A—Development Cycle of a Business

This chart will help us to better understand the typical life cycle of the owner-managed business. Such businesses are usually owned by rugged individualists who were drafted into business in a variety of ways. Although the growth curve is different for each business, it can generally be separated into four distinct phases, with the first two involving a lot of hard work.

The first stage is best described as the Wonder Stage, because sooner or later the business owner will wonder, “How in the world did I get into this mess?” A seven-day workweek is the norm, for which the business owner gets freedom, power, and the last word on how the job is to be done. Undercapitalized and overextended, the business owner expends maximum energy just to keep creditors at bay and end up with a profit to finance future growth. The large majority of new businesses don’t survive this stage.