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7 Stages of the Entrepreneur’s Life Cycle: From Independence to Interdependence

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Celebrate your accomplishments as you spend time with your friends and family members today. Know where you are in the 7 stages of the entrepreneur’s life cycle so that you can celebrate the independence (or interdependence) of your business.

Today, as we celebrate our founding fathers’ bold move for independence and the founding of the United States of America, it’s a wonderful time to reflect on similar desires and attributes that all entrepreneurs go through when starting their own company. Deciding to branch out on your own is a huge step in every entrepreneur’s life. Here are some of the important phases of evolution from the very beginning, to peak performance, and eventual end of life. Every business goes through a life cycle that is similar to a person and each stage brings with it unique characteristics and challenges to solve in order to move to the next stage.

Stage 1: The Birth of Your Company. This initial stage in the entrepreneur’s life cycle is filled with emotions running the gamut from elated excitement to fear and uncertainty. One thing is clear: The drive for independence starts with an idea. You see something that others don’t see and it compels you to take action and do something about it (for more on this topic, see related article, “Join the Billion Dollar PayPal Mafia Club: Ace These 7 Questions.“) While you may not be crystal clear on how you’re going to get it done, there is a natural drive to start something that doesn’t exist. When you take this step, you are seeking your independence in the business world and creating opportunity for others to join your mission and vision.

Stage 2: Toddlers Seek to Survive and Grow. Assuming that you find a way to successfully launch your company, you’re now looking to survive as a business. Most entrepreneurs will either seek to stay independent or immediately look for investors to give them the cash they need to survive. Staying independent will give you more control over your outcomes, but having a cash cushion will help you sleep better at night knowing you have some time to build your company and get it right. Survival is the name of the game at this stage.

Stage 3: Young Adults Get Cocky. You know your company has reached young adulthood when you are in hyper growth mode but not really in control of your outcomes. It’s at this stage that many companies run into trouble as entrepreneurs, having tasted the success they were seeking and suddenly think they can do no wrong. If you believe you’ve figured it all out and are killing it, you are at the stage right before you usually get blindsided. Rather than measuring and focusing on your desired outcomes, entrepreneurs are enjoying and celebrating their early success at the young adult phase. Many companies spend years cycling between the Toddler and Young Adult phases as they are missing the key ingredient to move to the next phase: stability. Only when a business is truly stable, can it rise to the next stage.

Stage 4: Adults in Their Prime. This is real success and it happens when your company has gone beyond survival and stability, and moved into a more predictable growth phase. This is the phase you want to stay in for as long as possible. This is also the phase when entrepreneurs seek interdependence. That is, other people and companies that can make your business stronger because they themselves are independent and strong. Rather than creating co-dependencies, adults in their prime form partnerships that are interdependent. This further helps maintain the growth cycle and keeps great companies in their prime.

Stage 5: Aging and Early Decline. Perhaps the interdependent partnerships have been strained or some of your best teammates choose to strike out on their own. Often times the marketplace has caught up with your great idea or someone else has seen an even better way to accomplish the vision and mission you set out to deliver. Whatever the circumstance, your business (and perhaps your entire industry) is being disrupted. At this stage you can either disrupt yourself to get back to your prime, or begin the journey to unwind what you have started (see related article, “You Are Either Uber or You’re Being Ubered.“)

Stage 6: Illness and Rapid Decline. If you have not figured out a way to stem the early signs of decline, then this phase is predictable. It starts internally with a team that isn’t sure where to go next and how to fix the problems that have been identified. Inaction leads to faster decline and internal stigmas, fears, uncertainty and doubt set in. Unless massive action is taken at this stage, the company is all but assured it’s going to fail.

Stage 7: Death. While we work hard to ensure that our companies outlast us, there comes a time when it’s clear that staying in business is either leading you into bankruptcy or has already caused such as cash flow strain that there simply is no way to dig yourself out of the hole that has been created. Shutting your doors can feel like a failure, but when the writing is on the wall, it’s much better to close up shop before the business takes everyone down with it.

What stage are you grappling with today? As you enjoy our country’s Independence Day, take a moment to recognize where you are in your business and what you need to do to move to the next phase. Before you can move from one phase to another, it’s important to recognize where you are and what got you there.

Celebrate your accomplishments as you spend time with your friends and family members today. Just know where you are in the 7 stages of the entrepreneur’s life cycle so that you can plan your future and celebrate the independence (or interdependence) of your business as well today. As entrepreneurs, we need time to step back and celebrate what we have built and accomplished. Otherwise, why spend so much of our lives doing what we do? Have fun and enjoy your day today!

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