Entrepreneurship and Small Business (ESB) V2 Certification Practice Exam

Which stage in the business life cycle indicates that the business is separate from the owner and has delegated responsibilities to staff?

1. Decline

2. Start-up

3. Takeoff

4. Maturity

The correct answer is: Maturity

In the maturity stage of the business life cycle, the business becomes well-established, and there is a clear separation between the business entity and the owner. By this point, the company has typically developed its systems, processes, and a reliable workforce to handle various operational responsibilities. This delegation is essential as it allows the owner to focus on strategic decisions rather than daily management tasks. During this stage, businesses often have a stable customer base and consistent revenue streams, which enables them to implement a wider range of managerial structures compared to earlier stages like start-up or takeoff. The maturity stage also signifies that the business has likely achieved its growth potential and can operate independently of the owner, demonstrating its capacity to thrive through its staff’s capabilities and systems in place. In contrast, during the start-up phase, the business is usually heavily reliant on the owner for decision-making and operational tasks. The takeoff stage may involve rapid growth, but the focus is often still on establishing a firmer foundation rather than delegating responsibilities. The decline stage often represents challenges where the business may struggle to maintain operations, further deviating from the characteristics of a well-managed organization.