The Second Step: Survival

April 13, 2006

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The first stage in a business's life was infancy. The next stage is a state of survival, and it could take anywhere from a month or five years to reach this plateau. The keys to this phase are:

income is sufficient to cover expenses, to break even, and to renew assets as necessary
income is growing so that a small profit might be realized
employees may be necessary, but systems are still minimal
cash forecasting is possible as well as necessary

Causes of failure. The causes for business failure at this stage will likely involve:

owner burnout
inability to grow and expand due to a variety of factors, including insufficient cash flow, limited owner ability, and marketing shortcomings.

Many, many businesses reach the survival level and remain there indefinitely, earning just enough to get by. This is the case for most "ma and pa" stores, for example, and is acceptable if the owners don't rely on ultimately selling their business for a gain after it has marginally supported them over the years. Most survival-type businesses are sold at a slight loss or simply closed when their owners choose (or are forced) to retire.