Starting a business is not an easy task, especially if you want your business to be successful. Given the tough economic conditions and the misfortunes of the year 2023, business owners and startup entrepreneurs need extra bit of caution to not just survive but also thrive in these challenging moments. When the idea of a startup sparks in your mind, you go through a rough brainstorming stage. You need to address so many questions and understand what to sell, whom to sell, where to sell, and when to sell to establish a business that can be profitable.
You need to come up with ways to finance your startup and find out the necessary resources to keep the business operational at minimal costs and maximum productivity. Understanding the business world is not simple. You need to research about your competitors and learn their marketing tactics. You need to find out your target audience and determine what would appeal to them. The challenges are immense; however, if you are determined to overcome the obstacles, you will find yourself at the helm of a business that can soon turn into an empire.
Having said that, beating your competition is not a task easily achieved; you need to find out their tactics and devise your own strategies that would outperform your competitors. That is what you call gaining a competitive edge over your competitors. Well, that is just the first bit of problems; you also need to address various other issues such as maintaining your customer service and client satisfaction. However, despite being able to achieve all of the above, many businesses fail to turn a profitable business into an empire.
Starting and running a business is just a fraction of the equation, you need to amass comprehensive understanding how the entrepreneurial work operates and the various tricks of trade to keep continuing in the long-term. One of the biggest reasons of failures for startups is not understanding when to contract of expand their horizon. You might be producing goods that are exceptionally well received in the market, but you fail to satisfy the demands of all the customers, what happens next? Well, since your customers are unable to satisfy their wants or gain the desired utility due to shortage of products, they would start switching to substitute products. However, you need to understand how quickly consumer behavior changes these days.
Given the above scenario, a target market that is unable to obtain their desired product chooses a different commodity to fulfill their utility. Well, when supply becomes an issue and your goods are sparingly available in the market; do not expect the demand to last each time you deliver a fresh batch of goods. Customers do not always prefer constant switching between brands. Often, customers want a product with stable supply and within their reach. Therefore, if your product keeps running out stock, your customers would simply shift to another product with a stable supply chain. Therefore, you ultimately tend to contract your demand by not fulfilling them.
Similarly, you have a big production line and can produce goods more than required. You decide to produce to you capacity while working on the demand simultaneously, but fail to increase demand. You have a stockpile of goods worth quite a bit of your investment with no buyers. Now you might think that you can stock up on the goods and sell them as months pass by. In that case, you would end up paying your employees for not working, or you would continue production and keep piling stock i.e. your capital, without finding a buyer. In such cases, you would exhaust your resources and would be unable to earn a profit, pushing your business to the depths with no hope of recovery.
Many businesses fail, as they do not understand the different growth stages. Tech firms are no different. According to PinterEC from Calgary, Alberta, as a technology consultant service, In the tech industry, the growth of the business is governed by the same principles as for any other business and entering into the wild stream of businesses without understand the universal laws is bound to lead to failure. Tech startups can be enthusiastic, the early stages of the business is spent acquiring orders and almost any project that can help in keeping the business moving. Therefore, tech startups tend to be needy in the beginning and need a profitable venture to retain their operations. However, understanding the four stages of tech business growth is vital for any entrepreneur to ensure the business is adequately equipped for the changing market forces.
Here are the four stages of tech business growth:
1. The startup Stage
During the startup stage, you undergo business ideation and formation. This is where the concept comes into realization. However, you need to address multiple variables to ensure that the business would be viable in the near future. For example, you need to identify if your business has a potential target market or consumers. Secondly, you need to understand what are the products or services you would sell and how would you sell. You also need to address various other challenges such as business financing, running day-to-day operations, managing the human resources, establishing a trade network, etc.
During the startup stage, you need to consider whether you are able to deliver your products or services to the customers on time. In addition, you need to understand how your services compete with your competitors and whether you offer your customers a fair value. If you are unable to overcome these challenges, you would remain in the startup stage and unable to move to the growth stage. Once you are able to product goods or services that offer your customers value and can compete with other competitors in the market, you step into the growth phase.
2. The Growth Stage
During the growth phase, business starts pouring in and you no longer need to worry about paying your employees. This means that once the business has enough prospects and projects, the business has sufficient cash flows to manage its operational expenses without injecting financial aid from the capital. During the growth stage, your business is blooming into profits and you have secured multiple clients and projects.
Therefore, you also need a refined marketing strategy to keep the business expanding by increasing your customer database. However, this is where your business management skills are put to test. During the growth stage, you need to manage various roles and resources effectively to maintain profits while competing with other forces in the market. You also need to keep reinvesting your profits into the business to promote growth.
Investing in the business during the growth stage is vital, and you need to seek funds to expand your business domain. It is vital during this stage that you learn to delegate the authorities and find high-level managerial staff to keep the business operational. This way, you are able to focus on capitalization and expanding the business without worrying about current affairs and profits.
3. The Maturity Stage
The maturity stage is when you can actually call your business reliable and stable. During this stage, you are able to forecast your profits effectively and have a keen understanding about your business’s capabilities. During this phase you are able to plunge into various endeavors that may hold significant financial risks knowing that your business will be able to overcome the challenges due to its stable revenue generation stream. Similarly, during the maturity stage your business would have evolved from a single product or a service into a stream of products and services.
The real question during the maturity stage is if you need to get external investors on board to continue with current methods. The decision will affect the next stage of the business in multiple ways, which is why it is of significance importance.
4. The Decline or Renewal Stage
We live in changing times and need to adapt to differing environments constantly, which is why your decisions would either put the business into a decline to into a renewal stage. A business cannot continue with old methodologies and needs constant revamp to continue in a tight competitive market. This can be achieved by horizontal and vertical integration of the business. Therefore, scalability of the business is of critical importance. If the business is low on funds, you can always seek an external investor to help in promoting new ventures and keep the business afloat among all the chaos. However, if your business is unable to keep up with modern trends, a decline is imminent.
When it comes to failing to keep up with the trends, a good example would be Nokia’s downfall when it resisted android and supported its flagship operating system. Nokia resisted the new wave of operating system that was taking over the world, causing an ultimate downfall of the business only to be revived with the help of android, however, never to its former glory.