Business Life Cycle

business plan

A document a business should produce to give it purpose and direction over the long term

debtor

A person or business who owes money

undercapitalisation

A reason for business failure. When a business starts and it does does not have sufficient funds to pay their expenses or operate the business

poor record keeping

A reason for business failure. When the management of a business do not know the financial situation as they have not kept recorded all the business' transactions.

inflation

An increase in the general level of prices

creditor

An individual or business which is owed money by a business

proprietor

An owner of a business

renewal

In post maturity, business sales begin to rise again as the products are modified to attract customers

decline

In post maturity, the sales fall as the business' products are no longer in demand by consumer.

debt

Money owed by a business to creditors

profit

Revenue minus expenses

cessation

The closure of the business

establishment

The first stage of the life cycle. The business starts and sales are low.

post maturity

The fourth stage of the business life cycle.

market share

The percentage value of a business' sales as a proportion of total market sales

growth

The second stage of the business life cycle. Sales increase at a rapid rate

maturity

The third stage of the business life cycle. Sales level off.

sales

The value of goods sold by the business

loss

When revenues are less than expenses

breakeven

the total revenue is equal to the total costs