Mg Early Growth of Business

7/30/2019 Mg Early Growth of Business

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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

Mg Early Growth of Business

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