adjustments in business.

Business Cycle – Decline Phase

Many economists and business professionals have stated that the current global economic circumstances may have caused companies to enter the decline phase faster than projected.  In the normal business cycle, if adjustments to business are not made, companies, products and ideas usually enter a deep decline period.  The current economic climate may have accelerated that, but many statistics are indicating that the economies are turning around.

Business Cycles Repeat and Return to the Positive

As noted in the cycle, declining phases cause reactionary measures to once again achieve a period of stability.  Following stable periods comes growth phases and the business cycle repeats on and on.

Business Tips for the Business Cycle

• Be aware of where your company, product, service or idea is within the business life cycle
• Keep track of your finances and operations and watch for trends as these trends are your indicators.
• Be pro-active rather than reactive; being pro-active to trends may help you recover easier and faster from declining phases
• Be cognizant of the business and economic climates locally, nationally and on a global basis

Strategy Plan One

http://strategyplanone.com

Business information, resources and tips for the entrepreneur

© 2012 Strategy Plan One

Buying a Franchise – Another Great Opportunity for Entrepreneurs

Strategy Plan One

February 15, 2012 

As an entrepreneur you have choices to make when going into business.  You can start a business from scratch or you can acquire an existing viable business.  Also on the list of opportunities is buying into a franchised opportunity.

Investing in a franchised venture is a little different from acquiring a business or hanging your own sign out.  In this business scenario, you, the franchisee, agree to conduct business under the franchisor for a specified duration.  Franchised opportunities involve sophisticated agreements between you and the franchisor.

Buying a franchise brings a wealth of benefits, but you also need to be aware of the conditions around buying a franchise.  Here are some tips and information on franchised opportunities:

•  Franchises are plentiful; ensure you research each for the right fit against your operational, management and financial capabilities
• Franchises come with strict operating standards, and you must be aware that you will need to adhere to these standards such as pricing, marketing, design, customer service, employment, etc
• You will need to pay royalties or monthly payments for ongoing franchise costs
• Most established strong franchises have rigorous training programs and schedules, both at your location and possibly to a head office location
• In franchised opportunities, the master franchise holder or company will conduct frequent inspections to ensure consistency of standards
• Franchised opportunities will not provide the flexibility that you may see in your own start up scenario
• Most of the time with established bigger franchises, volume of business will be significant and margins may be lower than experienced in your own start up scenario

Benefits of franchises:

• The leg work has been done, and if you buy a franchise, you buy a brand, loyal customer base, standardized practices and operating procedures
• Through the power of a large franchisor, economies of scale are achieved, which results in greater negotiating power, buying power, marketing power, etc
• You could piggy back on to some of the largest national marketing and advertising budgets; normally you don’t have to worry about marketing and advertising
• With the franchise comes a support team of corporate managers and executives; the franchisor does not want you to fail and will assist
• Larger franchises with brand recognition and existing loyal global customers will possibly result in immediate revenue streams
• Franchised opportunities open the door for additional funding sources, and in some cases, franchisors offer in-house financing
• Franchisors undertake extensive product and service development to open new doors and revenue streams for franchisees
• If you do well, franchises may offer expansion opportunities (i.e.: the offer to run another location or two);  fast food franchises are good examples
• If you do extremely well with multiple locations, you may be eligible to invest and run master franchised opportunities, such as managing the franchisees within a whole district, state, or province or territory.

Disadvantages to be aware of:

• Franchised opportunities can be capital intensive
• Be prepared for heavy investment and the need to acquire funding sources
• Franchised agreements can be complex, with strict terms and conditions
• Franchised opportunities come with mandatory fees and monthly royalties
• In owing a franchise, you give up some control over the business

Similar to other opportunities, you need to investigate whether or not buying a franchise is your way into entrepreneurship.  With heavy due diligence on your part, franchised opportunities could provide you with a stable business opportunity with ample rewards.

Strategy Plan One

http://strategyplanone.com

Business Mentor information, resources and tips for the entrepreneur

© 2012 Strategy Plan One

5 Attributes of Modern Leadership

Strategy Plan One

February 8, 2012 

Leadership has changed with time and with varying economic and environmental circumstances.   Early to mid 20^th century, leaders often invoked a militaristic or autocratic leadership approach, and to most the extent, this worked for many successful companies and big corporations.

In the current age, the workforce is better educated with more rights.  Values and ethics are important, and company and personal values and ethics need to align to achieve common goals.  In order to compete on a global scale, leaders need to motivate and influence teams of valuable employees to thrive and survive.

 

Collaboration with team members

Leadership today is obviously quite different, with globalization, competition, values and ethics and people’s rights making big impacts on how leaders lead.  The global economic climate is challenging and is multi-faceted.  New leaders today need the ability to navigate through challenging environments, with multiple layers of complexity.  A new leader must be able to collaborate with professionals adequately, and to be able to adapt quickly to changing environments.

 

Engaging others

Twenty to thirty years ago, businesses relied on manual analysis of localized information.  Today, teams and leaders must competently analysis massive amounts of global information quickly.  Where leaders lack capacity, leaders must be able to source and acquire capacity to assist in meeting organizational goals and objectives.  Leaders need to have the skill to interact with, motivate and empower team members.  Effective interaction with employees leads to better buy-in of goals and objectives.  Frequent engagement tends to make the employees and teams feel valued.

 

Activating Efficiency

Today leaders must accomplish more with fewer resources.   In order to stay competitive in global markets, leaders must stay on top with efficient operations.  Leaders must have the ability to maximize results and benefits with decreasing levels of resources.  Leaders must seek ideas for efficient operations from their teams, as these valued employees are the subject matter experts.  There are several mechanisms to implement to achieve efficiencies, from empowering employees to take the lead, to compensatory mechanisms.

 

Ability to Vision

Experienced leaders thoroughly observe and analyze the past and present.  A great leader can envisage a successful way forward.  They are able to see an end goal and objective, and pathway to achieve the objective.  Only a few have this innate ability; most develop the skill through experience in operations and management.  This valuable trait may be the result of many years of experience leading to the ability to look forward, and some of it through trial and error.  Leaders with vision understand why they are in the business and why the company’s products or services are valuable or needed by the consumer.

 

Effective Communication

Effective leadership involves a high level of rich communication.  A great leader engages with others and can communicate the vision to the team.  With powerful, transparent communications, leaders will need to be influential on others, with the ability to convince and encourage the team to follow and buy-in.  The level of acceptance is a good indicator of the leader’s communication and influential effectiveness.

 

Strategy Plan One

© 2012 Strategy Plan One

Business information, resources and tips for the entrepreneur