CHAPTER FOUR: BUSINESS GROWTH FINANCING

Introduction
Sound financial planning is the foundation of any business growth strategy. Growth Finance is a
company’s use of debt, equity and hybrid financing techniques to achieve business expansion in a cost-
effective manner. The focus of growth financing should be on identifying the optimal financing solution
for a company. This occurs when the cost and flexibility of the financing structure is linked to the
company’s cash-flow based value and growth potential. Optimal acquisition finance structures are
adapted to the client situation and may call for nonstandard corporate finance techniques and funding
sources.
Firstly, you should establish:
• how much investment you will need to fund the venture
• when you will need it
• when it will be available
• how soon you will be able to repay the capital
It's important to detail all the costs incurred in getting your growth option underway and compare them
against the anticipated profits. You must be realistic and practical when setting business growth
objectives.
FINANCIAL FORECASTS
A detailed cash flow forecast is essential, not least because outgoings are almost certainly going to rise
sooner and faster than revenues. You must have enough money in the pot to keep the core business
running. It's a good idea to build in some surplus too, since projects of this nature often run over.
As well as cash flow, you may need to draw up detailed forecasts regarding sales, working capital and
sources of seed funding, or any subsequent funding. See how to tailor your business plan to secure
funding.
FINANCIAL INVESTMENT
Apart from bank finance, businesses looking for capital investment have three main sources:
• Equity finance is money invested in a business that is not directly repayable. It could be your own,
most likely raised through remortgaging a property, or money from others taking a share in the ownership
of the business.
• Venture capital is also known as private equity finance. Unlike business angels, venture capitalists
look to invest large sums of money in return for equity in (ie a share in the ownership of) your business.
• Business angels are private investors taking a minority or majority stake in a business, often
contributing valuable business experience in the form of advice and contacts.
There may also be some development or enterprise grants or loans available in your area. Search
the Northern Ireland business finance and support finder.

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Sources of finance for a growing business
There are two main sources of finance for a growing business that is internal and external sources of
finance. Capital found from within a business is called an internal source of finance, whereas capital
found from outside a business is an external source of finance.
Internal sources of finance
Retained profits
Retained profits are profits held back in the business for reinvestment rather than being issued
as dividends.
Advantages:
• cheap, quick and convenient, and there is easy access to the money
Disadvantages:
• once the money is gone, it is not available for any future unforeseen problems the business might
face
Selling of assets
Another internal source of finance is by selling unwanted assets, such as machinery and equipment.
Advantages:
• convenient, can create space for more profitable uses, and can be quick
Disadvantages:
• the business might not get the full market value of the assets or even sell them at all
• the business might also need the assets in the future
The owner’s savings
A third source of internal finance is the business owner’s own savings. Your own money
You can, of course, fund your business with your own money if you have enough. However, if your
business is a corporation, one option is to increase the share capital by purchasing more shares. Buying
more shares increases the business's assets, but it will tie up your money until you sell them.
You can temporarily put money into your company through your director's loan account. You can then
have this money returned to you when it is necessary or practicable.
Cost and convenience are just some of the considerations when looking for funding for your business.
Consider how each funding option will fit into your long-term goals and the risks associated with each.
Advantages:
• cheap, quick and convenient

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Disadvantages:
• the owner might not have enough savings or may need the cash for personal use
Plenty of business funding sources can help business owners like you achieve high growth and cater to
your business needs. Sources include crowdfunding, angel investors, venture capital, government
funding, bank loans, SBA loans, peer-to-peer finance and more.
External sources of finance
Crowdfunding
Crowdfunding is a common practice of asking a large group of people to contribute a set amount of
money to a specific cause or project in exchange for various rewards. Crowdfunding can be classified
into two broad categories: equity and reward. Equity is when you give away a portion of your business,
whereas reward is when you give away non-monetary items in exchange for cash. Equity crowdfunding
allows investors to fund multiple projects that diversify their portfolios and expand their financial
opportunities. This will help to put your business before the international audience if you're looking to
expand globally.
Bear in mind that each crowdfunding platform is unique as they have specific requirements needed as
well as the associated fees. So, carefully consider your options before committing to any platform.
Angel investors
Angel investors are typically high-net-worth individuals who make early-stage investments in your
businesses in exchange for equity or ownership equity. They are only interested in financing your
businesses if it is likely to be sold or make it to the IPO stage. However, angel investors can also provide
you with valuable expertise and advice to achieve high growth in business development. They can also
assist in introducing your business to new markets and opportunities which will be an advantage for you
if you're aiming for international expansion.
Venture capital
Venture capital (VC) firms are the next step up from angel investors. When you need a large sum of
money in exchange for a significant percentage of your business, you might consider approaching a
venture capital firm. Venture capital is the preferred funding method for high-growth startups that can
help drive the global expansion of SMEs.
Government funding
If you own a small business, there are several government grants that you may be eligible for.
Government grants are commonly available for small and medium businesses to cover the cost of
premises, plant, machinery and IT equipment.
Each grant has its application process and qualification criteria, so check these first, as there is no
guarantee that you will be eligible. However, these are worth it if yours is a new business.
Bank loans

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Bank loans can be used strategically to bring affordable financing that fits the company's growth plans.
Thus, there are better options than bank loans if you're looking for short-term financing for your
business.
The bank will determine the loan's terms, including the payback period, interest rate, payment frequency,
and payment amount. The terms may vary, but all require collateral to secure the loan. This collateral
will usually be in the form of a personal guarantee from the owner to ensure that the lender receives
payment even if the business defaults on the loan.
Bank loans can help you expand globally in a way that can still create new business opportunities for
you even without a credit facility. It also provides you access to working capital and business loan.
Therefore, looking around for the best rates and repayment terms is worthwhile if you intend to take out
a bank loan.
SBA Loan
If you own a small business, you will probably look for ways to improve your operations further and
increase sales. If you're in this situation, it can be the right time to consider a Small Business
Administration (SBA) loan.
SBA loans refer to a type of bank loan with more stringent eligibility requirements. It collaborates with
participating banks across the country to make loans more accessible to startups and small businesses.
Peer-to-peer finance
Peer-to-peer (P2P) finance connects smaller-scale investors with small businesses that require capital,
eliminating the middleman. With P2P financing, you can obtain funds without going through strict
regulations set by the banks.
Friends and family financing
Relying on friends or family for financing is a flexible way to secure funding. Getting a loan from someone
close to you may or may not include equity or ownership stake requirements, but it will almost certainly
have favourable payback terms. It would help if you also reminded yourself that receiving funds from
your friends and family can be difficult and emotional. So, it is important to provide them with your
strategic growth plan and business plan so they can see how serious you are about your business
growth. In addition, it would be best if you always worked with a lawyer to formalise the financing
agreement to reduce the likelihood of animosity on either side later.
FINANCING CORNERS FOR BUSINESS GROWTH
Every successful business has three key pillars and, as it expands further, there are four.
1. Production
Whether it is a service business or a product business, production (sourcing, manufacturing and
delivering) is a fundamental requirement for the business to succeed. You need to have a great offering,
and you need to deliver it well and deliver it consistently.
2. Marketing

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This can be a combination of things depending on your business and its target market. It might be social
media, it might be pricing, presentation in shop, or engagement in the community. It’s a focus on what
your customers want, and how to present it to them.

3. Finance
This is knowing your gross market, your breakeven point, your trigger point for expanding to that
administration assistant or sales assistant. It can include your banking relationship, and cashflow
funding, and it definitely includes your cashflow planning.
4. People
As you expand, you will also need to consider hiring, contracts, Fair Work, payroll, super, reporting,
management, development and promotion.
The first three pillars are essential to every business, and the fourth to those that have grown to require
additional staff.
All of these require someone in the business that is both good at them, and passionate about them. It’s
near impossible for one person to be both good at and excited about all of these things, so it’s highly
advisable to outsource the elements of these pillars that you do not care for yourself. This might expand
to your spouse, a trusted employee, a business partner, or you might hire in the skill set that you don’t
have strength in yourself.

CHAPTER FIVE: BUSINESS GROWTH POSSIBILITIES

Introduction
A company’s future ability to generate larger profits, expand its workforce and increase production and
distribution defines some of the key elements of growth potential. Growth however, introduces a variety
of complexities that are not without their own challenges. By identifying the different ways in which you
can grow and by determining whether the time is right for your business is crucial for success.
Those purchasing businesses typically pay a premium for those with the potential to grow. In rare cases,
an acquiring company may even buy a business that has a high growth potential, but is low on other
attributes. The purchaser will see a way to leverage some of their own assets to help the business grow
much more quickly than it could under its current owner. This type of transaction is known as a strategic
sale and by definition the buyer is called a Strategic Buyer. This differs from a Financial Buyer who is
mostly interested in how much profit is being generated now and into the future.
To understand the relationship between growth potential and value, imagine that instead of generating
a flat $1,000,000 in profit for the next 10 years, the hypothetical business owner expects profits to grow
by 20 percent each year in the future. For a perspective, according to researcher David Birch, less than
2% of American companies grow by 20% per year for three consecutive years.
A business expecting a 20 percent growth rate over the next 10 years is worth more than double the
business, which expects its revenue to remain flat.
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The potential growth of your business reflects the extent to which you believe your business can grow
in the future by selling more products and services to your existing customers or by acquiring new
customers quickly.

FACTORS INFLUENCING BUSINESS GROWTH POSSIBILITIES

Businesses have to be nourished constantly. If you want to achieve your goals as an entrepreneur, you
need to work around the clock. Among particular aspects that need to be considered to ensure your
business’s constant and steady growth are business structure and management. Capitalizing on social
media marketing might be a good idea while adopting sustainable and green practices will help attract
more customers. Things like online presence, credibility, openness to new ideas, and clear articulation
of goals will also prove beneficial. Let’s take a closer look at these things.
Openness to New Ideas
One of the most effective ways to grow your business is by taking advantage of opportunities. When
setting up a business, there are certain things you can expect from it, but some are and will remain, like
the economy or political situation in your country. Due to this uncertain air, every entrepreneur needs to
keep an open mind to make the right decision when required. Recognizing patterns earlier than your
competitors is one of the most critical factors determining whether you’ll achieve success.
New ideas can also mean services provided by others, which can make running your business easier. If
you’re working with international companies, for example, hiring a translation company that owns
proper translation equipment might be suitable for your needs. While transactions keep the world
moving, brands don’t have time to focus on language challenges getting in the way of their funds.
Budgeting and Finances
How you spend your money determines whether or not you will achieve your goals for the next quarter
or year or even five years down the road. You need to make sure that you have a solid financial plan
that has been appropriately implemented into your operations. Your first step should be creating a budget
outlining your expected profits for the next six months along with possible expenditures related to
marketing, advertising, payroll, office space, utilities, etc.
The second step would be deciding how much money is going towards each category as well as writing
down some basic financial principles such as using a free check stub maker to write checks as soon as
possible and avoid losing track of them. Paying bills immediately after they arrive is also crucial, so you
don’t rack up late fees. Another thing is being organized to avoid unnecessary spendings. An organized
office will save you a great deal of money over time because you won’t lose any documents or
information that might be useful later on during tax season or when trying to figure out what happened
with finances during a certain time.
Business Structure and Management
The organisational structure consists of hierarchical levels, departments, and divisions that contribute to
the business operations. As a business owner, you will need to determine how you want it to look and
who will do what. A good structure will focus on the common goals and aims of particular departments

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while empowering them to take decisions on their own. The key is to ensure that all parts of the business
work in harmony while being efficient and effective.
In order to achieve success, you will need the right kind of people on board. This can be done through
good recruitment practices, but the ongoing training and development of your people is also an essential
factor to bear in mind.
Marketing
A successful marketing strategy is a must if you want your company to get more recognition and push it
ahead of competitors. To get the most out of your marketing efforts, you need to make sure you’re
targeting the right audience. If you’re not getting the desired results from your campaigns, you might
want to reassess your strategy and try something else.
One of the most efficient ways to get more customers is by implementing a solid digital marketing
strategy. Social media marketing is an excellent way of getting more exposure for your business.
Regularly posting short promotional videos and visually interesting photos or interacting with people in
the comments will boost engagement and help create a bond with your customers.
Moreover, you will need to consider the overall look of your website and its usability. The fact that you
have a good product is not enough; you need to make sure potential customers will be able to find it.
Pay close attention to the design of your website, the mobile version, and the way you’re using social
media. Confusing text, banners, pop-ups, and calls to action that don’t engage users will only send them
away.
Sustainable and Green Practices
More and more people are becoming aware of environmental issues and are making conscious efforts
to reduce their carbon footprint. It’s essential for every business that wants to grow to adopt sustainable
practices. By increasing awareness, you will be able to reach new customers and build their loyalty.
Moreover, eco-friendly solutions can help you cut costs while gaining profit in the long run. You could
even turn these eco-friendly practices into an opportunity for business growth by offering products and
services that promote sustainability or making it a part of your brand image. Whether it’s a small thing
like using less printing paper or focusing on creating a more energy-efficient office space, it’s always
great to do something for the environment.
Clear Articulation of Goals
Every business owner has specific goals that they want to achieve. Having clear objectives is essential
if you want your company to grow and expand its horizons. It would be best to make sure that everyone
in the company understands what you want them to do to understand their roles and responsibilities.
You can achieve it through working on your communication skills and organizing meetings with
professionals who will help lead you and your workers. It will also allow for better cooperation between
employees and other companies involved in your business operations. If you want to achieve the best
results, you must remain realistic about your goals and expectations. This way, you will know for sure
what should be done to fulfill your intentions.
Brand Image
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Creating a recognizable brand image will help you connect with the customers, and it’s essential for
businesses that want to grow and expand. By working on your brand image, you will be able to boost
your business, attract new customers, create a name for yourself, and make more sales.
As an entrepreneur, you need to make sure that the company’s brand identity is consistent across all of
its marketing channels. This applies to both online and offline marketing efforts. By maintaining a
particular look and feel of the brand, you will maximize your business growth and create a strong
reputation.
Conclusion
If you want to achieve your goals, you need to make sure that you’re focusing on the right areas. While
coming up with a business idea is key, it’s not enough. You have to work hard to maintain it, provide your
workers with the right tools, and make sure that you get more customers. Not every business can
succeed, but that doesn’t mean that yours won’t. With the right approach, dedication, work ethic, and
determination, you might just be able to get exactly what you want!

SUCCESSFUL TIPS
There are plenty of things you can do to put your company on the path to growth. These 13 tips offer
tried-and-true methods for scaling up, no matter what your business does.
1. Hire the right people.
Before you can even think about your company’s growth trajectory, you need to have a solid staff to help
you achieve your goals.
When you have hardworking employees who are dedicated to your company’s success, your business
will be better equipped for continued growth. In addition, delegating tasks to focus on important work will
free up your time and energy, allowing you to perform at your best and cultivate a collaborative work
culture.
2. Focus on established revenue sources.
Rather than trying to acquire new customers, direct your attention to the core customers you already
have, suggested Bill Reilly, a Wisconsin-based auto repair entrepreneur. You can do this by
implementing a referral or customer loyalty program or trying out marketing strategies based on previous
purchasing behaviors to encourage repeat business, he said.
Focusing on your established market is especially important if you’re trying to get funding. “In the past,
we would highlight our business goal to become a franchise, which didn’t resonate with banks,” Reilly
said. “We learned to emphasize that there is a large market for what we do. This would pique a banker’s
interest, because they care about the return on investment more than your business aspirations.”
Tip
Maximize your current customer base by implementing a customer loyalty program or trying out
marketing strategies based on customers’ purchase histories.

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3. Reduce your risks.
Risk is an inevitable part of starting and growing a business. It’s impossible to control everything, but
there are many ways to limit internal and external threats to your company and its growth. One important
resource to help you accomplish this is your business insurance provider.
“Small businesses need to manage their growth to avert disruptions that can bring business to a grinding
halt,” said Mike DeHetre, senior vice president of underwriting and insurance at Preferred Mutual. For
example, “the theft of employee data, customer records, and product designs can destroy a small
business, generating significant costs and eroding customer confidence and loyalty,” he said. “Not every
business owner’s policy covers data breaches or other cyber losses. Small businesses should be
prepared by seeking insurance products that help them recover, including those that cover the cost of
remediation and lawsuits.”
As your small business grows, you may add space or equipment, create new products or services, or
increase your operating and distribution footprint. Therefore, DeHetre recommended reviewing your
policy periodically to ensure you have the right coverage.
“It’s easy to forget this step amid rapid expansion, but you don’t want to find out that you’ve outgrown
your coverage just when you need it the most,” he said.
4. Be adaptable.
One trait that many successful startups have in common is the ability to switch directions quickly in
response to changes in the market. Lanng said an agile approach to development, both in your product
and your company, will help you grow more quickly.
“By allowing yourself to adapt and change quickly, you’re able to test different approaches to business
and find out what works best,” Lanng told Business News Daily. “It allows you to fail, pick yourself back
up and keep going.”
Chris Cornell, founder and CEO of Manhead Merchandise, said his company has found adaptability to
be key in expanding its client base beyond its initial focus on music merchandise.
“Look to current pop culture trends for an opportunity to become part of the movement when it makes
sense,” he said. “In an era of internet fame, we looked to expand our horizons beyond the music industry.
We partnered with ‘The King of Pop Culture’ and Insta-famous pup Doug the Pug to release his new
gear. Recognizing the reach and popularity of Doug, we were able to take his merchandise to the next
level, extending our business model beyond bands.”
5. Focus on the customer experience.
Customers’ perceptions can make or break your business. Deliver quality experiences and products,
and they’ll quickly sing your praises on social media; mess it up, and they’ll tell the world even faster.
Fast growth depends on making your current and potential customers happy.
“Compared with large companies, small businesses are nimble and often better able to see, anticipate
and respond to their customers’ needs,” DeHetre said. “The most successful small businesses exploit
this advantage by bringing new and innovative products and services to market more quickly and
developing and nurturing long-term customer relationships.”
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6. Invest in yourself.
In the early stages of your business, you’ll likely see a very lean profit margin (or no profit at all), so any
money you make should go directly to helping your business grow.
“A startup’s ability to invest in itself [helps] accelerate growth,” Lanng said. “In those early years, it’s
critical to make sure that you’re redirecting any revenues back into the company. It’s vital to invest early
and heavily in order to grow quickly.” While it might be tempting to pocket all of your profits, it’s better to
invest in your business’s growth so you can reap bigger benefits later. Determine which parts of your
business need more attention. For example, do you need to hire more workers, expand your marketing
efforts, or secure additional funding? When you find a crucial area that needs improvement, give that
area your financial support.
7. Always think ahead.
While agility is an important quality for a startup, you can’t fly by the seat of your pants when you’re
running a business. Planning your next step in anticipation of all possible scenarios is the best way to
stay grounded and secure as your business evolves.
Thinking ahead is broad advice, but it can be as simple as reviewing all ongoing contracts, like comparing
rates with the best credit card processors and seeing if you can negotiate a better deal.
8. Boost your customer service.
Another great method of growing your business is to focus on providing superior customer service. When
you exceed customers’ expectations, they are likely to tell their friends, family and followers about your
business.
When you go the extra mile, such as by offering discounts if a customer has a poor experience or
following up to ensure a client was satisfied with your product or service, you establish a reputation for
great customer service.
9. Focus on social media.
Another method to grow your business is to create profiles on all of the major social media platforms,
including Instagram, Facebook and Twitter. An active profile helps you market your business and interact
with far more potential customers.
When your business has regularly updated accounts on the major platforms, consumers can find your
business more easily and are more likely to share your business with their friends. You’ll also create a
more engaging experience for your audience, helping them feel more connected to your brand and
cultivating trust.
10. Attend networking events.
Networking events allow you to connect with people in your industry, many of whom have unique
perspectives and insights that can help you grow your business. The connections and relationships that
come from attending networking events can be beneficial for years to come.
In addition, networking events offer you the opportunity to learn from others who operate in your industry
or adjacent to it. Whether they’ve had similar problems as you, have heard news that’s relevant to your
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business, or just have a great network of professionals you can tap into, expanding your network offers
a wealth of opportunities.
11. Practice corporate social responsibility.
Consumers want to buy from businesses that are passionate about causes that help make the world a
better place. Whether you donate to cancer research or support a nonprofit such as a homeless shelter,
look for ways to contribute meaningfully to the causes you support, and share that with your customers.
You could publicly express your support to underserved communities, donate to various organisations,
offer your time to fundraisers, and provide sustainable products to help the environment. There are many
ways to be socially responsible as a business; find a few that work for you.
12. Host local events.
Although attending events is a great way to grow your network, hosting your own events within your
community is even more beneficial, whether it’s running a fundraiser, offering exclusive deals on a
holiday, or sponsoring a local sports team. Creating a unique experience for your customers will foster
more personal relationships with them.
If you host events in your area, you’ll increase brand awareness and show your community that you are
invested in their well-being. When you are committed to them, they’ll feel more loyal to your business.
13. Research your competitors.
Although it might not elicit immediate growth, researching your competitors is one of the most important
first steps in launching your business. Ask yourself who your competitors are, what they’re doing (that
you’re not doing) that works for them, and how you can differentiate your business from theirs. The
answers to these questions will help you form a more productive business strategy that defines the areas
of your business that require more attention.
Tip
If you want to analyze the competition the right way, read our guide on how to conduct a competitive
analysis, which offers key tips that will help you take advantage of opportunities your competitors have
left on the table.

HOW TO MEASURE BUSINESS GROWTH

There are a few factors to examine to gauge your business’s growth. Depending on your goals, you may
prefer one factor over another, but analyzing them in context with one another can give you the clearest
picture of how well your business is scaling.
• Revenue:Revenue is a go-to metric in establishing business growth; after all, it’s the amount of money
your company is bringing in. Revenue growth over time can be good, as it generally means you’re
making more sales or higher-value sales. However, it’s important to balance revenue with expenses,
because making more often means spending more.

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• Profit: A more important indicator than revenue is profit, which is what your company has netted over
the course of a given period. When it comes to profit, a positive growth rate is great, but it doesn’t always
tell the whole story. If your profit margin is healthy, even a flat profitability year over year might not be
bad. But for new businesses, quick profitability growth should be a key focus.
• Market share: Market share describes how dominant your business is in its space compared with
competitors. For new companies breaking into an industry, growing market share rapidly is a major
concern. Without gaining a significant foothold against your competitors, it will be hard to drive sales to
grow revenue.
• Customer acquisition: One of the best ways to grow market share is by focusing on lead generation
and sales volume. By getting your brand in front of potential customers and then converting them to
make a sale, you can grow your company’s market share and revenue at the same time.
• Customer retention: Acquiring new customers helps you gain market share only if you retain those
customers, so focusing on customer retention and improving this metric over time is also key to
monitoring the growth of your business.
• Team size: Growing your team is a significant expense, but the size of your team also represents how
much you can do. Balancing a team that can meet operational needs with the payroll budget is a key
challenge for every entrepreneur, so monitoring the growth of your team over time is particularly
important.

HOW TO CALCULATE BUSINESS GROWTH RATE

Did you know there’s a mathematical formula for calculating business growth? Best of all, it’s fairly
simple! First, pick a metric, such as revenue. Then, examine two periods: the starting value and the end
value. Divide the end value by the starting value, and multiply the quotient by 100. The result is your
growth rate. This formula can be expressed as follows:
(End value/starting value) x 100% = Growth rate
For example, if your annual revenue in year one of opening your business was $10,000 and has grown
to $50,000 by year two, your formula would look like this:
(50,000/10,000) x 100% = 500% revenue growth rate year over year
Understanding the growth rate of any given metric can show you how your business is performing in
each area, and comparing these results in different areas can give you critical context. If your revenue
has grown significantly but your profitability has declined, for example, it means your expenses have
outpaced your income and your business may be headed in the wrong direction.
Key Takeaway
Don’t look at any metrics in isolation. Compare key metrics such as revenue, profitability and customer
acquisition to determine how fast a business is growing and whether that growth is sustainable.
Scaling responsibly leads to long-term success

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Growth is important for any business, but it’s important to be smart about how you scale. Growing too
quickly can leave you with a sizable payroll burden or customer demands you can’t meet, thereby setting
you up for failure in the long run. Incremental growth and deliberate decisions about how to expand your
operations and team are the best methods for establishing a business that’s set up for success well into
the future. Keeping the tips above in mind is a great way to do just that.

BUSINESS GROWTH CHALLENGES AND HOW TO OVERCOME THEM

In a competitive market, every company must grow to survive. But, growth can create new challenges
that are tricky to navigate. Limited resources, new customer segments, and shifting business goals
require entrepreneurs and business owners to think on their feet and change how they run their business
as it grows.
Here are the top challenges of growing a business and how to overcome each challenge.
1. Recruiting employees and growing your workforce
A small business works best when it has the right team. It needs skilled workers to manage day-to-day
operations.
When you start a business, your team is small. Just one or two people start most companies. And as a
solopreneur, you must do everything. It’s your job to find a great business name for your new company,
write a business plan, register the business, figure out a revenue model, create a strong brand identity
by getting a memorable company logo, hire employees, and do everything else a young business needs.
There’s barely enough time to do all of those things. As your company grows, so does the need for
additional workers and an increased range of skills.
Effective businesses need to be good at recruiting the right talent and scaling their teams. These people
will keep the company running and prepare it for future expansion. It’s also vital to minimize turnover.
Even if you can find skilled workers to join your team, your business may still struggle if employees
decide to look elsewhere for employment.
Many small changes to business operations and culture can help reduce turnover. A comfortable office,
good work-life balance, options like remote working, advancement opportunities, and training are good
places to start. Effective onboarding practices will integrate new employees into your business, help
familiarize them with their role and make it easier to adapt to the company culture. Ensuring pay is
competitive and offering the right benefits will make it easier to retain talented workers and grow your
workforce.
2. Keeping cash flow positive
A small-business owner needs to spend money to make money, and growth tends to open up new
business opportunities that require additional expenses. However, sometimes you can spend too much
and get into trouble.

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Cash flow problems are one of the most common reasons small businesses fail. Keeping tight control
over spending, cutting down on costs where possible, and securing any needed business financing will
ensure you have cash on hand to deal with unexpected issues.
3. Attracting new customers
New customers are essential to business growth. It’s in your best interest to appeal to untapped
audiences and target segments that can help your operations expand.
Knowing what your customers want will become more critical than ever. Market research, using
techniques like focus groups, interviews, field tests, and surveys, will help you understand more about
a potential audience. Soliciting feedback from existing customers can also help.
At the same time, you can’t afford to leave your current customers behind. Repeat customers are
foundational to small-business success and tend to spend much more than new customers who may
only buy from you once or twice before moving on. It’s 5 to 25 times less expensive to maintain
relationships with current customers than to acquire new customers.
The customers you have already invested in are essential to future growth. Keeping them happy is good
business practice and will ensure revenue stays steady as you pursue new audiences. Use the many
available customer retention techniques to keep existing customers engaged.
4. Scaling up company culture
Preserving company culture as your business grows can be challenging. A tight-knit small business may
start to take on a new character as it grows and more employees join the team.
Not everyone at work may speak to each other daily. You may have to learn how to integrate new
employees into existing structures. Some workers may be remote or spend most of their time in the field
cutting them off from the rest of the team.
Fortunately, you can keep your small business’s excellent company culture as you grow with the right
approach.
Tools that make it easy for employees to stay in touch with each other like web conferencing and office
chat will help you facilitate team communication.
They will also help you, as an owner or manager, keep in touch with new hires and existing employees
with whom you may no longer regularly communicate.
Digital office events and celebrations can also help. Staging regular office happy hours, digital training,
and celebrations for significant holidays will provide a chance for employees to mingle, talk with each
other, and share news. All team members will benefit, even if they don’t regularly come into the office.
5. Inventory and asset management
More customers mean additional sales and increased inventory you have to store and move. Adopting
the right inventory management solution will help you keep track of these resources as your business
grows.

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Even if your company doesn’t sell physical goods, you may still have to deal with asset management
problems as your business grows. You may need to invest in a more extensive vehicle fleet or swap old
computers for new ones.
Tools like telematics and GPS trackers will be handy for businesses with a vehicle fleet, such as trucking
businesses. These devices let you track where trucks or cars are, how fast they’re going, and even what
maintenance they may need.
6. Knowing when to delegate
Many small-business owners are tempted to do it all themselves delegating as little work as possible.
This approach isn’t always practical, however, and it can become unworkable as your business grows.
If you find yourself constantly beset by small, non-managerial tasks, you may not be spending enough
time delegating work to others.
Good leaders know when they need help. They’ve learned how to tell if passing on work to an employee
would be more efficient.
You don’t want to step back from your business entirely, and there will always be times when your
judgment is necessary or when someone needs to be the decision-maker. However, as your company
grows, you may find it better to delegate some work to others.
7. Skills and attitudes
Entrepreneurs are the driving force behind creating and growing new businesses. All too often, they are
also the people holding them back.
The abilities that can help you launch a business are not the same as those you need to help it grow. It's
vital not to fool yourself into valuing your own abilities too highly. The chances are that you'll need training
to learn the skills and attitudes required by someone who is leading growth.
To grow your business, you need to learn to delegate properly, trusting your management team and
giving up day-to-day control of every detail. It's all too easy to stifle creativity and motivation with
excessive interference. As the business becomes more complex, you also need to develop your time
management skills and learn to focus on what's really important.
As your business grows, you may need to bring in outsiders to help. You'll want to delegate responsibility
for particular areas to different specialists, or appoint a non-executive director or two to strengthen your
board. As you start tackling a new opportunity, someone who has experience of that activity can be vital.
For many successful entrepreneurs, learning to listen to - and take - advice is one of the hardest
challenges they face. But it may also be essential if you are going to make the most of your opportunities.
Some entrepreneurs, recognising their own limitations, even appoint someone else to act as managing
director or chairman.
8. Welcoming change
Complacency can be a major threat to a growing business. Assuming that you will continue to be
successful simply because you have been in the past is very unwise. Regularly revisiting and updating
your business plan can help remind you of the changing market conditions and the need to respond to
15
them. See the page in this guide on planning ahead. An up-to-date plan helps you identify what action
you need to take to change your business and the way it operates, for example:
• Changing to suppliers who can grow with you and meet your new priorities. As your business grows,
consistent quality and reliability may be more important than simply getting the cheapest offer.
• Renegotiating contracts to take account of increased volume.
• Training and developing employees. Your own role will also evolve as the business grows. See the
page in this guide on skills and attitudes.
• Making sure that you keep up to date with new technologies.
You need to be fully committed to your strategy, even if it takes you out of your comfort zone. This may
involve hard decisions - for example making employees redundant or switching business away from
suppliers you have become friends with. But unless you're prepared to do this, you risk putting your
business at a dangerous competitive disadvantage.

WAYS OF OVERCOMING THE CHALLENGES OF BUSINESS GROWTH (Assignment)

CHAPTER SIX: ENTREPRENEURIAL MANAGEMENT

Meaning
Entrepreneurs may possess qualities that help them establish a new business, such as innovation and
passion. To provide a new business venture with a more detailed direction, entrepreneurs can study
entrepreneurial management. Understanding the structure needed to manage your own company can
help you be successful as your business progresses. We discuss the practice known as entrepreneurial
management along with why it's important to have an entrepreneur management plan.
Entrepreneurial management is the practice of giving the innovation inherent in entrepreneurship a more
solid management structure. Many new entrepreneurs have ideas for businesses they want to start, or
products they want to create, but don't know how to manage a small business effectively. However,
managing a new venture and managing an existing company requires different methods and principles.
Through entrepreneurial management, you can manage a growing business without limiting the
creativity or passion of a startup.
Characteristics of a good Entrepreneur
1) Creativity:
Creativity gives birth to something new. For without creativity, there is no innovation possible.
Entrepreneurs usually have the knack to pin down a lot of ideas and act on them. Not necessarily every
idea might be a hit. But the experience obtained is gold.

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Creativity helps in coming up with new solutions for the problems at hand and allows one to think of
solutions that are out of the box. It also gives an entrepreneur the ability to devise new products for
similar markets to the ones he’s currently playing in.

2) Professionalism:
Professionalism is a quality which all good entrepreneurs must possess. An entrepreneur mannerisms
and behavior with their employees and clientele goes a long way in developing the culture of the
organisation. Along with professionalism comes reliability and discipline. Self-discipline enables an
entrepreneur to achieve their targets, be organized and set an example for everyone.
Reliability results in trust and for most ventures, trust in the entrepreneur is what keeps the people in the
organization motivated and willing to put in their best. Professionalism is one of the most
important characteristics of an entrepreneur.

3) Risk-taking:
A risk-taking ability is essential for an entrepreneur. Without the will to explore the unknown, one cannot
discover something unique. And this uniqueness might make all the difference. Risk-taking involves a
lot of things. Using unorthodox methods is also a risk. Investing in ideas, nobody else believes in but
you is a risk too.
Entrepreneurs have a differentiated approach towards risks. Good entrepreneurs are always ready to
invest their time and money. But, they always have a backup for every risk they take. For exploring in
the unknown, one must be bestowed with a trump card; a good entrepreneur has one, always. Also,
evaluation of the risk to be undertaken is also essential. Without knowing the consequences, a good
entrepreneur wouldn’t risk it all.

4) Passion:
Your work should be your passion. So when you work, you enjoy what you’re doing and stay highly
motivated. Passion acts as a driving force, with which, you are motivated to strive for better. It also allows
you the ability to put in those extra hours in the office which can or may make a difference. At the
beginning of every entrepreneurial venture or any venture, there are hurdles but your passion ensures
that you are able to overcome these roadblocks and forge ahead towards your goal.
5) Planning:
Perhaps, this is the most important of all steps required to run a show. Without planning, everything
would be a loose string as they say, “If you fail to plan, you plan to fail.” Planning is strategizing the whole
game ahead of time. It basically sums up all the resources at hand and enables you to come up with a
structure and a thought process for how to reach your goal. The next step involves how to make optimum
use of these resources, to weave the cloth of success. Facing a situation or a crisis with a plan is always
better. It provides guidelines with minimum to no damage incurred to a business. Planning is one of the
most important characteristics of an entrepreneur.
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6) Knowledge:
Knowledge is the key to success. An entrepreneur should possess complete knowledge of his niche or
industry. For only with knowledge can a difficulty be solved or a crisis is tackled. It enables him to keep
track of the developments and the constantly changing requirements of the market that he is in. May it
is a new trend in the market or advancement in technology or even a new advertiser’s entry, an
entrepreneur should keep himself abreast of it. Knowledge is the guiding force when it comes leaving
the competition behind. New bits and pieces of information may just prove as useful as a newly devised
strategy.

He should know what his strengths & weaknesses are so that they can be worked on and can result in
a healthier organization. A good entrepreneur will always try to increase his knowledge, which is why he
is always a learner. The better an entrepreneur knows his playground, the easier he can play in it.
7) Social Skills:
A skillset is an arsenal with which an entrepreneur makes his business work. Social Skills are also
needed to be a good entrepreneur. Overall, these make up the qualities required for an entrepreneur to
function. Social Skills involve the following:
• Relationship Building
• Hiring and Talent Sourcing
• Team Strategy Formulation and many more.
8) Open-mindedness towards learning, people, and even failure:
An entrepreneur must be accepting. The true realization of which scenario or event can be a useful
opportunity is necessary. To recognize such openings, an open-minded attitude is required. An
entrepreneur should be determined. He should face his losses with a positive attitude and his wins,
humbly. Any good businessman will know not to frown on a defeat. Try till you succeed is the right
mentality. Failure is a step or a way which didn’t work according to the plan. A good entrepreneur takes
the experience of this setback and works even hard with the next goal in line.
This experience is inculcated through the process of accepted learning. Good entrepreneurs know they
can learn from every situation and person around them. Information obtained can be used for the process
of planning. Learning with an open mind lets you look at your faults humbly. New information always
makes an entrepreneur question his current resolve. It also provides a new perspective towards a
particular aspect. Open-mindedness also enables you to know and learn from your competition.
9) Empathy:
Perhaps the least discussed value in the world today is empathy or having high emotional intelligence.
Empathy is the understanding of what goes on in someone’s mind. This skill that is worth to mention. A
good entrepreneur should know the strengths and weaknesses of every employee who works under
him. You must understand that it is the people who make the business tick! You’ve got to deploy empathy
towards your people.

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Unhappy employees are not determined and as an entrepreneur, it is up to you to create a working
environment where people are happy to come. To look after their well-being, an entrepreneur should try
to understand the situation of employees. What can be a motivational factor? How can I make my
employees want to give their best? All this is understood through empathy. Keeping a workplace light
and happy is essential. For without empathy, an entrepreneur cannot reach the hearts of employees nor
the success he desires. Empathy is one of the most important characteristics of an entrepreneur.
10) And lastly, the customer is everything:
A good entrepreneur will always know this; a business is all about the customer. How you grab a
customer’s attention is the first step. This can be done through various mediums such as marketing and
advertising.
It is also important that you know the needs of your customers. The product or service which is being
created by your organization needs to cater to the needs of your consumers. Personalising a business
for consumers will also boost the sales. The ability to sell yourself in front of a potential investment when
it comes in the form of a customer is also required. Being ready with the knowledge to please a customer,
is a way to have a successful business.
It isn’t necessary that every entrepreneurial venture is a huge success. In addition to a brilliant idea,
viability is an equally important aspect of a business, which is where having a business education can
play an important role. All these characteristics of an entrepreneur can be instilled in an individual.
So, what is entrepreneurship management? Entrepreneurship management involves combining the
innovative and risk-taking spirit of entrepreneurship with the organisational skills of management.
In essence, entrepreneurship management empowers you to be both a visionary entrepreneur and an
effective manager, ensuring your business's success. Entrepreneurial management helps you set
structured goals for your new venture. Setting structured goals can help drive your business forward. It
consists of the following operations.
• Identifying business opportunities,
• Creating and executing business plans
• Setting goals
• Managing resources
• Navigating uncertainties to achieve sustainable growth.
Let us consider the example below to further understand entrepreneurship management's meaning.
Let's say you have a passion for eco-friendly products and a brilliant idea for a sustainable packaging
company. You need more than an innovative concept to turn this vision into a profitable reality. You must
implement entrepreneurship management principles to conduct market research, analyse competition,
create a business plan, and lead a team effectively.

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The core elements of entrepreneurship management
Here are some of the core elements of entrepreneurship management you should know:
• Risk assessment and mitigation
Every entrepreneurial venture carries inherent risks. Entrepreneurship management involves a thorough
risk assessment to identify potential obstacles and uncertainties. Once identified, you can develop risk
mitigation strategies to minimise negative impacts on your business. Enhance your skills in navigating
business uncertainties by enrolling in risk management courses, ensuring you are well-equipped to
proactively address and manage risks in your entrepreneurial journey.
• Resource allocation
Entrepreneurship management involves managing scarce resources effectively. It involves handling your
resources so that you use your time, money, and human capital to maximise output and returns on
investment.
• Creative thinking and innovation
Successful entrepreneurship management is driven by innovation and creativity, which enables you to
differentiate your company, keep one step ahead of the competition, and satisfy changing consumer
expectations. For instance, Bhavish Agarwal and Ankit Bhati, the founders of OLA Cabs, saw the
demand for reasonably priced public transport in India and realised their dream by launching OLA Cabs.
• Strategic planning (Goal, Vision, and Growth Plan)
Your strategic planning maps out your entrepreneurial journey. A thorough plan may be created thanks
to this fundamental component of entrepreneurship management. Your company's goals, target market,
and projected financial results are all described in this strategy.
• Leadership and team building
Effective leadership and team building are crucial in entrepreneurship and management. Selecting the
right team members with the required skills and adaptability to work in a startup environment is vital for
entrepreneurship management. Creating a clear leadership and organisational structure ensures a
smooth flow of work.
• Financial management
Sound financial management is critical for business sustainability. This core element in entrepreneurship
and management helps monitor cash flow and make financial projections. Elevate your expertise by
enrolling in financial management and analytics certificate program, providing you with comprehensive
skills to navigate the intricate financial landscape of your business.
• Market research and customer insights
This involves understanding your target market, preferences, and buying behaviours to make informed
business decisions.

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The role and importance of entrepreneurship management in today’s business world
• For effective resource allocation and financial management
Effective resource allocation and financial management are vital for businesses in today's world.
Entrepreneurship management guides you in investing time, money, and effort where it will yield
maximum productivity and optimised outcomes. This helps you make important decisions.
• It helps create performance standards
With entrepreneurship management, you define desired outcomes and timelines, serving as
performance benchmarks. Monitoring progress allows you to stay on track, adjust methods if needed,
and increase the likelihood of achieving goals.
• For risk assessment and mitigation
Entrepreneurship management emphasises assessing and mitigating risks. It involves balancing
personal risk with the role within the company, ensuring a prudent approach to risk-taking.
• Time management and prioritisation
Entrepreneurship and management techniques ensure time allocation and prioritisation. Entrepreneurs
must efficiently manage tasks, dedicating time to essential activities.
• For scaling and business growth:
Entrepreneurship management helps you plan for scalability and effective growth management. With
management and entrepreneurship, you can anticipate expansion challenges and implement measures
for smooth growth.
• For market analysis and strategic planning
Understanding the market and planning accordingly is critical in entrepreneurship management. Market
analysis and strategic planning identify customer needs and preferences, gain competitive advantage
and set achievable goals.
• It ensures effective leadership and team management:
Entrepreneurship management emphasises strong leadership and effective team management.
Entrepreneurs must lead by example, inspire teams, and foster a positive work culture.
Conclusion
Mastering entrepreneurship management will give you the tools to embark on an exciting journey toward
entrepreneurial success.
The fusion of entrepreneurial spirit and effective management principles propels you toward success.
Entrepreneurship management will help you make informed decisions and build a resilient and
innovative business. So, what are you waiting for? Seize the chance to make a meaningful impact in the
business world with entrepreneurship management! You can hone your skills with an executive
management programme in entrepreneurship development for a comprehensive and strategic approach
to business leadership.

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How entrepreneurial management improves on business growth
In entrepreneurship, unutilized resources, labour, and capital are utilized most efficiently. Entrepreneurs
take on risks in the hopes of making profit, or in the case of social entrepreneurship, of solving a problem
facing communities. So, the significance of entrepreneurs and the role of entrepreneurship go beyond
the business world. The importance of entrepreneurship is so broad that it’s quite tough to explain all
the aspects of it in a short blog post. However, it is necessary to shed some light on the importance and
role of entrepreneurship in business growth development as follows;
1. Entrepreneurship Accelerates Economic Growth
Entrepreneurs are important to market economies because they can act as the wheels of the economic
growth of the country.
By creating new products and services, they stimulate new employment, which ultimately results in the
acceleration of economic development. So public policy that encourages and supports entrepreneurship
should be considered important for economic growth.
A large number of new jobs and opportunities are created by entrepreneurship. Entrepreneurship
creates a huge number of entry-level jobs that are very much important to turn unskilled jobholders into
skilled ones. It also prepares and provides experienced workers to large industries. The increase in the
total employment of a country largely depends on the rise of entrepreneurship. So, the role of
entrepreneurship in creating new job opportunities is huge.
By bringing innovation to every aspect of businesses, entrepreneurial ventures enhance
production utilizing the existing resources in the most effective ways. Entrepreneurs develop new
markets by introducing new and improved products, services, and technology. Thus, they help generate
new wealth and add more to the national income. So the government can offer the citizens more national
benefits.
2. Entrepreneurship Promotes Innovation
Through the right practices of research and development, entrepreneurs bring new innovation that
opens the door of new ventures, markets, products, and technology. Entrepreneurs have a role to play
in solving problems that existing products and technology have not yet solved. So, by producing new
products and services or bringing innovation to existing products and services, entrepreneurship has the
potential to improve peoples’ lives.
3. Entrepreneurship Can Promote Social Changes
Entrepreneurs change or break the tradition or cultures of society and reduce the dependency on
obsolete methods, systems, and technologies. Basically, entrepreneurs are the pioneer of bringing new
technologies and systems that ultimately bring changes to society. These changes are associated with
improved lifestyle, generous thinking, better morale, and higher economic choice. In this way, social
changes gradually impact national and global changes. So, the importance of social entrepreneurship
must be appreciated.

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At Duke, the Innovation and Entrepreneurship Initiative has a special program aimed specifically
at Social Innovation. The program is “building upon and extending the strengths of the university to
create a transformational learning environment to inspire, prepare, and support entrepreneurial leaders
and scholars to turn knowledge into action in pursuing innovative solutions to the world’s most pressing
problems.”
For example, one of the most recent projects of the initiative is the Duke-UNICEF Innovation Accelerator,
which is focused on entrepreneurship for menstrual health and hygiene for women and girls in vulnerable
communities in three African countries.
4. Entrepreneurship Promotes Research and Industrial Development
Along with producing new business ideas and thinking out of the box, entrepreneurs also
promote research and development. They cultivate their ideas, shape them into a new form, and turn
them into a successful business endeavour.
Entrepreneurs are a special kind of people, they are always working to discover new ideas and improve
existing ones. But their impact extends beyond their own companies and ventures: when an
entrepreneur develops a new product, service, or idea, others often follow (and sometimes even further
refine the ideas).
Innovation and industry is accelerated through the combined action of entrepreneurs. They can motivate
each other, share ideas and inspiration, and share planning to establish new industries. The change of
the existing industrial climate opens the doors for others at the same time. Therefore, we see that the
importance of entrepreneurship to the economy is multi-functional.
5. Entrepreneurship Develops and Improves Existing Enterprises
We often think of entrepreneurs as inventing totally new products and ideas, but they also impact existing
business. Since entrepreneurs think differently, they can come up with innovative ways to expand and
develop the existing enterprises. For example, modernizing production processes, implementing new
technology in the overall distribution and marketing processes, and helping the existing enterprises to
utilize existing resources in more efficient ways.
To sum up, supporting and promoting entrepreneurship can have a positive impact on the country’s
economy and even existing businesses, and social entrepreneurship increases the likelihood of finding
innovation solutions to social challenges faced by communities around the world.
WAYS TO HANDLE RAPID BUSINESS GROWTH
Fast growth is not always easy to handle but a proactive, step-by-step approach can help make it more
manageable. It is essential that, even in a boom period, you keep control of the situation.
1. Define your growth objectives
Be strategic about your growth. It's a good exercise to first ask yourself some very basic questions in
order to determine your key objectives.
• Do I have the necessary capital to finance my growth?

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• Am I having cash flow problems, or am I managing well? For instance, do I have assets that I could
turn into cash if need be?
• Am I expanding too quickly?
• Am I growing because I want to be more profitable or is it growth for growth's sake?
• Am I hiring too fast?
• Am I collecting my receivables fast enough?
• Is my inventory in line with my growth?
• Is my production line efficient?
• Does my management team have the right competencies to handle my company's growth?
2. Do a growth diagnosis of your company
Essentially this means analyzing how you manage your company and how to gain more control over the
aspects of your business that affect your cash flow. Generally, a comprehensive growth diagnosis
includes an analysis of your sales, overhead, receivables, inventory and assets. Try and assess whether
your inventory and capital assets are absorbing too much of your cash flow, if they do, take the necessary
steps to tightly control them. This will help you define your refinancing requirements and help you avoid
future liquidity problems.
3. Ensure your growth is sustainable.
Be certain that your company is not undergoing seasonal or one-time-only growth.
4. Prepare a growth strategy
Prepare a growth strategy which will enable you to understand the risks and opportunities for your
company. Your strategy is a result of looking closely at internal resources, the market, the economy,
competitors, marketing and distribution channels and demographics.
5. Forecast your cash requirements
Forecast your cash requirements by doing an analysis of your cash inflow and outflow. This will enable
you to determine future cash requirements. Knowing this, you can look at your current financial situation
and assess if you can make improvements. You may be able to get additional financing for working
capital, restructure your debt or convert unused assets into cash.
6. Analyze receivables and payables
Analyze receivables and payables to see how you can improve your liquidity problems. To improve how
you manage your receivables, be sure that you:
• Do credit checks on clients
• Have clear payment terms
• Use the right collection methods

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• Resolve problems quickly
• Monitor the collection time and take the right means for substantially overdue accounts, such as
freezing accounts
• If your credit policy is affecting your cash flow, are there any ways to reduce your collection time?
Apply the same logic in examining your payables: A sale is not a sale until the money is in your bank.
Ask yourself:
• How much commercial credit do you get from your suppliers? How much interest do you pay?
• Do you wait until the due date to pay your suppliers or do you pay them in advance?
• Can you get an extension on your commercial credit?
• Do you use the "just-in-time" method i.e. reduce your inventory by closely coordinating reorders and
deliveries?
7. Control costs
Control costs through vigilant planning. You can consider using a rigorous streamlining system that
addresses overhead such as: Rent, equipment, human resources, office supplies, etc. Be sure you set
concrete goals for cost-cutting, assign somebody accountable and secure employee buy-in to help
reduce costs. Be particularly careful about maintaining cost controls during growth spurts where
businesses often binge with spending.
8. Control debt
Control debt to ensure that your lenders will continue to consider you as a viable client and give you the
financing that you need to meet your needs. Remember that high-growth companies can be risky for
financial institutions. You can also look for alternatives to conventional debt financing. For example, you
can negotiate better payment schedules with suppliers, or look at leasing vs. buying assets.
9. Get the refinancing you need
After analyzing your company, you will be better able to examine your payment procedures. Refinancing
can help reduce your monthly payments by rescheduling your debts and spreading your payments over
a longer period.
A refinancing application is very similar to a financing application. In both cases, the lender establishes
certain debt repayment conditions, which you must be able to fulfill. If you cannot demonstrate your
repayment ability, the lender cannot assume the risk alone.
BDC provides business loans to refinance debt for businesses undergoing rapid expansion, purchasing
equipment or increasing financial flexibility. For example, you could replace multiple debts with a single
debt that is easier to manage. BDC also provides flexible-term refinancing which can be repaid in equal
monthly, progressive or seasonal installments. Terms take your enterprise's rate of cash flow into
account. The repayment period is determined by the nature of the assets provided as security.

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CHAPTER SEVEN: BUSINESS GROWTH MODELS
A business model is a high-level plan for how a business will earn and maximize profits. Business models
establish whether a company will offer a product or service, be online or brick and mortar, or sell to
businesses vs directly to consumers, or a hybrid between several traditional business models.
A growth model is a visual representation of the acquisition model a business uses to grow and sustain
its customer base. A business's growth model will depict the inflow of new customers, the methods used
to create this inflow, and the expected growth generated with these methods.
Greiner growth model
Greiner's Growth Model is a framework that shows the different phases a company goes through to
achieve growth and the different types of crisis that may occur during those milestones. A business
growth goes through different stages and each stage has crises associated with it. Functions in a
rapidly growing company may not be as smooth as it was before and managers may not be as efficient
as they were before, as their span of control and responsibility increases. Greiner’s model helps in
understanding the root cause of crises that an organisation may face during its growth phase.
Understanding the model helps to foresee a problem before it occurs, helping organisations to take the
required measures.
This model was proposed by Larry E. Greiner in 1972 with five phases of growth, which he then updated
in 1998 with the sixth phase (see Figure 1 below). The six phases are:
• Growth through creativity
• Growth through direction
• Growth through delegation
• Growth through coordination
• Growth through collaboration
• Growth through alliances

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The graph shows time on the X axis and size of the business on the Y axis, with both increasing as the
company goes through the different phases.
The model is helpful in showing companies the different approaches to growth, as well as highlighting
the different challenges. It is commonly used by businesses to self-identify obstacles they are facing that
will hamper their efforts to achieve their full potential.

What are the phases of growth in the Greiner’s Growth Model?

Let’s firstly look at the different phases a company goes through based on this model.
Growth through Creativity
All businesses start from a spark of an idea, one that is fostered and developed over time. It’s a truly
creative stage of a company's life as they attempt to develop a new product or service, pull together a
team, a route to customers, and get that sometimes elusive 'product-market fit'. In this phase, there
aren’t many staff, and the founders are busy innovating new products and trying to enter new markets.
Informal communication works just fine during this stage. As the company starts to grow, the number of
staff increases, and the workload increases, there is a need for formal communication and a change in
management style is required. This phase ends with a leadership crisis.
There are some common traits of companies at this stage:
• They are small, responsive and agile
• They are creative and working to find their product-market fit
• They are informally structured with strong communication between teams
Growth through Direction
At this point in a company's life the owner/founders begin to hire managers, releasing some of the control
of the resources and direction of the business. This is normally a 'growing up' period of a company's life,
when processes become slightly more formal, departments may be developed, and a culture is set within
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the business. That’s not to say the founders/owners aren’t still actively involved, they are indeed
ultimately running the company, but it’s a collaboration of managers that drive the direction. Now, there
is more formal communication in the workplace. The activities become more intense and numerous,
making it difficult for them to be managed by one person. This phase ends with an autonomy crisis,
calling for new structures based on delegation.
A company can be considered in the Growth through Direction phase if:
• They have recently hired managers as the team grows
• Decisions are no longer solely made by the founder/owners
• Processes have started to be created within the company (e.g. HR, operations)
• A culture is embedded within the company
• Things are getting bigger and more complicated!
Growth through Delegation
The Delegation phase of growth occurs when key staff members are given accountability and
responsibility to deliver in areas where they are better equipped to than the manager. At this point in a
company life there will be specialist employees, focused on specific roles.
Delegating jobs to more specialists, skilled employees mean you will get a better result, with the added
benefit that the executive team have time to focus on the market data, their strategic decisions and
business planning. The autonomy crisis is solved in this phase, and the company now has functional
management. Having functional management means having the organisation grouped into areas of
speciality to better manage each functional sector. This helps reduce chaos in the company, as each
manager can take necessary and well-informed actions in their departments. The problem arises when
the founder or the entrepreneur finds it hard to pass their control to the newly assigned managers. This
leads to a control crisis.
A company may be in this phase if:
• Specialist skilled employees are increasingly being hired
• Accountability for key tasks is shared down the company
• Leadership teams spend less time doing jobs they are not good at or don’t like
Growth through Coordination
This is now a mature stage of growth, one that focuses on the company core competencies and all
departments working in line with each other to output a product or service. Growth comes from the whole
business being greater than the sum of its parts. Coordination is important for a company facing a control
crisis. It helps bring together every functional area and ensures efficiency. This process adds many
layers of hierarchy to the system, increasing bureaucracy and leading to a red-tape crisis.
A company may be in this phase if:
• They are mature in a marketplace

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• Teams work with each other internally for the best outcome
• There are set processes and functions within the business
• Workflows and communication tools are present within the business
• Roles and responsibilities are clearly defined
Growth through Collaboration
The final stage of growth in this model is deemed to be Collaboration. This is an evolution of
Coordination, one where all parts of the company work together in a trusted, effective manner. Systems
are simplified for efficiency, learning and development is prominent, and all aspects of the business
contribute towards ways to continue success. Collaboration helps in simplifying and standardizing formal
systems. Managers and employees are given more educational training programs. Collaboration helps
with acquiring more resources such as different marketing channels, various products and services, etc.
During the collaboration phase, companies experiment with new technologies and processes which
cause changes within the company’s people and their practices. This phase results in an internal
growth crisis.
A company may be in this phase if:
• They are a mature company
• There is a positive culture around problem solving
• There’s little 'red tape'
• Reward is shared on the basis of team performance
• Processes are simple and teamwork is good
• Employees feel they can contribute ideas for growth
• Everyone knows how they impact the company with the work they do

Growth through Alliances

This phase is the latest addition to Greiner’s growth model. This phase shows that companies facing an
internal growth crisis can be saved by strong strategic alliances to form growth strategies. It also
suggests the option of acquiring another company for expanding or growing the organisation. This is the
last phase of the model. This final stage of growth is a new one introduced more recently to the curve,
and it focuses on strategic alliances. The idea being that companies may merge, acquire, partner or
work with other companies in order to grow themselves.
Are the phases of growth linear in the Greiner’s Growth Model?
The model suggests that is the case, but in real life it is not necessarily always linear. For example, a
start-up company focused on Direction may also embark on Strategic Alliances. It’s important to note
the real importance and value of this model lies in the crises that may impact a company at the different
stages… so let’s take a look at those.
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What are the crises in the Greiner’s Growth Model?
Each phase in the Growth Model has an associated potential crisis that may disrupt the trajectory of
growth.
Crisis of Leadership occurring during Creativity
This is a common issue for start-ups and young companies that find themselves growing via creativity
and innovation. Initially with a small and informal team it’s possible for founders to manage the business
in a relaxed manner, but over time this becomes a challenge.
Growth will lead to increasing difficultly around coordinating processes, communicating and motivating
the team, or driving the company forward. This can be fatal for a business as it can result in key people
departing (remember, people leave managers as much as they leave jobs) and founders becoming
increasingly frustrated. At this point a more defined management style is required in the company to take
it to the next level.
Crisis of Autonomy occurring during Direction
This is a really interesting crisis. As a company develops in direction then managers may become more
interested in their own unit than the business as a whole. This can result in conflict between management
where a decision may be good for one department or area but bad for another.
The balance to strike is giving managers and employees autonomy but ensuring everyone is on the
same page around decision that are best for the business as a whole. Ensuring everyone is on the same
page around their strategy is key in that balance.
Crisis of Control occurring during Delegation
The crisis around the Delegation phase can be summed up with two factors:
• Founders and managers can find it difficult to let go and give others full control over certain aspects
of the business.
• Communication may be difficult. At this point in a company’s life there can be problems between
management or employees about what is trying to be achieved in each job and how to get the best
result.
The latter can sometimes be a reason to reinforce the behaviour of the former, with founders citing
concerns that if they do not do something it would not be done well. It ultimately will result in a sub-par
outcome though, with founders struggling to ‘do everything’ and teams feeling unmotivated.
Crisis of Red Tape occurring during Coordination
Another very relatable crisis within the life of a company is that of 'Red Tape' or bureaucracy. The addition
of extra reports, processes, functions, all of which contribute to additional work for employees and can
risk the wider culture of the business.
This can slow down decision making, resulting in a less agile company that cannot respond to market
changes while also suffering a wider loss of efficiency/reduced margins.

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Of course, this is a risk at all points in a company life, but it has more chance of arising when coordination
is required and thus processes are needed within a company.
Crisis of Growth occurring during Collaboration or Alliances
The final crisis is one of how to grow. In the framework we have moved through each phase, so the
company is now successful and mature. The question becomes how does it continue to grow, given the
success?
If you are in Collaboration, then perhaps Alliances are your way forward. If you are already developing
partnerships then perhaps diversification is the route to growth? There are lots of potential options here,
it’s a good point to evaluate your industry and develop a new strategy.
What are the advantages of Greiner’s Growth Model?
There are lots of advantages to this model including:
• It provides a number of identifiable challenges companies may face
• It’s simple to understand and shows a way forward for growth
• Different phases for a company to identify their current position are highlighted
• It provides a good discussion piece for management teams
• It reinforces change is needed for growth

What are the disadvantages of Greiner’s Growth Model?

The few limitations of this model include:
• It’s simple and in real life the lines blur between phases
• Not all companies follow the curve in a linear way
• The crises may not always occur in each phase

What frameworks go well with Greiner’s Growth Model?

As a company using Greiner’s Growth Model you may also want to use a SWOT Analysis, which should
include strengths & weaknesses from this model.
Who invented Greiner’s Growth Model?
The Greiner's Growth Model was invented by Larry E. Greiner in 1972 with the five phases of growth. In
1998 he updated the model to add the sixth phase around Alliances.

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CHURCHILL AND LEWIS GROWTH MODEL
The Churchill & Lewis Growth Stage Model is a useful framework that helps analyse what particular
stage of growth a small firm is at, and the issues and problems that they need to be aware of now as
well as in the future as the business grows. The five stages of small business growth (from the HBR
paper)
• Stage 1: Existence – Validation of idea, gaining enough customers
• Stage 2: Survival – Improve customer service, focus on profitability and growth
• Stage 3a: Success – Size and complexity of the firm grows rapidly. Owners face dilemma whether to
exploit the company’s accomplishment or keep the company stable, securing funding for expansion
• Stage 4: Take Off – How to scale operations
• Stage 5: Maturity – Maintain customer service and entrepreneurial spirit while scaling. Get rid of
inefficiencies.
Here’s a video that provides an overview of the Churchill & Lewis Model:
Churchill and Lewis proposed five- (5) stages of small business growth: (i) “existence,” (ii) “survival,” (iii)
“success,” (iv) “take-off,” and (v) “resource maturity.” Each stage, they argued, is achieved based on a
combination of attributes, such as size, diversity of operation, and business complexity, and requires
different organistional dynamics with regard to:
(a) management style, (b) organisational structure, (c) systems development and (d) owner
involvement.
During the first stage of growth, the “existence” stage, the focus of the business is on three(3) things:
generating cash, expanding the business’ customer base, and delivering quality products and
services. The company’s objective is proving its business model. During the “existence” stage, the owner
is extremely “hands-on” and directly supervises subordinates. Systems are informal and
rudimentary. The owner is ostensibly the business.
To move to the next stage, the business owner(s) must not only have a sound business idea, but also
be able to meet the demands of the business, which consumes tremendous amounts of the owner’s
time, finances, and energy. Unfortunately, the majority of aspiring business owners cannot meet these
demands and the business does not survive. Businesses that continue to grow move onto the “survival
stage.”
When a business has reached the “survival stage,” it has a sufficient number of satisfied customers. The
main challenges of the business become managing its revenues and expenses to meet the company’s
cash flow needs, consistently and exceeding its break-even sales, requirements for capital expenditures
and ability to fund its further growth.
The organisation’s structure and systems remain basic in nature. The company may have a few
employees, but the owner must still be very involved in the business and the reputation of the business
continues to be synonymous with the owner. The main concern when planning is on cash flow
forecasting.

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A good example of a survival stage business is a small “mom and pop” business. It may generate an
adequate return, but if the business is not scalable it will remain a “mom and pop” business. For some
business owners, being a “mom and pop” business was their objective for starting the business, but
many business owners are looking for more.
The third stage of business growth is the “success” stage. Characteristics of a small business in the third
stage of its growth include stability and profitability. Cash flow is good, established systems are in place,
and the owner has delegated duties, functions and responsibilities to competent managers. The
organization’s main concern is on strategies and budgets to maintain consistent business performance.
At this point in the company's evolution, business owners are presented with a choice: to enjoy the fruits
of their labors and focus on lifestyle choices, or to continue to grow the business. A successful franchise
with an absentee owner is an example of the former.
If the owner desires to grow a business beyond the “success” stage, the business has entered the fourth
stage of a business known as the “take-off” stage. Challenges for a business that is “taking off” is
sustainable growth and the best way to finance that growth. Organizational traits of a small business
that aspires to “takeoff are: (a) sound systems, procedures & controls, (b) highly competent managers,
and (c) decentralized structures. Sales, financial, operational and strategic plans drive the
organization. While the owner’s presence in the organization remains significant because the business
owner still holds the majority of the stock, the owner’s role becomes less vital to the performance of the
business.
Best-selling authors of The Founder’s Mentality: How To Overcome The Predictable Crises of Growth,
Chris Zook and James Allen, believe that a founder should remain engaged with a relentless focus on
front line performance, an unambiguous owner mindset, and an insurgent’s clear mission and purpose,
as these are key elements to sustainable growth and exceptional business performance.
Often the founder of the business isn’t capable of scaling the business and the company’s investors
and/or creditors replace the founder. If the founder or a successor is not able to scale the business, the
business will try to maintain the status quo, but it must be able to successfully adapt to changes in the
marketplace. If not, it will likely regress. Actually, this can happen at any point of the business’
trajectory. If the business is able to scale, however, it has reached the fifth and final stage of small
business growth: “resource maturity.”
When a business has reached the final stage of small business growth, it enjoys the advantages of size,
a strong balance sheet, and exhibits best practices with regard to its systems, procedures and
controls. The company has the resources to engage in detailed strategic, financial and operational
planning, and is run by a talented management team. At this point in the company’s evolution, the
separation between the owner and the business is very clear.
If the company can maintain its entrepreneurial spirit and leadership position it will become entrenched
in the marketplace. Today’s tech companies, for example, are considered “resource mature” businesses
that are able to grow without limits. If the business cannot maintain its leadership position in the
marketplace, it will slip into what the authors describe as the “ossification” stage, usually characteristic
of a mature business that isn’t innovative, avoids risks, and is resistant to change.

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In sum, Churchill’s and Lewis’ five stages of small business growth provide important insights to owners,
consultants, investors, managers and others about where a business is, where it’s going, and the best
way to get where it wants to go. To aid in the analysis of the most important characteristics influencing
the growth of small businesses the authors have identified the following eight- (8) ownership and
business factors:
Ownership Factors
1. The owner’s goals and objectives for starting the business;
2. The owner’s business prowess and acumen when it comes to things like inventing, sales, marketing,
production, leadership, management, etc.;
3. The owner’s ability to effectively delegate to others; and
4. The owner’s strategic thinking when it comes to seeing into the future and positioning the resources
of the business to meet the owner’s goals and objectives.
Business Factors:
1. Financial resources, including its available cash as well as its ability to borrow;
2. Talent acquisition as it relates to the number, depth, and quality of its managers and front-line
supervisors;
3. The business’ planning, information and control systems; and
4. The business' resources as with regard to things like technology, manufacturing & distribution
processes, supplier relations, market share, and customer focus, which collectively comprise the
company’s unique selling proposition (USP.)
As a business begins its growth trajectory, the above mentioned "ownership factors" are critical, but then
decrease in terms of importance, while the importance of the above "business factors" increase. The
reliance on the owner is paramount to the success of a growing organization, but as the company scales
the owner’s ability to delegate, lead, and manage become more important.
During the “success” stage, the owner becomes torn between kicking back and enjoying the company’s
success and aggressively scaling the business. Cash is most critical at the start of the business and
then again when it scales. As the business expands, the success of the business becomes much more
reliant on business factors. The importance of people, planning, and process also, increases as the
business grows.
Critics of models like the five stages of small business growth argue that they are great for teaching
concepts, but real life tests our abilities to manage the growth of a small business in practice.
In practice, flexibility and adaptability are essential at every stage of a small business’ growth. Different
businesses can take different paths and there are infinite combinations of variables that are mixed,
matched, layered, and timed differently; albeit, I believe the five stages of small business growth provides
a very good framework to assess and adjust the owner’s and business’ focus as a small business grows.

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How to develop a business growth plan
Follow these guidelines to create an effective business growth plan for an organization:
1. Define your goals
Begin your growth plan by determining what you hope to achieve by the end of the plan. Usually, this
means establishing what type of growth strategy you plan to pursue. Think about what method is most
cost-effective and achievable for an organization, and consider which one may cause the greatest
possible growth. Use the SMART method to create a realistic, measurable goal. This acronym stands
for:
Specific: Make your goal as specific as possible to help you determine the growth you want to achieve.
For example, rather than setting a goal to increase sales, you may create a goal to increase sales by
5%.
Measurable: Make sure you can measure your goal to determine your progress. For example, you may
have a goal to gain at least 3% more customers each month, which allows employees to understand
how their participation matters.
Achievable: Adjust your expectations and make sure your goal is achievable. Review your current
metrics and data to help you set a goal the organization can meet with hard work since a goal that's too
difficult can lower motivation and a goal that's too easy can create boredom.
Relevant: Ensure the growth goal you set is relevant to your long-term organizational goals. For
example, if you're hoping to build an international customer base, set a goal that focuses on increasing
the organization's total number of markets.
Time-bound: Set a deadline for assessing your progress so you can help the team track and progress
goals effectively. Make sure you can meet the rest of your SMART criteria within your established time
frame.
2. Determine your metrics
Establish how you plan to measure success. Consider the type of strategy you're pursuing to help you
determine relevant metrics to evaluate. For example, if you're using a market development strategy, you
may choose to monitor social media impressions within a certain time frame to assess your progress. If
you're using a product development strategy, you might compare the cost of research, development and
production to sales of the new product or service. The goal is for the future sales of the new product or
service to outweigh the costs associated with the final research, development and production costs.
3. Consider your timeline
Set a timeline for your growth. Use the deadline you've established in your SMART goal to set short-
term benchmarks along the way. These benchmarks can help you continue progressing to meet your
growth goal. Short-term benchmarks are easier for your team to hit than setting one long-term goal.
When working towards a short-term benchmark, the team may feel more pressure to continually work
towards the goal instead of feeling that there's still time to hit the long-term goal before they push to
meet it. Trying to hit a long-term goal without a short-term benchmark can slow progress or cause a

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team to cut themselves too short as a long-term goal date draws near. For example, if you want to create
a new product for the organization, a short-term goal may be to develop a prototype within six months.
4. Create a plan
Use your short-term benchmarks to create an effective action plan for yourself and other growth plan
stakeholders and participants. The action steps you identify may depend on the type of plan you are
implementing, the length of time it may take to achieve your goals and the resources you can use to
meet your objectives. For each step, identify the person responsible for completing the action to ensure
everyone understands their requirements and expectations. A well-organized plan can help a company
succeed in achieving its goals.
5. Meet with stakeholders
Share your plan with internal and external stakeholders. Seek input from internal stakeholders, such as
other managers or team members, to improve the action steps of the plan. Ask external stakeholders,
like investors, if they have any additional guidance or requests for the plan. Getting feedback from others
can help you consider additional ideas and viewpoints. Use this collective feedback to help you adjust
the plan before distributing it widely.
6. Implement and adjust
Once all stakeholders have reviewed and approved the plan, implement the action steps. Make sure to
assess the plan regularly to ensure you're progressing as expected to meet your growth goal. Consider
a monthly or quarterly check-in to adjust the plan as needed. After achieving a short-term goal or
benchmark, celebrate the success as a team to keep everyone motivated to continue working toward
the larger goal.
Tips for creating an effective business growth plan
Use these tips to help you create a comprehensive and actionable business growth plan for an
organization:
Know the company's strengths
Ensure your growth strategy aligns with areas in which the company excels. Use these talents to help
you identify areas where the company can grow organically.
Make your next growth plan
Before you reach the end of your current growth strategy, begin brainstorming what your next growth
goal might be. Make sure you're consistently working toward a growth objective.
Review other plans
You can often gain insights from other businesses to help you develop a growth strategy. Search for
other companies' growth plans so you can determine what templates you might consider and other
details you can use for your own goals.

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Use your team
Make sure you have skilled team members who can help you develop and implement a business growth
plan. Seek their input to help you identify areas where you can improve the plan to achieve success by
scheduling a regular meeting with the team to discuss new ideas, concerns and growth success.
Approach investors
In some cases, you might require additional capital to reach your growth goals. You can use a business
growth plan both to satisfy current investors and to seek more money from new investors.
Include marketing in your plan
No matter which growth business plan you select, marketing can be a valuable part of that plan. Make
sure you include marketing employees in the growth plan so they can contribute their skills and expertise.
Consult with your network
Consult with peers in your professional network who have implemented business growth plans in the
past. Ask them about their experiences to help you gain additional insights into your own plan by
networking with them regularly.
Consider software
You can purchase software programs designed specifically to help you write a thorough business growth
plan. If you're not sure what to include in your plan to meet your goals, business growth software might
help.

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