1. 16 - 1 Chapter 16 Managing Rapid Growth: Entrepreneurship Beyond Startup McGraw-Hill/Irwin New Venture Creation, 7/e © 2007 The McGraw-Hill Companies, Inc., All Rights Reserved.

2. 16 - 2 Exhibit 16.1

3. 16 - 3 Exhibit 16.3

4. 16 - 4 Issues Leading to Possible Crises in Rapid Growth Opportunity overload Choosing from among an abundance of sales or new market opportunity Abundance of capital Evaluating investors as “partners” and the terms of deals with which they were presented Misalignment of cash burn and collection rates Cash burn rates racing ahead of collections

5. 16 - 5 Issues Leading to Possible Crises in Rapid Growth Decision making Executing functional day-to-day and week-to-week decisions, rather than strategizing Expanding facilities and space... and surprises Coping with surprises, delays, organizational difficulties, and system interruptions spawned by space or facility expansion

6. 16 - 6 Common Approaches to Successful Management Leadership Roles, tasks, responsibilities, accountabilities, and appropriate approvals clearly defined Leadership based on expertise, not authority Emphasis placed on performing task-oriented roles Consensus Building Emphasis placed on overall goals Emphasis on participation and listening

7. 16 - 7 Common Approaches to Successful Management Communication Information sharing Willingness to alter individual views Encouragement Encouragement of innovation and calculated risk-taking

8. 16 - 8 Common Approaches to Successful Management Trust Do what they say they are going to do Traits include openness, spontaneity, and straightforwardness Development Develop human capital

9. 16 - 9 Exhibit 16.7

10. 16 - 10 Chapter 18 The Entrepreneur and the Troubled Company McGraw-Hill/Irwin New Venture Creation, 7/e © 2007 The McGraw-Hill Companies, Inc., All Rights Reserved.

11. 16 - 11 External Causes for Failure Recession Interest rate changes Changes in government policy Inflation The entry of new competition Industry/product obsolescence

12. 16 - 12 Internal Causes for Failure Inattention to strategic issues Misunderstood market niche Mismanaged relationships with suppliers and customers Diversification into an unrelated business area Mousetrap myopia The big project Lack of contingency planning

13. 16 - 13 Internal Causes for Failure General management problems Lack of management skills, experience, and know-how Weak finance function Turnover in key management personnel Big-company influence in accounting

14. 16 - 14 Internal Causes for Failure Poor planning, financial/accounting systems, practices, and controls Poor pricing, overextension of credit, and excessive leverage Lack of cash budgets/projections Poor management reporting Lack of standard costing Poorly understood cost behavior

15. 16 - 15 Nonquantitative Signals of Trouble Inability to produce financial statements on time Changes in behavior of the lead entrepreneur Change in management or advisors, such as directors, accountants, or other professional advisors Accountant’s opinion that is qualified and not certified

16. 16 - 16 Nonquantitative Signals of Trouble New competition Launching of a “big project” Lower research and development expenditures Special write-offs of assets and/or addition of “new” liabilities Reduction of credit line

17. 16 - 17 Telltale Trends of Organizations in Trouble Ignore outside advice People (including and usual, most especially, the entrepreneur) have stopped making decisions and also have stopped answering the phone Nobody in authority has talked to the employees Rumors are flying

18. 16 - 18 Telltale Trends of Organizations in Trouble Inventory is out of balance Accounts receivable aging is increasing Customers are becoming afraid of new commitments A general malaise has settled in while a still high-stressed environment exists (an unusual combination)

19. 16 - 19 Turning Around a Troubled Company Diagnosis of the problem Strategic analysis Management analysis Cash flow analysis

20. 16 - 20 Cash Flow Analysis Steps in identifying and quantifying the profitable core of the business Determine available cash Determine where money is going Calculate percent-of-sales ratios for different areas of a business and then analyze trends in costs Reconstruct the business Determine differences

21. 16 - 21 Potential Cuts/Improvements Most common areas for potential cuts/improvements Working capital management Payroll Overcapacity and underutilized assets

22. 16 - 22 Kawasaki, Chapter 8 Smart reasons for partnering “spreadsheet reasons” Areas that should be covered/discussed What will each organization deliver? When will they deliver it? Where will they deliver it? What interim milestones must each organization meet?

23. 16 - 23 Kawasaki, Chapter 8 Accentuate each partner’s strengths Cut win-win deals Follow with the file – legal follows detailed plan

24. 16 - 24 Kawasaki, Chapter 8 Everybody deserves and “out” clause Watch the “lies,” rationalizations, and other sales pitches YOU might hear… Get past the emotion to the detail

25. 16 - 25 Kawasaki, Chapter 8 Schmoozing (In person/Email/Otherwise) Network – Get Out and meet people Listen more than you speak Follow up – within 24 hours Give contact information Be passionate Read Do favors/return favors/ask for favors

26. 16 - 26 Kawasaki, Chapter 9 Branding You must define yourself and your business clearly (contagiousness): Cool, effective, distinctive, disruptive of the status quo, emotive, deep (capabilities beyond the obvious), indulgent, supported.

27. 16 - 27 Kawasaki, Chapter 9 Everything about your product or service must be obvious, simple, easily understood by the consumer… Simplicity takes thought and time Surround yourself with people who believe in your product or service

28. 16 - 28 Kawasaki, Chapter 9 See the “art of speaking” tips on page 183: This is why you must be passionate about what you do… To appear genuine and interesting you must be genuinely interested!

29. 16 - 29 Kawasaki, Chapter 10 Rainmaking Every business will change as the market demands it to….If you are smart, you will change too! See the Gorilla … what’s that about?

30. 16 - 30 Kawasaki, Chapter 10 Rainmaking Find the key influencers and contact them…build a relationship with them “Suck down” pay attention to mid and lower level employees

31. 16 - 31 Kawasaki, Chapter 10 Rainmaking Learn from rejections…yes, there will be rejections, even Kawasaki thinks so… You can’t convince everyone…