What business lifecycle stage are you in—and why is it important?

This allows for service that’s personalized, not cookie-cutter. And it helps clients remain as competitive as possible by looking multiple moves ahead while navigating the current landscape.

Here, Cathcart shares his insights about the defining factors of each stage of the lifecycle of a business—and what should be on your mind at each point so you can level up when you’re ready.

Early-stage businesses: Creating a product—and a market

The early days of a business can be the most exciting and fun for an owner or entrepreneur, says Cathcart. “It’s when that spark of an idea turns into a decision: ‘Hey, I’m going to build a business,’” he notes.

That said, many early-stage business owners can be so wrapped up in the day-to-day processes and challenges that they don’t seek advisory services right away. But partnering with a financial advisory team early on (ideally before you start maxing out personal credit cards or shifting inventory to a tent in the backyard) can help protect your personal finances and set you up for professional success, too.

What business lifecycle advisory prioritizes at the early stage

You and your advisors can discuss all the capital sources available to cover startup costs. You can also plan out next steps, such as a shift from leasing a space to purchasing a property, even if those moves may be several years in the future. It’s never too early to discuss commercial real estate: Moving locations can be expensive, so it’s valuable to be prepared well ahead of time, enabling you to move when your business and the market are in alignment.

It’s also smart to get a risk assessment and an insurance evaluation done in the early stage of the business lifecycle—and annually thereafter. This way, as you grow, you can make adjustments quickly to ensure proper coverage for your business, employees, and investors.

And even if you’re not ready to automate payables or explore new ways to receive payments just yet, it’s also a good time to start learning about these and other treasury and payment solutions, such as a commercial card program, online banking, and lockbox services. Making the shift to electronic wire transfers, for example, helped William Thayer, owner of Palm Beach Cast Stone, find the time and funds to expand into global markets when he was ready.

Growth stage: Sustain cash flow under able leadership

As you move into the growth stage of the business lifecycle, you’re determining whether the business has viability. “The owners who are successful are the ones with the resources and the business acumen to make something grow,” says Cathcart.

At this stage of your business lifecycle, you might be facing new challenges with your supply chain or operations, especially if you’re expanding your product lines. For example, Cathcart says, if you have a milk company but don’t have enough milk cows or almonds to create your product, you can’t hope to expand. Leadership development and clear communication also become more important at this point, as you add employees—and develop relationships with more and more industry professionals, vendors, and even local politicians and others whose decisions can impact your success.

What business lifecycle advisory prioritizes at the growth stage

Working with advisors who understand the challenges facing growing companies can be a game changer. In an article for business leaders, Don Geletko, a corporate strategist at Truist Leadership Institute, noted that challenges for businesses engaging in rapid growth in particular include issues with growth strategy (such as hyperfocusing on one aspect of growth), challenges with business leadership (such as a reluctance to delegate responsibility), and challenges with talent optimization (such as ensuring employees’ skills evolve alongside the company’s needs). Revisiting and revising your business plan—with the help of your advisory team—can set you up for securing equipment loans and small business or SBA loans, if needed.

Adding or creating more robust employee benefits and workplace wellness programs at this point can also assist in attracting and retaining talent for your company. At this stage, you might also consider exploring more merchant services, such as payment processing software, which can improve cash flow and reporting. Digitization can also provide you easy access to data that can help you make quicker decisions based on which of your products or services are outperforming others, for example.

And, as your personal wealth increases, this is also an important time to pay more attention to where you invest that money—and to create plans to preserve that wealth and pass it along to your heirs someday.

The growth stage involves building new relationships with expert partners in your industry and region. Look for financial advisors who are well connected and can make key introductions. For example, Daniel O’Dorisio, owner of O’Dorisio Carpentry and Concrete, says that his Truist Relationship Manager introduced him to a new accounting firm, which helped him reach the level of reporting needed to secure larger amounts of financing as his contracts grew.

Established stage: Control financial gains, implement efficiencies

An established business has achieved success in the marketplace. “That usually means it has two important things,” says Cathcart. “One is sustainability of cash flows, and two is a defensible and durable enterprise value.”

At this point, owners have the opportunity to invest further by making acquisitions or doubling down on the business model and operations they already have. “By doubling down, I mean investing in the organic growth of their mature business,” he adds. This can help you expand your customer base and market share.

What business lifecycle advisory prioritizes at the established stage

Mergers and acquisitions—whether vertical or horizontal—can do more than grow your profitability and enterprise value. M&A can also help you grow your workforce, find efficiencies, and even solve for supply chain issues.

For example, a company that requires natural (or nonrenewable) resources, such as stone, might acquire similar businesses as a way to reduce competition for these limited supplies. Or consider INSP LLC, a media company and Truist client that recently added 12 broadcast stations to its successful cable network offerings—nearly doubling profits and employees through that one move. Industry expertise, strategic consulting, corporate financing, and other services can help simplify complex deals.

Businesses that have worked with advisory partners for decades by this point may find these big moves even easier to make, as their relationships, mutual understanding, and trust have been built and solidified over time. You can also put your heads together to maximize value for your investments through innovative strategies, recapitalizations, debt and equity financings, joint ventures, and more.

Established-stage business owners may also begin to think about business transition—that is, exiting from the business—whether they choose to sell the business outright, take a less active role in day-to-day operations, or hand over the keys to heirs or executive leadership.

Transition: Prepare the enterprise for new leadership

“At some point, as the business grows and you become successful, we start thinking about the things that best position you for monetizing that business once you get to the transition stage of the business lifecycle,” says Cathcart.

What business lifecycle advisory prioritizes at the transition stage

The name of the game during this stage is finding ways to increase enterprise value so you can get the most for your business when you sell (or hand it to the next generation).

“For a public company, that’s easy to observe because the stock price goes up, but for a private company, it’s not as easy to see,” he adds. “In every case, you need to focus on the same things. If you take care of your people, deliver what your clients want you to deliver on, and live by the mission and values of your business, that should lead to an increase in enterprise value.”

While owners at this point are well-versed in running a business, most have never sold one before—and never will again. Having the right advisory team at this point is vital if you don’t want to risk leaving money on the table. Working with a business transition advisory team can protect personal wealth, as many owners are accustomed to having much of their money tied up in their company. Upon its sale, the sudden influx of liquid assets can be a surprise—as can the lack of a life focus. Advisors can work with you and your family to smooth that transition and help preserve generational wealth as it’s passed along.

Truist Business Lifecycle Advisory: Putting it all together

In reality, notes Cathcart, business transitions are inevitable, and they take on many forms, not just final sale. Transitions in leadership, location, focus, culture, staffing, and other challenges may be well planned, or they can happen unexpectedly and almost overnight. What’s more, despite the seemingly neat and tidy stages of a business lifecycle, there are transitions between these, too. By having an advisory team that’s been through the process before—and knows the hurdles you’re likely to face—you can feel more comfortable focusing on your life’s work, knowing the team will bring you solutions as needed, sometimes foreseeing or averting challenges you weren’t even aware of.

“One of the most important questions for a business at any stage is, ‘What’s next?’” says Cathcart. “The longer you have an advisor who understands your business and is working with you from the earliest stages to the latest stages, the better they can help you plan and prepare.”

“The longer you have an advisor who understands your business and is working with you from the earliest stages to the latest stages, the better they can help you plan and prepare.” 

Scott Cathcart, Head of Corporate Finance at Truist