How many phases are there in a business cycle?
Asked a year ago
What are the distinct phases of a business cycle, and how would I know which phase my e-commerce business is in?
Friday, January 14, 2022
There are 5 phases in a business cycle, the startup phase, growth, shake-out, maturity, and decline stage. In the startup stage, you spend time creating and implementing ideas on how to market your products. In the growth stage, there is a rapid increase in sales but the profit is not as high as sales.
In the shake-out phase, sales are at their peak however profit is declining which is due to saturation and an increase in competitors. In the maturity phase, cash flow remains the same, sales decrease, and profit margins are low. You can decide to either reinvest in the business or cash out.
It's hard for a business to know it's in the decline stage, but if it has declined for three consecutive quarters it's probably declining.
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