Life Cycle of a Small Business
FIN/375
August 5, 2013
Life Cycle of a Small Business
Team C will discuss the main points to the life cycle of a small business from an article titled, The Complete Life Cycle of a Family Business. A family business, AAA Construction, Inc., was in operation for 38 years; however, gone through a turbulent ride throughout its entire business history. The article presented the organization life cycle and its five stages, 1) existence, 2), survival, 3) success, 4) renewal, and 5) decline and applied these stages to AAA Construction (Lester & Parnell, 2006). The purpose of the article is the inability the family had by not separating family and business during the organization’s life cycle.
The Organizational Life Cycle
An organizational life cycle is a model that presents the growth and development of an organization and the different stages developed during the course of business. Each stage in the life cycle is “a loosely set of organizational activities and structures” (Lester & Parnell, 2006, p. 2). It is important to understand how changes occur over time with these organizational activities and structures. At times, a business may take a backward step in a stage, stay constant in one stage, or unable to progress forward that could lead to the end of a business.
The Life Cycle Stages
The first stage of the organizational life cycle is existence. With this stage the organization begins and the establishment of products, customers, and the business organization. It is during this time that the creation and implementation of the business plan and strategy begins.
Stage two is the survival period. A more formalized system is put in place to assist the organization in determine more specific areas to grow and create revenue. As the company grows requiring additional staffing and the survival comes with integrating the product, people, and processes for this growth.
Success is the third stage in the...