Managing the

Growing Venture
Gaurav Karakoti – VLMP/04/07
Gaurav Malhotra – VLMP/04/08
Kumar Anshul -VLMP/04/10
Devidutt Mishra – VLMP/04/14
T Umashankar –
VLMP/04/25
Praveen Sharma – VLMP/04/21
Agenda
Life cycle of a venture
Problems during growth
Important concepts for entrepreneur
Framework for developing growth strategy
Summary
 Life cycle of venture
Sales

•Ideation •Initial
•Business customers
plan •Cash out
•Seed fund La te g ro w th
flow
•Legal a n d m a tu rity
issues
•
•
Prof
it

Pre S ta rt- S ta rt-u p E a rly G ro w th Time

up
 Problems with Growth
Growth can dilute effective leadership and
control
It might lead the venture , away from its goals
and objectives
Lack of training and employee development
might lead to poor quality control
Financial problems
Can lead to stress and burnout of founding
team
ds of new employer establishments survive at least two years,
ercent survive at least four years and 95 percent fail within five years”
- Small Business Administ
Important concepts
entrepreneur should
know
How customers behave

Rogers - Adoption of innovation curve

Fixed capital arrangement
• Fixed capital required for setting up offices,
factory building and equipments
•

Equity through issue of shares

(ordinary/preference)
Debt -
 Term loans – Issued by state financial banks,
some have option of conversion to equity
 Issue of debentures – Interest paid on maturity
Cash flow management
• Cash to cash cycle time = Sales receivables in
days + inventory in days- suppliers payable in
days

Trade credit – Negotiate with supplier for
extended credit period
Deferred credit – Any case of capital equipment
purchase banks works a guarantor for deferred
payment
Bill of exchange
Bank Overdraft facility
Other Factors
Don’t neglect external macro factors like
changing regulation, labor market and
monetary policies
Good time start some small CSR activities if
you can afford it
 Changing priorities
Start UP Growth
Sales/Marketing Sales/Marketing
Obtaining external financing Internal financial management
Internal financial management Human Resource Management
General Management General Management
Human Resource Management Pro d u ctio n / O p e ra tio n s
m anagem ent

“Entrepreneurial Start up and Growth: A classification of

problems” Phillip Olson & David, Entrepreneurship Theory
and practice, 1993
 Questions to be
answered
What
•

How

Who
Managing Growth – Dynamic Model

Vision and Strategy Organization structure and Process

Entrepreneur

People
 Alternative growth strategies
Depends upon Products, Customers and geography.
•
N ew
N ew

N ew

C u sto m e rs

N ew
G e o g ra p h y
E xistin Pro d u cts N ew
g 13
Questions to answer

Which markets/customers will we serve, and which

we will we not ?
What results do we endeavor to deliver to these
customers ?
Balance value to customers and cost
To determine Operational tasks and financing
requirement
Resource commitments
What are the basis of competitive advantage
established and how to maintain it ?
 Entrepreneurial Strategy Matrix
The Entrepreneurial Strategy Matrix

Business Horizons 40 (May–June), 73–77.

Sonfield, M. C., and Lussier, R. N. (1997). “The
Entrepreneurial Strategy Matrix. A Model for
New and Ongoing Ventures.” ©1997 by Indiana
University Kelley School of Business.
Organization Structure, and Processes
Managing by Managing by Managing by Managing by
“youOrganization
Context have Structure
know the Iresults Plus “&
behavior
(2) ..toProcesses
Content
(3) Plus “ I will
(1)
product , you (2) developed this (3)
achieve these (4)come with you
know the plants, budget-in terms results you will to plant A,B to
work with of quality, have to close tell them what's
sales/marketing quantity and plants A,B , going on”
team to cost. Figure out start sourcing
determine how to make it from Far East “
appropriate happen
quality level and
then make these
products as cost
effectively as
you can
Managing transitions in a growing enterprise,
Michael Roberts, HBR
 Management style
Responsibility Content Behavior Results Context
Strategy & Operating Do analysis, formulate Prescribe analysis to be Define results along Define Mission
plan , strategies and done, criteria's to be used financial, competitive
Organizing Group
budgetstasks. Define Prescribe
assumptionsactions
to beand
made Define results
and market required Create Culture
dimensions
job units, structure and behavior of specific
Staffing Recruit , select
performance and
standards. Prescribe approach, fix Define performance
organizational unit Instill values
train
Oversee and criteria for selection standards personnel will
coordinate day to day be held to, as well as
activity reward and punishment
system

Managing transitions in a growing enterprise,

Michael Roberts, HBR
Alternative Managerial Approaches

High Laissez-failure Professional Management

Delegation Of
Responsibilit
y

Low Entrepreneur Style Bureaucratic Style

Low High

Use of Formal Coordinating Mechanisms

18
Organization structure and
process
What are the key tasks, and how can these be
broken down into positions that map onto the
availability of staff in marketplace ?
What responsibilities can be delegated to the
senior layer of management ?
How can I – as the entrepreneur maintain
required degree of influence over these tasks
and how can I build coordinating mechanisms
?
What are the key values to be institutionalized
as culture, and how can this process be
accomplished ?
People
What specific knowledge , skills, experience,
and aptitude are required for the set of
positions that have been identified?
How can individuals be hired, trained,
evaluated and rewarded to motivate superior
performance?
What attitude towards customers, suppliers
and fellow employees must new hires
possess, if they are to fit into existing culture
and be effective contributors to strategic
success?

Entrepreneur
The entrepreneur’s vision largely determines
firm’s strategy
The entrepreneur’s value’s drive the firm’s
culture
The entrepreneurs management style creates
the features of organization structure and
process

Transitioning from doer to manager to leader
E n tre p re n e u r
What is my existing model of management ,
and where it is likely to “ hit the wall” as we
scale-up?
What changes are required and what tools do I
need to be competent in?
How can I get feedback on my own
performance ?
Do I even want to attempt, to make this
transition?
SUMMARY
Growth forces companies through transitions
for which the management may be ill
prepared
Dynamic fit between Vision & Strategy,
Organization Process and structure, people
and entrepreneur
Growth challenges the founding management
team who may lack skills to lead a larger,
more complex organization
Entrepreneur should also change himself
according to the organization need
•
Thank you
• &
• Questions for discussion