How To Make My Small Business Grow – At first glance, categorizing small business problems and growth patterns in a systematic way that is beneficial to entrepreneurs seems like a hopeless task. Small businesses vary in size and growth potential. They are characterized by freedom of action, different organizational structures, and different management styles.
However, a closer look reveals that there are common problems that occur during similar developmental stages. These parallels frame our understanding of the nature, characteristics, and problems of business in a framework that extends from two or three low-wage workers to his $20 million computer his software. can do. Company growing 40% year on year.
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For small business owners and managers, such an understanding helps them assess current challenges. For example, upgrading existing computer systems or the need to hire and train secondary managers to sustain planned growth.
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Helps forecast key requirements at different points in time. For example, excessive demands on owner time commitments and licenses during start-up, and changes in management roles as companies grow and become more complex.
This framework provides a basis for evaluating the impact of existing and proposed government regulations and policies on your business. An example is the exemption for double taxable income. This works great for mature, profitable, stable businesses like funeral parlors, but never for fast-growing new high-tech businesses.
Finally, the framework helps accountants and consultants diagnose problems and adapt solutions to small businesses. A business problem of 20 people in 6 months is rarely addressed by recommendations based on a 30-year, 100-person manufacturing organization. Initial cash flow planning is important. In the latter case, strategic planning and budgeting are critical to ensure coordination and operational control.
Over the years, various researchers have developed models for studying business operations (see Appendix 1). Each uses business size as one dimension and company maturity or stage of growth as a second dimension. While these frameworks are useful in many ways, they are not ideal for small businesses in at least three ways.
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First, you believe that the company must grow and go through all stages of development. Second, the model fails to capture the crucial first steps in the company’s birth and development. Third, these frameworks define firm size in terms of annual sales (some also refer to number of employees), value added, number of sites, complexity of product lines, rate of change in product or production technology, etc. Ignoring other factors.
We used experience, literature reviews, and empirical studies to develop a framework for small and growing businesses. The framework developed from this effort outlines the five development stages shown in Appendix 2.
Each level is characterized by measures of size, diversity, and complexity and is defined by five management factors: management style, organizational structure, formal system coverage, key strategic objectives, and owner involvement in the business. increase. Each step is shown in Figure 3 and explained in this article.
The main problem for businesses at this stage is finding customers and delivering the promised product or service. The main questions are:
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The organization is simple. Owners do everything and directly supervise subordinates of at least average ability. Systems and formal plans are minimal or non-existent. The company’s strategy is just to survive. owner
The organization performs all necessary functions and is the main supplier of energy, direction and capital with relatives and friends.
Incumbents range from start-up restaurants and retailers to high-tech manufacturers stabilizing production and product quality. Many of these companies either do not have enough customer support or fail to realize the potential of their products. In such cases, the business owner will close the business when the start-up capital runs out and, if they are lucky, sell the business for asset value. (See Endpoint 1 in Appendix 4). In some cases, business owners cannot afford the time, money, and energy demands of their business and leave the business. Companies that continue to operate are Tier II businesses.
At this stage, the business proved to be a successful business. You have enough customers and are satisfied with your products and services to keep them. Thus, the basic question shifts from existence to the relationship between income and expenditure. Main topics are:
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The composition is still simple. A company may have a limited number of employees overseen by a sales manager or general manager. No one makes important decisions independently, but instead follows the well-defined orders of their owners.
System development is very low. A formal plan is the best financial forecast. The main goal is still survival and the owners are the same as the business.
In the Survival Stage, the business grows in scale and profitability and moves to Stage III. Or, as many companies do, stay in the survival stage for a while, making a profit on the time and capital invested (Endpoint 2 in Appendix 4), and eventually going bankrupt when the owner gives up or retires. There is likely to be. “Mom and pop” stores also fall into this category, as do manufacturing businesses that fail to sell their products or processes as planned. Some of these small businesses eventually developed enough economic power to sell, but often suffered small losses. Or it may fail completely.
The decision faced by the owner at this stage is to capitalize on the company’s success or lay the groundwork for alternative ownership activities to stabilize the company and increase its profitability. Therefore, the major issue is whether to utilize it as a growth platform (Tier III-G company), as a support tool when the owner leaves the company (Tier III-G company), or to become a sub-Tier III. – D. Company. (See Appendix 3.) Behind the move is the desire to start a new business, run for public office, pursue a hobby or other interest, while keeping the business viable to a greater or lesser extent. You may have aspirations.
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In the Success Impairment subscale, the company has achieved true financial health, has sufficient volume and product market penetration to warrant financial success, and is making above-average profits. A company can remain at this level indefinitely unless a change in the environment erodes its market position or makes it less competitive due to inefficient management.
At an organizational level, the company has grown so much that functional managers are often required to perform specific tasks performed by owners. Managers should be competent, but they may not be highly motivated because their ability to advance is limited by organizational goals. I have a lot of cash. The main thing is to successfully prevent cash flow at the expense of the company to cope with the inevitable difficult times.
In addition, the first professional employee joins the company. Usually an office supervisor, possibly a factory production planner. Basic financial, marketing and production systems are in place. Planning in the form of functional budgets supports functional delegation. Owners and, to a lesser extent, company managers must adopt strategies primarily to maintain the status quo.
As the business matures, he and his wife become more and more distant. This was partly because my wife moved to another location and partly because there were other managers. Many companies stay on sub-platforms of successful releases for long periods of time. Some product markets do not allow growth. This is true for many service businesses in small or medium-sized, slow-growing communities or limited jurisdictions.
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Other owners choose exactly this method. If the company continues to adapt to the changing environment, it may be encouraged to continue, sell or merge for profit, or grow later (Endpoint 3 in Appendix 4). This is a last resort for franchisors who need to buy other franchisees.
As many automakers experienced in the late 1970s and early 1980s, if a company cannot adapt to changing conditions, it will go bankrupt or go into recession (Endpoint 4 in Appendix 4).
At the Success and Growth sublevel, owners strengthen the company and allocate resources for growth. Owners receive the company’s cash and built-in borrowing power and use it all to fund growth.
Key tasks include maintaining the profitability of CoreHis business and not exceeding his cash flow, and developing managers to meet the growing needs of the business. This second task requires managers to hire with the company’s future in mind rather than the present.
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The system should be installed with attention to future needs as well. Operational plans, such as Sublevel III-D, are in the form of budgets, while strategic plans are comprehensive.
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