The Life Cycle of an Enterprise

An enterprise is a business that undertakes significant commercial activity with an intention to make a profit. Enterprises generally conduct activities that are of a reasonable size and scale. Just like all businesses, enterprises have a life cycle that changes over time. The stages are pioneering, growth, renewal and transformation. As set out in this article, it is important to understand the life cycle stages of an enterprise as it will assist in achieving a competitive advantage.

Pioneering and Consolidation Phase

At the early phases of a new business venture, the pioneering phase is characterised by a rapid entry into the market. Customer demand can drive accelerated growth of the product or service. Pioneering action within existing enterprises can also come in the form of incubator groups, new products and spinoffs. Pioneering action can form individually or with the help of the original enterprise. The key characteristic of enterprises in this phase is that they are market leaders and dominate a targeted customer space.

Professional consultancy firms can also assist enterprises in growing and scaling their business. For example, EY assists businesses with growth through the sponsorship of incubator spaces, such as Tanks Stream Labs in Sydney. Such firms often sponsor the innovative ecosystem in Australia through providing services such as capital raising, research and development, M&A, risk management and tax support.

The next stage of an enterprise’s life cycle is the consolidation phase, where a company focuses on making improvements in its goods and services. At this stage, there is a key focus on making processes more efficient and making improvements to existing methods.

Renewal and Transformation Phase

The renewal phase is a crucial part of an enterprise’s life and should be constantly assessed. For most businesses, the chaotic nature of piloting unstructured and inventive business concepts has the ability to transform a business through innovation. The renewal phase allows businesses to differentiate their operations and product offering from competitors by making internal changes to improve productivity.

An example of a successful enterprise that underwent a renewal phase is IT multinational, Cisco. Cisco developed an internal enterprise management tool that allowed management to monitor performance, IT support, voicemail and home support. As a result of the tool, the reduction of operating costs allowed the company to harness further growth.

The transformational phase of a business follows closely after the renewal phase. This phase enables the business to harness what was developed in the renewal phase to transform the company into the next stage of growth. If a enterprise fails to successfully renew or transform, there may be a phase where growth slows. Customer satisfaction may also decline along with investment. Transformation phases should be implemented with careful planning and the involvement of all key stakeholders.

Key Takeaways for Enterprises

It is important for enterprises to constantly review their business processes and their phase in the lifecycle. While phases may not be clear cut for every enterprise, it is vital for top-level management to constantly assess processes and procedures to improve efficiency and productivity. If you have any questions about your company’s business lifecycle, get in contact with our business structuring lawyers.