Enterprise Life Cycle

The Enterprise Life Cycle course makes the participant understand the different phases of
an enterprise and the unique challenges of each phase. They develop a short and long-
term vision for their business and understand the framework for making choices across the
enterprise cycle and how to move from one stage to the next. They are exposed to
various kinds of decisions that are needed to be made at different stages—from decisions
required for setting up a business to scaling it up, to diversification, etc., and will practise
decision-making skills in these contexts.

Sessions List

1. Stages of an Enterprises
2. Vision/ Mission/ Value added statement, SWOT Analysis of Enterprise

Session 01: Stages of an Enterprise

A. Seed stage: The seed stage of any enterprise cycle is when you have just thought of
some business idea. This stage is very crucial as it either pushes you to take the next step or
it could cause you to drop out of the journey. Most budding entrepreneurs don’t get
enough courage to cross this line. It leads to the failure of a dream in its seed stage. For
eg: If a woman knows that she has a skill which can be monetised, she is at the beginning
of this idea stage. When she sees other women running their businesses with the same idea
the budding entrepreneur thinks of developing it into a business plan. However, when
there are successful examples, then one will come across examples of failure too. Hence,
the motivation for converting an idea into an enterprise keeps varying. The entrepreneur
at this stage has to overcome these hesitancies and doubts and take the first step towards
setting up the enterprise. The first step includes clarifying the idea, getting some idea of
the market, and coming up with a good idea of what the business will be.

Challenge: At this stage, most seed-stage enterprises will have to overcome the
challenges of market acceptance and persist in pursuing the niche opportunity. There is a
need to spend resources in a controlled manner.

Focus: At this stage of the business the focus is on matching the business opportunity with
your skills, experience, and passions. Other focal points include deciding on a business
ownership structure, finding professional advisors, and business planning.

B. Birth of an enterprise: The birth phase, also known as the “pioneering” or “creation”
phase, is the stage when the company has just been founded and everyone involved in it
is filled with energy and new ideas. E.g.: A group of women team up to make tomato
ketchup with some innovative ideas, let’s say, different flavours, spicy, non-spicy, or based
on different age groups.

At this stage, they may start out working 80-hour weeks out of a small office with 2-3
employees. The birth stage is characterised by creativity and energy. 
Challenge: It is likely an entrepreneur has underestimated money needs and the time it will
take to market the idea and product. The main challenge is not to burn through what little
cash there is. An entrepreneur needs to learn what is profitable, the needs of one's clients,
how to assess demand, handle production and quality challenges, cash flows, etc., and
do a reality check to see if the business is on the right track.
Focus: At this stage, the enterprise requires establishing a customer base and market
presence along with tracking and conserving cash flow.
Money source: Loan, fund, personal savings

C. Growth of the Enterprise: The growth phase of the enterprise life cycle is when the
company takes off. Growth is usually rapid as the company expands into new markets
and more and more customers find out about the product. E.g.: A woman’s rural
enterprise cultivating Organic Mangoes may start from a small farm. Slowly, once the sale
is good, more farmers will become part of that enterprise and more land can be used to
grow mangoes. At this stage, the women will try to understand different cultivation
techniques, make nurseries and classify the quality of their mangoes for the market. 

Challenge: At this stage, the challenge is dealing with the constant range of issues bidding
for more time and money. Effective management is required, as maybe also be a new
business plan. There may be conflicts as more people join the enterprise who may not all
be aligned. Entrepreneurs have to learn how to train and delegate, as well as put more
systems and processes in place, to conquer this stage of development.

Focus: Enterprises in the growth life cycle are focused on running the business in a more
formal fashion to deal with increased sales and customers. Better accounting and
management systems will have to be set up. 

D. Maturity Phase: The maturity phase marks the mid-life crisis of a business enterprise. The
company growth and sales figures are starting to flatten, as most of the people who need
what the company sells have already bought it. 

The maturity stage, also known as the “operate” or “renewal” stage of the enterprise life
cycle, represents both danger and the potential for new opportunities. 

Challenge: If the company focuses on operating its business according to the status quo,
flat sales figures can eventually become declining sales figures, leading to the death of
the enterprise. Entrepreneurs must be aware that things constantly change in the outside
environment, which could affect their business. They must be especially alert to cues from
the outside environment, to see how they can remain profitable.

 Focus: If the company can find a way to renew itself from within, instead of just
maintaining things the way they are, then a new cycle of growth is possible. The focus
should be on better business practices along with automation and outsourcing to improve
productivity, as well as exploring new opportunities

Money: profits, banks, investors, and government

E. Expansion phase: This life cycle stage is characterised by a new period of growth into
new markets and distribution channels. This stage is often the choice of the micro and
small business owners to gain a larger market share and find new revenue and profit
channels.

Challenge: Moving into new markets requires planning and research well before taking
any decision. The entrepreneur’s focus should be on businesses that complement the
existing experience and capabilities. Moving into unrelated areas can be disastrous.

Focus: Add new products or services to existing markets or expand the existing business
into new markets and customer base. Re-jig production processes to meet increased
production. Review HR and other policies as the number of staff/locations increases.

Money Sources: Joint ventures, banks, licensing, new investors, and partners.

F. Decline/Death or Rebirth: Enterprises that don’t innovate regularly can fall behind the
competition. To prevent this from happening, the company must find a way to renew the
energy it originally had in the birth or creation phase. 

Challenge: In the decline stage of the life cycle will be challenged by dropping sales,
profits, and negative cash flow. The biggest issue is how long the business can support
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.

Links: 

1. https://www.forbes.com/sites/forbestechcouncil/2019/08/08/the-business-life-cycle-
where-does-your-enterprise-stand/?sh=795617a26c6e

2. http://www.fao.org/3/x0186e/x0186e05.htm

 Session: 02 Vision/ Mission/ Goal statement, SWOT Analysis of Enterprise

VISION

A vision statement outlines the venture’s broader purpose, and what an entrepreneur sees
the venture growing into in the long run. Before an entrepreneur can produce a centred
mission statement and goals answering who she is as an entrepreneur, what she does, and
what she intends to try and will do in the future as an entrepreneur, she needs to develop
a vision statement.  It permits an entrepreneur to examine the future to answer this
question: “What would my enterprise become someday if the enterprise is the best
possible version of itself?”
 
Drafting a vision statement is an exercise in ideation—a purposeful method of opening up
one’s mind so that it branches out into many directions from stated purpose or problem—
in this case, to generate new prospects for goods, services, or processes to create a
successful enterprise. 

Some examples of vision statements

Amazon(retail): To be Earth’s most customer-centric company, where customers can find

and discover anything they might want to buy online

Nirma: “Nirma is a customer-focused company committed to consistently offering better

quality products and services that maximise value to the customer.”

Colgate-Palmolive: “As we plan our strategies to sustain growth for the years to come, our
core values of Caring, Global Teamwork and Continuous Improvement will continue to
drive our future initiatives.”

Parle-G: “To concentrate on customer tastes and preferences, the Parle brand has grown
from strength to strength ever since inception.”

Ikea (retail) – "To create a better everyday life for the many people

Writing a Vision Statement

There is no template for writing a vision statement, however, a common structure for
successful ones includes these traits:

Be Concise: This is not the place to stuff a document with fluff statements. It should be
simple, easy to read and cut to the essentials so that it can be set to memory and be
repeated accurately.

Be Clear: A good rule of thumb for clarity is to focus on one primary goal, rather than
trying to fill the document with a scattering of ideas. One clear objective is also easier to
focus on and achieve.

 Have a Time Horizon: A time horizon is simply a fixed point in the future when you will
achieve and evaluate your vision statement.

Make it Future-Oriented: Again, the vision statement is not what the company is presently
engaged in but rather a future objective of where the company plans to be.

Be Stable: The vision statement is a long-term goal that should, ideally, not be affected by
the market or technological changes.

Be Challenging: That said, you don’t want to be timid in setting your goals. Your objective
shouldn’t be too easy to achieve, but also it shouldn’t be so unrealistic as to be discarded.

Be Abstract: The vision statement should be general enough to capture the organisation’s
interests and strategic direction.

Be Inspiring: Live up to the title of the document, and create something that will rally the
troops and be desirable as a goal for all those involved in the organisation.

Links: 

1. https://openstax.org/books/entrepreneurship/pages/7-1-clarifying-your-vision-
mission-and-goals#fs-idm177270352
2. https://www.inc.com/magazine/20110201/creating-a-company-vision.html

Spotlight on:

A vision statement is a foundational document for any enterprise.

To define a vision one needs to identify the problem/issue/gap they are addressing. The
potential solution for filling the gap helps create the vision statement of any enterprise.

Mission

A mission statement is defined as an action-based statement that declares the purpose of

an organisation and how they serve its customers. This sometimes includes a description of
the company, what it does, and its objectives. 

A mission statement provides perfect clarity behind the “what,” the “who,” and the
“why,” of your company. The best mission statements are guidelines by which a company
operates. Everything you do as a company should work toward your mission statement.

A mission statement is a summary of your company’s purpose.




 Some Examples of Mission Statements:

1. Tesla - “To accelerate the world’s transition to sustainable energy.”

2. TED - “Spread ideas.”
3. LinkedIn - “To connect the world’s professionals to make them more productive and
successful.”
4. Amazon - “To be Earth’s most customer-centric company, where customers can find
and discover anything they might want to buy online, and endeavours to offer its
customers the lowest possible prices.”

Goal

The SMART formula is a system designed to help you achieve your goals faster by getting
as specific as possible on what it is you’re wanting out of your goals. The SMART formula as
you go through your goals to ensure they are:

● Specific.
● Measurable.
● Achievable/Attainable.
● Relevant/Realistic.
● Time-based.
For example, a good SMART goal is, will establish 5 retail outlets to supply quality fruits and
vegetables to reach about 2000 customers over the next 2 years.

SWOT Analysis
Strengths

Strengths describe what an enterprise excels at and what separates it from the
competition: For example, a strong brand, loyal customer base, a strong balance sheet,
unique technology, and so on.

Weaknesses

Weaknesses stop an enterprise from performing at its optimum level. They are areas where
the business needs to improve to remain competitive and may include a weak brand,
higher-than-average turnover, high levels of debt, an inadequate supply chain, or lack of
capital.

Opportunities

Opportunities refer to favourable external factors that could give an enterprise a

competitive advantage.



 Threats

Threats refer to external factors that have the potential to harm an organisation. For
example, a drought is a threat to a wheat-processing company, as it may destroy crop
yield and hence supply to the processing unit. Other common threats include things like
rising costs for materials, increasing competition, and tight labour supply. and so on.

SWOT Table

Strengths Weaknesses

1. What is our competitive advantage? 1. Where can we improve?

2. What resources do we have? 2. What products are underperforming?
3. What products are performing well? 3. Where are we lacking resources?

Threats Opportunities

1. What new regulations threaten 1. What technology can we use to

operations? improve operations?
2. What do our competitors do well? 2. Can we expand our core operations?
3. What consumer trends threaten 3. What new market segments can we
business? explore?

Example: Bharat Chandra Raut wants to start a small spice processing unit. He is a 10th-
grade pass and lives in a remote location. In his village, he saw that the people are buying
spices in bulk from a market 30 km away from his village. Let us explore whether Bharat
Chandra Raut should start the spice processing unit or not.

SWOT Table

Strengths Weaknesses
1. No near-by spice processing unit 1. Not having skills and knowledge to run
2. Space to set-up a unit the enterprise
3. Spices 2. Not having financial resources

 Threats Opportunities
1. The vendor might decrease the cost of 1. Inexpensive means of advertising like
spices and people continue buying from banners.
his shop 2. Less competitors of the product in the
2. The vendor might be offering some area
discount or providing transport facility 3. Adding multiple products to portfolio on
3. People tend to trust old vendors more basis of demand