Challenges for Growth and Sustainability from a Financial Perspective Mr. Shekhar Agharkar Director Arthtech Consultants Pvt. Ltd. Presentation for MCCIA May 21 st 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 171Wholesale 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: MoneyTimeEnergy SupplyDemandSocial 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.

Points to ponder: Personal SWOT analysis Personal Objectives Deciding the legal form of the business Business plans Common business plan mistakes While Starting Up

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 5 th 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 PresentNew Markets Present Market Penetration (Penetration existing markets with existing products) Product Development (Introduce new products in existing markets) New 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…

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 Funding Options

Challenges for Growth and Sustainability from a Financial Perspective Mr. Shekhar Agharkar Director Arthtech Consultants Pvt. Ltd. Presentation for MCCIA May 21 st 2012