Transcript Challenges for Growth and Sustainability from Financial

Challenges for Growth and Sustainability
from a Financial Perspective
Mr. Shekhar Agharkar
Director Arthtech Consultants Pvt. Ltd.
Presentation for MCCIA
May 21st 2012
Interesting Statistics
• Women-owned small businesses -WOSB- are a powerful force
in the economy
• The number of WOSB in the United States increased by 78
percent, almost twice the rate of increase of all businesses in
the United States
• Employment provided by WOSB in the United States
increased by 183 percent
• Approximately 8,000,000 WOSB in the United States provide
jobs for 15,500,000 individuals and generate almost
$1,400,000,000,000 in sales each year
• The rates of growth for WOSB in the United States for the
fastest growing industries were
Construction 171
Wholesale trade 157
Agriculture 130
Manufacturing 112
Transportation and communications 140
Growth
“Business growth means an increase in the size or scale
of operations of a firm usually accompanied by increase
in its resources and output”
Indicators of Growth
• Increase in the total sales volume
• Increase in the production capacity
• Increase in the employment
• Increase in production volume
• Increase in the use of raw material and power
Sustainability
Business sustainability is often defined as managing the
triple bottom line – a process by which firms manage
their financial, social and environmental risks,
obligations and opportunities.
These three impacts are sometimes referred to as profit,
people and planet.
Different ways to view sustainability:
Money
Time
Energy
Supply
Demand
Social
Environmental
Initiation phase of an organization
Setting up a business is not an easy task. Business
support process is required to accelerate the successful
development of startups and fledgling companies.
While Starting Up
Points to ponder:
• Personal SWOT analysis
• Personal Objectives
• Deciding the legal form of the business
• Business plans
• Common business plan mistakes
Growth phase of an organization
• Initial Catalyst Phase: Initial 1 – 2 years of high involvement
• Growth Phase: Creative expansion of work, 2 – 3 years
• Crisis Phase: Conflict ridden decision making, around 5th
year of growth
• Phase of Sustainable Growth: Steady phase of growth to
fulfill the vision
Why should I grow my business?
Need for Growth:
• Survival
• Economies of scales
• Owners mandate
• Expansion of the market
• Latest technology
• Prestige and Power
•Government policy
• Self-sufficiency
Forms of Growth
1. Organic Growth
• Internal Growth
• It is grown from within
• It leads to the growth of production and sales turnover
of the business
• It is slow and involves comparatively little change in
the existing organization structure
2. Inorganic Growth
• External Growth
• It involves a merger of two or more business firms
• A firm may acquired another firm or firms may
combine together to improve their competitive strength
How can I grow my business?
1. Measure and analyze the current status
2. Efficiency through technology
3. Customer Relationship Management (CRM) strategy
4. Market opportunities: Expand offers, new niches
5. Develop new channels
6. Acquire Grow Capital
7. Generate demand and create interest from the market
8. Improve marketing and sale techniques
Growth Strategies
• Intensive Growth Strategy (Expansion)
• Diversification
• Modernization
• External Growth Strategy
a) Mergers
b) Joint Ventures
Diversification
Products
Markets
Present
New
Present
New
Market Penetration
(Penetration existing
markets with existing
products)
Product Development
(Introduce new
products in existing
markets)
Market Developments
(Enter new markets with
existing products)
Diversification
(Introduce new
products in new
markets)
Crisis of Business Growth
1. Creativity Stage
2. Direction Stage
3. Delegation Stage
4. Coordination Stage
5. Collaboration Stage
Sustenance and Growth
• Financing for Expansion and Growth: To grow
adequately, it is advisable to convert it into a limited
company
• Raising the capital for expansion:

Capital Structuring
External funds can be raised through Grants, Loans,
Investors, Angel Investors, Equity Financing, Small
Business Investments Companies, Venture Capital,
Mergers, Going Public, Debt Financing.

• Business Valuation: How much the business is worth
• Organizational Planning and Management: Organizing,
Staffing, Directing, Controlling, Corporate Governance…
Funding Options
• Bootstrapping: Personal or family funds.
• Seed Funding by Business Incubator: Seed funding in
the form of grants or softloans or partly equity and loans. It
is generally up to Rs. 50 Lakhs.
• Borrowing (Friends & acquaintances): Funds borrowed
with some commitments towards payment period and
interest.
• Angel Investors: Available only in very innovative
projects.
• Bank borrowings
Challenges for Growth and Sustainability
from a Financial Perspective
Mr. Shekhar Agharkar
Director Arthtech Consultants Pvt. Ltd.
Presentation for MCCIA
May 21st 2012