AOFEntrepreneurship

Unit 3, Lesson 8

NavBuigating siness Growth

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Entrepreneurs’ goals and values help them choose the best strategies for growth and maintenance of the business

A partnership enables an entrepreneur to share the risk and responsibility of owning and managing the business

Benefits of partnerships:• Shared workload• Combined skills

Drawbacks of partnerships:• Shared profits• Loss of total control

Licensing and franchising a business allows an entrepreneur to increase profits through royalties

Benefits of licensing and franchising:• Revenue without direct effort• Increased brand recognition• Growth with low financial risk

Drawbacks of licensing and franchising:• Risk to brand image by poor franchisee • Reduction of potential markets

Benefits of acquisitions and mergers:• Can finance growth that wouldn’t otherwise be possible• Gives entrepreneur the option of staying or leaving

Drawbacks of acquisitions and mergers:• Long, complex process to close• Deal often comes apart during

negotiations

Two strategies for growing the company with an immediate infusion of assets are acquisitions and mergers

Globalization is one way for a company to grow—by selling products and services to untapped markets

Benefits of globalizing:• 95% of the world’s population lives outside the United

States—many markets are untapped.

• Selling to multiple markets diversifies a business’s “portfolio,” making it less susceptible to downturns in one market.

Drawbacks of globalizing:• Hard to gauge partner creditworthiness

• Exchange-rate fluctuations

• Language barriers

Entrepreneurs manage business growth by choosing a strategy and selecting the options that help reach that goal

Entrepreneurs have several options to help them promote and manage their business’s growth. A few of these are:

• Partnerships• Licensing and franchising• Mergers and acquisitions• Globalization