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MANAGING EARLY GROWTH OF BUSINESS
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All enterprises must grow
All enterprises small or big must grow
Make profit and plough it back for growth
However any growth will create problemsas well (+)
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Growth Stages of Small Scale Business
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Phase I Creativity Birth and creation of the organization by the entrepreneur
Personal handling of management, making and selling of the product Frequent and informal communication with employees
Long hours of working
Salaries and wages governed by paternalism
Problem starts as soon as there is growth Promoters do not leave their old habits they do not delegate
Loose control and weak co-ordination
Due to lack of necessary and timely attention with increasing activity anddiversity the organization faces a crisis.
Need for corrective steps
Need for inducting strong management and new business methods
The entrepreneur has to think in terms of separation of ownership fromcontrol and fully support the professional manager so that the unit does not
stop growing and is saved from dying its natural death.
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Phase II Direction
Units which survive the first phase achieve a period of sustained growth with followingmain characteristics:
Functional division into two distinct departments manufacturing and marketing
Proper accounting systems are adopted
Separating owners account from companys account
Development of formal organization structure with titles and hierarchy
Centralised decision making with the professional manager
Direction is usually authoritarian with lack of delegation
After a few years the organization again faces crisis as procedure and hierarchy riddenorganisation coupled with authoritarian direction kills employee initiative andenthusiasm.
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Phase III Delegation
De-centralised organisation structures
Autonomy given to field managers
There is again crisis after few years due to
lack of effective co-ordination of financial,technological and manpower resources of theorganisation.
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Phase IV Co-ordination
Adaptation of the usual formal system forgreater coordination
Establishment of formal planning procedures
The proliferation of systems and programmesbegin to exceed their utility and the red tapecrisis is created
The organisation becomes more bureaucratic incharacter with its formal programmes and rigidsystems
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Phase V Collaboration
More flexible and behavioural approach tomanagement
Quick solution of problems through teamaction
Many large successful companies are in thisphase
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Understanding of these
Growth Stages
Every organisation and its component parts are at different stages of development.
The entrepreneur should be aware of these stages so as not to miss the time for shiftingfrom one stage to the other.
Helps in determining the flow of tide and learning to swim with it rather than workingagainst it
Each phase results in certain strengths and learning experience essential for successduring subsequent phases So, do not skip any phase.
Helps predicting future problems and evolving strategies
Helps in creating conducive environment for overall growth of the organization
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EARLY GROWTHADVANTAGES & LIMITATIONS
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Advantages of Early Growth Stage
Very important stage
Testing time when the future of the unit can be made or destroyed
Entrepreneur is full of enthusiasm, is familiar with all operations
Focussed attention to enterprise launching
Not deterred by the problems and obstacles
Scale of business is small and manageable
Informal organization and free flow of communication
Multi-tasking, high efficiency, low overheads
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Limitations of Early Growth Stage
Limited experience in someone elses business
Experience is mostly in one functional area
Lack of total perspective with regard to totalbusiness operations
Limited financial resources
Lack of skills availability in specialiseddisciplines/functions
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The Opportunity during Early
Growth Stage
Most Important Resource During the Early Growth Stage
PEOPLE
To be developed, nurtured and retained forthe sustained growth of the enterprise
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Criticality ofManagement Skills & Strategiesfor long-term success of the enterprise
during the early growth of a new venture
Record Keeping & Financial ControlInventory Control
Human Resource ManagementMarketing Skills & ManagementTime ManagementStress Management
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THANKS