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 157Agriculture 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

SustainabilityBusiness 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.

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 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 Strategya) Mergersb) Joint Ventures

Diversification

ProductsPresent New

Markets

PresentMarket Penetration(Penetration existing markets with existing products)

Product Development(Introduce new products in existing markets)

NewMarket 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 21st 2012