Software Developer, Applications

Have you ever heard of the term “Business life cycle”? In simple terms, a business life cycle is defined as the stages or phases that a business goes through. There are mainly four stages in a business life cycle: launch, growth, maturity, and decline.

The transition from the launch phase to the growth phase would require a significant financial commitment. However, the problem here is that your business might not be able to generate the funds needed to scale its operations. Situations like this usually require that you seek funding from external sources. These sources could be family and friends, angel investors, venture capitals, etc.

As your business growth partners, we will be underscoring some signs which would help you identify when you should start seeking financing to help grow your business.

1. Consistent increase in demand

One of the early signs of growth is usually an increase in the demand for your product or service. This is typically a sign that your marketing efforts are effective. Increased demands do come with an increase in operational costs. Therefore, it is crucial that you have enough funds to meet the uptick in demand.

An inventory financing loan would come in handy here. It enables you to stock up in anticipation of customer demands.

 

2. Product-market fit

Product-market fit is when you have a product or service that satisfies strong market demand. The moment that product/market fit is achieved, you intuitively begin thinking about how to own a sizeable portion of the market. Doing this, however, costs a lot of money as you have to sort out marketing, human resources, etc. At this point, there is a valid case to raise external funds to drive growth. 

 

3. Evolving customer needs

As a business owner, paying attention to your customer needs and how they evolve is quite essential to ensuring growth and continuity. Although, these evolving needs might require that you make changes to your current business offering, which would require that you incur some unplanned expenses.

In cases like this, having a credit line in place usually comes in handy. You only get to pay interest on the amount utilized, thereby reducing your interest cost and providing you with a readily available source of credit.

4. Increased competition

Increased competition is a sign that you are operating in a market that other individuals have identified as profitable, and as such, there is a need to continually innovate to stay ahead of the pack. However, innovating your way through competition might come at a cost that you are financially incapable of shouldering. 

In times like this, having access to external financing can provide the financial buffer you need to ensure continued business relevance.

5. Available funding options

Some options available to business owners include loans from digital lenders like Pennee, Venture capital, Angel investors, friends and family, etc. Here is an article we wrote on raising capital for a small business in Nigeria. We believe that you will find this helpful.

 

Conclusion

As a business owner, understanding that each phase of your business life cycle requires varying levels of financial commitment, knowing the right time to introduce funds into your business, and knowing the appropriate financing options available to you at different phases are vital to ensuring business continuity.

We hope that this article has been able to help you spot when your business needs to start seeking financing to aid your growth.

AJIBOLA


 





Share this post:

Guest posting

Recent posts

Sponsored

298866352.jpg?k=1eadebdcceb0654bcbae3a3edb20d33d45c552ac7a38dae710e8fd34ef0bdde6&o=



Trustpilot
Blogarama - Blog Directory
paytolet_footer