Managing Early Growth Of Business New Venture Expansion Strategies and Issues

Managing Early Growth of Business

Project Execution : Various steps involved
Feasibility of the project to be determined Involvement of the promoters. The detailed project report needs to be prepared. Search of the financial institutions to support the project including alternative search and evaluation. Submission of the DPR to the financial institution Checking of feasibility by the financial institution A loan is sanctioned for disbursing of the loan amount. To check the agreed upon terms and conditions of the loan. The project is ready for the execution. To control the development for the conception period.

Company Formation
Proper consideration towards venture ownership before establishment. It must be based on sole or in multiple combination of -- Investment capacity -- Technical competency -- Managerial ability -- Salesmanship -- Limitations if any In general the ownership may be of following types -- Individual Proprietorship -- Family Partnership -- Partnership with individuals who are not family members -- Private limited company -- Limited company -- Co-operative society and -- Private Trust its

Acquisition of Assets Fixed Assets

Land Building Plant and Machinery

Movable Assets
Factory cars and vehicles Work managers Technical know how Promoters and experts Infrastructure

Sundry Assets
Power stations, Bore wells, Water tank, Fire fighting etc. Equipments and Balance Sheet Items (Loan interest etc.) Working manpower and workers

 Infrastructure Road and Transport facilities Telecommunications Electricity and water supply Post office, banking, medicine, catering etc. Marketing Activities Product Testing Testing of the marketing mix Advertising, publicity and sales promotion & Market intermediaries Organization Structure Decision of hierarchy Role as per hierarchy Accountability of the hierarchy Formulation of operational manual Monitoring and Control Sales analysis and profitability analysis Expenditure and liquidity analysis

 Management of Human Capital

The new enterprise normally obsessed with the problem of high staff turnover. Initially, the minimum manpower is selected for trial run of the project. This is the most crucial segment of an enterprise apart from material, money, method, machines, market and mechanism. The management of human resource can be divided into 2 parts as, staffing and the performance management.

Staffing
Identification of need in terms of necessary knowledge, skills and abilities to perform the desired job at all stages of enterprise development. Principle of effective staffing is to be observed. The feasibility of outsourcing

 Principle of Effective Staffing

Staffing objective Determination of short and long run needs Formulation of job description and specification To organize a recruiting campaign Knowledge of govt. regulations regarding employment Staffing Expectation from the job by the employer Any specific skill is required for the job Training of the worker to make them more competent Job Definition Person must aware that what is expected from them To observe open competition to select the best Employee Appraisals to cater the motivational level Employee Training Owner or the Work Manager training

 Performance Management
This is essential for survival and competency of the enterprise This is must for manpower retention To organize training program To establish training needs and goals To choose most practical training methods To evaluate the result and the outcome On the Job Training Preparation, Demonstration, Application and Inspection Performance Appraisal Personal Development, Personal planning, Motivation, Reward and Communication Management by Objectives Adequate Compensation KRA and Accountability and Job Satisfaction

Challenges before the Growing Ventures

The distinction of smaller size The one person brand syndrome Time management Community obligation To abide various govt. laws To continue management education To manage venture capital at each stage of growth Effective delegation and control Tolerance of failure To cope up with the environmental change Networking capabilities and flexibility To balance the focus of objective To establish outside managerial assistance To maintain focus on the customer needs

New Venture Expansion

The venture needs to transform from single line to a multi line enterprise To broaden the venture product and service offerings All together to enter into a new market segment Decentralization across different departments To Identify the alternate source of resources To further define the need of human resource Inventory control and credit management Marketing and cash flow management To deal with the competitions Adequate logistics and distribution management Further c onsolidation to maintain profit

Prime Difficulties to Manage

Financial Problems
Long time of dispersal of loan In general preference given to experience persons SFCs ask for details of working capital sanctioned by the commercial bank Seed capital is very difficult to get For sundry assets SFCs declines to provide loan The attitude of banks in financing new venture is not encouraging and sympathetic.

Energy Problem
Power connection not provided on time. Power company asks for deposits which are not funded To decide the load factor and thus installation is very tedious

Prime Difficulties to Manage

Asset Procurement Problems
To get the NOC for procurement of fixed asset is troublesome Small sheds and plots are not available in SEZ, SIZs. In SEZ and SIZs the infrastructures are not adequate To procure private land and sealing lands for industry purpose is an up hill task. Legal formalities from the local authorities is not easy. The land allotted by the govt. is not on permanent basis.

Raw Material Problem

Small quota of raw materials is very difficult to get.
To get quota regularly is not certain. Delay in recommendation of quota from authorities To get approval from state development authorities takes time

 Problem from the DICs

Prime Difficulties to Manage

More delay in registration process Lack of coordination between bank and the DICs Delay in recommendation of quota for raw materials Loan recommendation from DIC is time taking always.

Promoters Problem
Delay in preparation of project reports specifically for small units EDP participants gets low priority from promoters.

Marketing Problems
Lack of marketing efforts by entrepreneurs and lack of govt support Competition and price wars