Understanding the Three Parts of the Business Cycle

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Before you think about growing your business, you need to make sure it is stable and properly managed. And before it becomes stable, you must do the necessary research to set it up well.

Having said that, let us look at issues to keep in mind in the setting, management, and growth stages of your organization.

Setting Up Your Business

When it comes to the legal entity of your business, there are several types of organizations you can register. Examples include sole proprietorship, general and limited partnerships, and LLCs or limited liability companies.

If you’re starting a business by yourself, the best option is to create a sole proprietorship, namely a single owner to an enterprise. This is pretty straightforward.

Yet, when more people are involved, it might be a bit more difficult to decide. In such cases, it is best to consult with a business lawyer. A reputable attorney will guide you on what each business entity entails and help you make the right long-term decision.

Aside from the business entity, there are other factors to consider when starting a new firm. Perhaps the most important one is your staff. Whether you are managing five or five hundred people, the basic principle is the same. You need to be aware of what kind of employees you will be using and how this will affect your bottom line.

For example, half of your staff could be full-time workers while the other half could be divided into part-time employees, freelancers, interns, and temporary staff. Keep in mind that there are no rules set in stone on this. Whatever benefits your company is what you should do.

Managing the Business

Having set up your business, the next thing you should take care of is coming up with a long-term management strategy. There are many reasons why businesses fail. Some of them include the wrong product or service, bad timing, and an inadequate relationship with your customers.

But arguably the biggest one of all is bad management. If the person at the helm doesn’t know what he’s doing, chances are nobody else will, and the enterprise will flounder.

As an entrepreneur, one of the toughest decisions you have to make is determining whether you are the person most suitable to run the ship or whether it is somebody else. You might have the vision necessary to succeed but cannot make the dream become a reality. In these cases, it would serve you better to hire someone with expertise, somebody who can understand and embrace what you are trying to do and do it well.

If the choice is not as clear cut as you would hope for, you can start by asking yourself the following questions:

  • Do I know where the business is headed? More than that, do I have the ability to take it there?
  • How do I get along with other people? Am I a good motivator who brings out the best in others?
  • Am I interested in a management role, or do I prefer to oversee operations?

These and other questions will help you decide who the right person for your firm is.

Growing the Business


All great companies were, once upon a time, very small. Steve Jobs and Steve Wozniak started Apple from a basement in the state of California. Mark Zuckerberg gave birth to Facebook from his dorm room at Harvard University. What would become of these two technology giants nobody could have imagined.

One of the many lessons from these two stories is that for businesses to be successful, they need to grow. Otherwise, they run the risk of becoming stale and eventually disappearing.

But how does a business grow? The answers vary based on whom you ask. Still, there are tried and true principles that can be applied regardless of the industry you find yourself in.

For instance, one way for your organization to expand is by finding a new market. Another would be growing from the core. If your company produces computers, it could also specialize in computer peripherals. If you run a restaurant, you could look into food storage and delivery services. There are also others.

The key is to remain open-minded and flexible, to think outside the box. You also need to take calculated risks. By doing so, you will discover growth areas in places you had never even dreamed of.

As we have seen, there are three parts to the business cycle, each one with a different set of ramifications. Those willing to put the necessary effort into all three of them will find themselves in a thriving organization for many years to come.

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