Enterpise life cycle,Motivation.docx

It could be said that entrepreneurs here are faced

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It could be said that entrepreneurs here are faced with two choices: push for further expansion, or exit the business. If you decide to expand further, you will need to ask yourself the same questions you did at the expansion stage: Can the business sustain further growth? Are there enough opportunities out there for expansion? Is your business financially stable enough to cover an unsuccessful attempt at expansion? And, perhaps most importantly, are you the type of leader 6
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who is up for the task of further expansion at this stage? In fact, many companies change leadership here, bringing in a seasoned CEO who is fit to navigate the new challenges. Many at this stage also look to move on through a sale. This could be a partial or full sale, and of course depending on the company type (for example, public or private), the negotiation may be a whole new journey in itself. Changes in the economy, society, or market conditions can decrease sales and profits. This may quickly end many small companies. Challenge: Businesses in the decline stage of the life cycle will be challenged with dropping sales, profits, and negative cash flow . The biggest issue is how long the business can support a negative cash flow. Consider if it may be time to move on to the final lifecycle stage ...exit . Focus: Search for new opportunities and business ventures. Cutting costs and finding ways to sustain cash flow are vital for the declining stage. Money Sources: Suppliers, customers, owners. 7. Exit Stage This is the big opportunity for your business to cash out on all the effort and years of hard work. Or it can mean shutting down the business. Challenge: Selling a business requires your realistic valuation. It may have been years of hard work to build the company, but think about the real value in the current marketplace. If you decide to close your business, the challenge is to deal with the financial and psychological aspects of a business loss. Focus: Get a proper valuation on your company. Look at your business operations, management, and competitive barriers to make the company worth more to the buyer. Setup legal buy-sell agreements along with a business transition plan. 7
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Money Sources : Find a business valuation partner . Consult with your accountant and financial advisers for the best tax strategy for selling or closing out the business. Whether your business is a glowing success or a dismal failure depends on your ability to adapt to its changing lifecycles. What you focus on and overcome today will change in the future. Understanding where your business fits in lifecycle will help you foresee upcoming challenges and make the best business decisions. From the moment you make the decision to set up a business, you’re in the “business lifecycle.” This will see you journey from idea to startup, and if successful, through to the growth and maturity phases.
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