What is a venture`s life cycle? What are the various stages in the life cycle, and what are the...


What is a venture`s life cycle? What are the various stages in the life cycle, and what are the important activities in each stage? How can this concept be used in the financial planning and management of a small business?


A business is an entity involved in manufacturing or service-related activities. They can be set up for earning profits or social work. A business may be done through trusts, Non-Profit organizations, body corporates, firms, etc.

Answer and Explanation:

A venture life cycle is a series of events that leads a new product into subsistence and continues its development into a full-fledged product. These demonstrate the four main turning points in the life of a venture. In any business, a venture life cycle is a method to outline the birth, development, aging, and substantial end of a product or service.

The four stages and important activities in each stage of the venture lifecycle are:

1. Establish venture:

At this point, the venture is just an idea. This stage takes the enterprise from concept to reality and leads to the venture's establishment.

It all begins with the Ideation activities. This is how a promotor gets the idea for a product. Following that is Validation, in which the team discusses the concept. This will either confirm or disprove the idea. The financing activity has now begun. Fundraising is required to put a new product idea into action. Management is the final activity of the Establish Venture phase. The venture cannot implement the idea and achieve its mission without the right team.

2. Build product:

At this point, the concept is transformed into something tangible that customers can feel. This stage decides the success or failure of the venture.

Specification is the first activity in this process. This step determines which needs will be met by the product. Another activity done in this stage is product development. It entails the creation or production of the product and includes the blueprint for the product as well as coding. The product is then sent for verification. This phase concludes with sales. This assembles all of the necessary components for releasing products to the market.

3. Market launch:

This stage is about the customer's interaction with the product. At this point, the product is released in the market to capture customers' attention.

The initial activity is to identify the prospective customers. It requires a deep understanding of the consumer's needs and wants. After identification, marketing is done. It means convincing buyers to purchase their product. Interacting and gaining over potential customers is a crucial component of marketing. The last activity is Closing. It includes the closure of the deal.

4. Customer success:

This is the last stage in the lifecycle. Customers who are satisfied with the products stay loyal to the brand and help build goodwill in the industry.

The primary activity in customer success is implementation. It refers to deploying the product. Deployment differs from product to product. After that, post-sale services are rendered to the customer. It involves helping the customer in setting up the product. This phase's next activity is service. Service frequently necessitates the venture to go above and beyond what the customer or the venture anticipated at the time of purchase. Cross or Upselling is the last and final activity of Customer Success. A successful service phase is required as a prerequisite for this stage. Insights observed during the service phase feed directly into and expose opportunities to cross new products of the venture to the existing customers.

The concept of venture lifecycle is useful in the financial planning and management of a small business as:

Small businesses can manage their finances and capital by understanding the sequence of events in a venture cycle. In the first stage of the venture life cycle, a small company is formed to raise funds and seed capital. It helps a small company in preparing budgets and digits. The next stage in product development which involves research. This can help to mitigate the impact of external factors like declining credit worthiness.

It aids in maximizing the use of capital resources while minimizing waste. In the third phase, a small company's product is launched into a competitive market. It aids in brand development and attracting new investors. Investors are always looking for reputable companies to invest in. When the venture reaches the end of its life cycle, if the product succeeds, it helps retain investors.

When the management of a small business is concerned, various useful aspects of the venture life cycle are found. During the establishment of the venture, people who will work for the organization are employed. It aids in the formation of a strong core team capable of carrying out business ideas. Following establishment, the concept is carried out to avoid the impact of increased competitors, insufficient inputs and raw materials required for manufacturing, or human resources.

Finally, once the product is on the market, more employees are enticed to work with the organization. Furthermore, if the product gains market share and profit, small businesses benefit from economies of scale, better stock carriage reduces expenses, and may also choke competition. It aids in the retention of employees and motivates management to work harder.

Learn more about this topic:

Starting a Business: Factors, Procedures & Issues


Chapter 6 / Lesson 6

Starting a new business can be a very enticing idea, but it is important to know the facts before taking action. Explore the factors to consider, procedures, and potential issues concerning starting a business.

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