Managing the Five Risks you face at all stages of your business development:

1. growth risk

2. technology & production risk

3. marketability & competing risk

4. financial risk

5. team & management risk

5.

Growth

– the company is broadening production lines, focusing on the main product; management style transition from informal to formal

Organization: Centralized

Management:  Hybrid formal/informal

Technology: Developed, focused

Funding Stage: Second

pp.

Problem

Solution

Action

5.1

Growth Risk:

• Your capabilities in maintaining perspective (reality vs. euphoria), balancing today's and tomorrow's needs, and coordinating resources are being tested

• The original route to success works for some time, but then it stops working so well and hits diminishing returns. It is nor easy to keep a great new venture to grow at its original rate for more than 3 to 5 years. If you continue doing the same things that made you successful during the start-up stage you are almost certain to fail.

• Thinking about your second stage of growth before the first has happened. Reinventing your business model, experimenting extensively to find a successful new model and get to the second stage of growth

• Besides creating a viable model, a critical factor in the ultimate success is how well and fast your company integrates

• Development of a flexible and responsive company structure adaptable to changing internal and external conditions

• Development of an effective and flexible production systems responsive to change

• Building strategic alliances and business partnerships

• Practice the ten commandments for building a growing company

• Master the balanced business systems approach

• Develop sustainable growth strategies

• Reinvent your competitive and differentiation strategy

• Master company integration and build a new organization that works

• Maintain a purposeful and organized search for new opportunities

• Inject the relentless growth attitude into your company

• Build a coaching organization

• Keep flexible – spot what goes wrong and turn error to advantage

• Identify people (values, skills, expertise) and resources needed

• Develop a business plan for your company growth stage

• Develop strategic alliances and business partnerships

• Lead the team, create roadmaps: market opportunities; positioning; sales, distribution, operations; continuous innovation; people

• Develop innovative value chain management system

• Develop effective reward system – people are reinventing the wheel

5.2

Technology & Production Risk:

• Early success with a single application or product line does not translate into long-term viability in the face of well-capitalized, entrenched competitors with strong customer relationships

• New technology and products development draws significant resources from the fast growing business operations

• Identification of strategic market intervention areas

• Development of the business and technology strategy to achieve this goal

• Top management participation

• Development of strategic technology development partnerships

• Reinvent your intellectual property management system and develop IP strategy

• Develop licensing strategy, protect your trade secrets

• Identify competitive factors and critical technologies and formulate your technology strategy

• Set strategic priorities and actions and develop your business strategy

• Develop your diversification strategy and launch differentiated produce

• Harness the power of innovation – search continuously for new opportunities

• Develop flexible lean production systems responsive to change

• Establish a technology intelligence system

• Explore opportunities for a joint venture or a merger with a strategic partner to best exploit your short-term technologic advantage and realize the full potential of the company's entrepreneurial vision. Transfer technology and establish strategic alliances to stay technologically competitive. Winning is not necessary achieved without partners and parents.

5.3

Marketability & Competing Risk:

• Poor market feedback

• Poor strategic marketing plan

• Growing backorders

• Competitors "knockoffs"

• Customer complaints; product returns or write-offs

• While managing growing complexity, it essential to remain focused on how the business provides value to its customers

• Fighting fires

• Research into the market and its trends

• Reinventing market development strategy

• Develop your competitive strategy - defend your markets from competitors, explore new markets to penetrate

• Revisit continuously the laws of marketing and reinvent your marketing strategy

• Revise critically your marketing approach

• Develop realistic marketing concept

• Reinvent your competitive strategy

• Reinvent your marketing, advertising and selling strategy

• Develop strategic marketing plan

• Gain repeated customers; retain customers - unleash the power of your service-profit chain to gain more loyal customers

• Partner with your customers to create a future for both parties that is better than either could have developed alone

• Develop innovative product selling and customer relationship chain

• Develop marketing partnerships

5.4

Financial Risk:

• High leverage

• Short-term financing

• Inventory shortages or imbalances

• Poor financial & tax strategy for generating cash

• Excessive increases in overhead and personnel

• Operating costs reduction through optimization of production systems

•  Raising of working capital (second round) to support strategic growth plans

• Look at several measures of capital employment - not just one

• Work back to costs from what customers are prepared to pay

• Select type of finance you require to implement your growth strategy and develop your fund raising strategy

• Study investment opportunity selection criteria of different types of investors

• Enhance shareholder value by adopting a leading-edge reporting model

5.5

Team & Management Risk:

• Start-up spirit starts to fade

• Organizational boundaries are mounting; employee gradually lose perspective on each other's jobs

• People lose the big picture: they can no longer see how the various tasks, activities and functions fit together to achieve the organization's overall purpose

• Employees start to identify more with their own unit or work group than with the company as a whole

• As boundaries become more rigid, the company loses its elasticity - it's ability to change in response to (or anticipation of) changes in the external environment

• No strategic and contingency planning

• Shifting priorities in response to opportunities

• Resisting development of structure, processes and controls

• Hiring people who are no smarter than you are

• Key people leaving

• Others don't share your urgency

• Poor decision support systems

• Overridden and inadequate internal systems, non-responsive to customers & employees

• Conflict between formal and informal

• Emergence of the "Peter Principle"

• Difficult decisions about roles, authority & responsibility

• Keeping pace with an increasingly complex business environment requires proper delegation, better communication, and cross-pollination of perspectives from outside advisers and peers

• Managing as a team

• Addressing the problem of "good people" who can't keep up

• Establishment of management systems enabling better control, transparency, and customer relationships

• Development of employee empowerment mechanisms

• Development of formal professional management structures

• Create the mindset of growth and establish the relentless growth attitude in your organization

• Learn to do less and manage more; practice the art of effective leadership, management, and coaching

• Practice effective self-management

• Manage by objectives

• Start with yourself, know your own values, strengths, weaknesses and use them effectively

• To be a successful manager, learn how to innovate

• Build an innovation-friendly organization

• If you cannot afford top management, build your management team from within and develop their management skills

• Change from reactive to proactive style

• Do the feedback analysis as a matter of course to build on your strengths

• Gain really effective control a comprehensive business audit

• Develop plans for the future

• Don't over-respond to opportunities to avoid fragmentation and burn-out (see 80/20 Principle)

• Micro management de-motivates people - concentrate on the activities that bring the most value to the organization and delegate other responsibilities and tasks

• Make sure you communicate clearly and often with colleagues, superiors, and subordinates

• Talk less and listen more and actively to associates, advisors, customers, suppliers, and vendors; cross-pollinate solutions and ideas with peers and advisers outside the business

• Don't assume that everyone in the company thinks like you do; that you have all the answers; that things won't get done without you; and that your direct reports will automatically function as a team. Lead!

• Play the role of the team builder, coach, strategic planner and communicator; communicate critical and actionable information

• Require top managers to operate as a "team"

• Help team manage the plan by group discussion of progress; measuring results with key metrics; communicating progress and results; and adjusting plans to market shifts

• Manage organizational misfits, malcontents, and non-performer