1. Managing growth
Super-project.eu

2. From start up to scale up
Each venture typically goes through different stages of development – a simplification - however, each stage requires different strategies and management techniques to be employed in order to make the venture successful
Figure 1: Financial performance and stages of new venture development (Smith et al., 2011)

3. Scale up strategies The four basic growth strategy modes:
Market penetration – increasing sales on existing markets.
Market development – increasing sales by entering new markets.
Product/service development – increasing sales by developing and selling new products/services.
Diversification – selling new products/services to new markets.
The considered growth strategy must be consistent with firm’s capabilities, draw upon and develop its competitive advantage, and be viable given the competitive situation

4. The dimensions of business growth
Business growth means much more than just an increase in size – it’s a dynamic process involving development and change within an organization, as well as changes in its interaction with environment
Growth and development of the venture must be understood from many perspectives, mainly:
Financial,
Strategic,
Structural,
Organizational.

5. Financial growth
Related to the development of the business as a commercial entity.
Concerned with increases in:
Turnover,
Costs,
Investment needed to achieve the turnover,
Resulting profits.
Company’s assets.
Value of the company, i.e. what a potential buyer would be willing to pay for it.

6. Strategic growth
relates to changes in how business interacts with its environment in a strategic whole.
Concerned with how a business develops its capabilities to exploit market presence, incl. selection of opportunities and acquiring assets to create sustainable competitive advantage
Must be at the heart of the growth process
All competitive advantages are sensitive to business growth:
Cost advantage – experience effects, economies of scale and scope
Knowledge advantage – developing and maintaining knowledge on product and/or market
Relationship advantages – leveraging relationships to grow and maintaining personally built relationships as the company grows
Structural advantage - retaining flexibility and responsiveness as the business grows and matures

7. Structural growth
Factors driving the structure of the organization as it grows:
Organization size – the larger the organization, the more complex its structure will be.
Operational technology.
Organization strategy – no simple relationship between strategy and structure. They need to be aligned and the key to determine the structure is the way how decisions related to strategy are made within the organization.
The organization’s environment it is defined by its complexity, speed of development and changes, and predictability.
Power, control and organizational politics – they determine the extent to which, and the way in which the entrepreneur can exert control over the organization as it grows.

8. Organizational growth
As the venture grows, the entrepreneur faces the task to design and create an organization.
One of the approaches is to:
Consider the resource requirements of the organization, and
Design its structure around them.
Particular functions are then formed to manage acquisition of these resources
In addition, the complete organization will include two more functions:
Operational system
Strategic control function

9. Consolidating the venture
At some stage, the growth slows and company becomes mature – it has to undergo a process of consolidation
Maturity - much more than a simple slowdown of growth - number of changes in the main aspects of the organization, which are:
Finance - growth in turnover and supporting assets slows down, investments are reduced and investors look for returns
Strategy - aggressive competitive strategies usually change to more defensive postures
Structure – internal configuration develops permanence
Organization – systems, procedures and practices are more permanent, culture gets its final shape

10. Harvesting, business exits and exit strategies
Entrepreneurial ventures are not necessarily life-long projects - at certain stage, entrepreneur can decide to exit the business and harvest by realizing its value
It is good idea to clarify from the very beginning of the venture start-up the entrepreneur’s plans and expectations toward the exit
VCs and investors normally negotiate harvesting options at the time of the initial investment
Two basic exit/harvesting alternatives:
Selling to outsiders (direct private sale, IPO)
Selling to insiders (management buyout, leveraged buyout, employee stock ownership plan)

11. Thank You !