Chapter 14 - Entrepreneurial growth. The chapter is organized around four driving forces in the growth stages: leadership, the opportunity domain, resources and capabilities, and execution. Before we get to this discussion, let’s review a key decision every entrepreneur must consider beyond startup: whether to sell, maintain, or grow the venture. | ENTREPRENEURIAL GROWTH Chapter 14 1 You’ll have multiple post-startup options Startup Sell Maintain Grow Options for Venture Options for Founder Start Another Venture Seek Other Employment Become a Manager Become an Entrepreneurial Leader Take Alternate Position in the Firm Exit Day-to-Day Management Exit Day-to-Day Management Stay With Company Execution becomes core driving force Leadership Organizational Resources and Capabilities Opportunity Domain Execution Uncertainty Environmental Conditions Stakeholders Control System Components Tracking performance to support decision-making The Entrepreneurs Critical Information Needs??? What the Entrepreneur needs to know about the customer/market? What the Entrepreneur needs to know about the competition/industry What the Entrepreneur needs to know about his/her own company CRITICAL FACTS & ASSUMPTIONS ABOUT PERFORMANCE MUST BE TRACKED TO CONFIRM/DENY THEM IN TIME SUPPORTS DP TIMELY DECISIONS EXTERNAL INTERNAL EXTERNAL Know the difference between performance & effectiveness Measure of Performance: Are we doing things right? Measure of Effectiveness: Are we doing the right things? Focus on tracking effectiveness If effectiveness is lacking, check performance If performance is lacking, you’re having trouble executing If performance is fine, you’re strategy needs improvement The faster you convert cash, the less you’ll need Average Inventory Collection Period + Cash Conversion Cycle = Average Receivables Processing Period – Average Payables Period Inventory Received Payment made to Suppliers Sale Payment Received from Customers Cash Conversion Period Days Sales Outstanding Days in Inventory Days in Payables 98 Days 53 Days 53 Days 98 Days Consider outsourcing non-core activities Activities that don’t underpin your competitive advantage might be done better and/or for less by others. Focus on your critical competencies. Balance your need for control with your ability to control. Implement controls and remain entrepreneurial Minimize controls to those needed to align and coordinate your venture Within those controls, give employees wide latitude to achieve objectives Underwrite mistakes of employees who take rational risks When large enough, organize to simultaneously: Execute the present (tactical) Refine near-future plans (operational) Innovate new ways to realize your vision in the future (strategic) Expand from your competitive advantage Distribution To Gift Shops Direct through retail, online, catalogs Wholesale New Products New Candles Home Fragrance Gifts Geographic Expansion Regional National International Acquisition Gifts for fundraising market Candles YANKEE CANDLES’ OPPORTUNITY DOMAIN Obtain & program resources to develop critical capabilities During growth, you’ll focus on funding Capable and well run ventures get higher quality funding Use of funds must support developing your organizations’ intangible capabilities (., your team) Forecast to align capabilities with market needs and your strategy Balance between developing capabilities for your customers & finding more customers for your capabilities Similar to cash conversion; the capability development cycle can take time plan ahead. Understand what type of leader your team needs you to be Become an entrepreneurial leader Growth requires more managers
