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Explanation Of The Business Cycle And Its Stages
Every business has to pass through four stages, that is, creation, growth, maturity and decline. If you are going to start your business then it is compulsory for you to know about the following stages of cycle that you are business will experience. Prior knowledge of these important stages of business cycle will prepare you to face the changing phase of your business boldly.
Stage 1 – Creation Phase
You must be aware that for starting any business, one has to gather some knowledge about it and has to work hard day and night to make his or her dream a reality. When a business comes into existence and starts its operational activities then this phase is known as creation stage. In this stage, you will need to apply different strategies to run your business successfully. You will need to establish goals and objectives of your business organization on the basis of which you will have to plan your next course of action.
You have to work very hard to establish your business in the market. You have to try different promotional schemes to attract and retain customers. You need to spend a lot of money in marketing and advertising your business. You have to think creatively to leave a good and lasting impression on the minds of your customers.
Stage 2 – Growth Phase
In this stage you will need to adopt good marketing practices to establish your brand and expand your customer base. In growth phase, you will notice an increase in demand of your products. Consequently, you have to increase production of your products and purchase more raw materials from your suppliers. You will observe increase in your sales as a result of which your company will make profits. You will also be able to establish your brand in the market.
Stage 3 – Maturity Phase
In this stage, your sales will reach at the peak level. You will enjoy customer loyalty. At this stage, your business will be completely established in the market. You will not need to spend a lot of money on advertising and marketing as people now will be aware of the brand identity of your business. But you have to make continuous effort to sustain your current market position.
Stage 4 – Decline Phase
Like other businesses, your business will also pass through this stage due to saturation. You will see a decline in your sales. Consequently, there will be a decrease in the production of your products. Customers will stop buying products in large quantities. This phase is also known as recession phase which is marked with reduced economic activity. You will have to struggle a lot to keep your business running. You will have to think of innovative ways to achieve quick recovery.
You should be ready to prepare all these stages of business cycle. Sometimes, you will gain profit and sometimes you will experience loss in your business. This is a part of business life. If you have made up your mind to start a business then you should be courageous enough to handle its bad phase also.
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