Understanding and Adapting to Market Changes
A young small business is often tagged as a “venture” since the entrepreneur needs to take that venture and mold it into a growing concern by developing and implementing solid management strategies. Without effective management the business venture can’t transition into a successful early stage company, even if the venture has a great entrepreneurial concept, great products and services, adequate funding, and great market demand. It actually takes successful Strategic Management for a venture to really thrive and evolve. Here in this article I will provide some great management strategies to employ in company operations which will certainly increase a venture’s success, whether an it is a struggling venture or a young growing company. This is really the foundation of effective Strategic Management and needs to be part of any small business enterprise, no matter its age or growth stage.
Management
It is important to plan well in advance what management needs to be in place as a company grows and succeeds. When the company is young and small, it can be managed by a couple people. However, as the company speedily grows, it is very important to have a solid management team in place. Otherwise, all that growth can cause severe problems if not managed effectively. It is also important to have good management practices in place and in the company business plan.
Management Resources: Having the right people in a company is the second prong in the Management equation. Recruiting and retaining the right experience and talent for a Company’s future growth plans and present sustainability is the one most important planning element for a company. Experience is absolutely vital when a young company is growing rapidly, by leaps and bounds, to ensure the success is not short-lived and to manage the growing assets of the company. Just as a growing company needs competent Management, it is Management’s responsibility to ensure the Company recruits skilled labor and has effective training programs in place.
Management Structure: A company needs a well designed and implemented structure in advance of high growth potential, so a company can properly manage its assets, products, quality assurance, customers, sales people, financial planning, market trends and all the other numerous variables which need attention for sustained growth and profitability. The Management Structure needs to include both Upper Level Management Planning, as well as, Mid-Level Management. It is critical there is clear Strategic Direction and Communication Top-Down and Bottom-Up throughout the organization in order to successfully grow and sustain an enterprise’s success.
Market
It is not unusual for a venture to determine that it needs changes to its products and services because its Market Analysis found its assumptions unsustainable or uncompetitive, as well as, identifying other market niches not originally planned for. However, market focus does not stop there. In fact, it is just beginning because a venture must be continually analyzing market trends and be carefully listening to its customers, so it can anticipate changes in the market in time to adapt and keep its competitive edge. A new venture should spend a lot of time out in its market place, with its salespeople and customers, to understand future market trends. This is what good Market Planning and Strategic Marketing accomplishes.
Financials
For a fast growing, young, small business, inadequate financial focus, analysis, planning and policies are a kiss of death. I find as Business Consultant many young companies focus primarily on Profits when they should be concerned with Cash Flow, Capital Management and Budget Control Systems. Without these three components, profit and loss projections are baseless as over time issues compound inside these unheeded areas, causing profits to in the last analysis decline.
Cash Flow: Sustainable profits come from good Cash Flow Analysis, Cash Flow Budgeting and Forecasting, and Cash Flow Management. At any point in time a growing company should know 12 months in advance how much cash is required to sustain its Business Plan. This gives a growth company time to generate cash, as well as, raise the necessary capital to sustain growth and profits. A growing venture needs to generate contingence cash in its Cash Flow Budget, along with holding consistent earnings over time and having credit facilities useable to snatch market opportunities as they present.
Capital Management: The well known business guru, Peter Drucker, maintains a new venture outgrows its capital structure in every 40-50% sales increase, necessitating changes to its Capital and Finance Strategy. As a company projects its Cash Flow Budget forward 12 months, one of the important components of this process is determining how much cash the Company will have on hand at the end of the period, what finance installation is in place to make up the necessary deficit in cash needs and ask the question of whether a different capital facility is necessary to continue. A Company’s Financial Strategy is intractably linked to its Cash Flow Management and completely necessary to define in order to sustain growth from one period to the next.
Control Systems: With effective Cash Flow Forecasting, Budgeting and Management in place, along with an embeded Capital Management Plan, a growing company needs first-class Control Systems in place to manage costs is an important element in Cash Flow Budgeting. This Control System is also a part of a Company’s Profit Analysis when “controlling” and examining certain expense areas, such as, payables, inventory, production, administration, service and distribution. Profit Analysis & Cash Flow Analysis should be linked, understanding the relationships between cash generation, profits and expenses.
The Turnaround Consultants is an integral part of a company’s success. Make use of good Business Plan Blog to properly grow your small business venture. Frank Goley is a highly experienced business coach for ABC Business Consulting, and he is author of a business plan guide. Frank also writes the business success blog, and he has written over 170 articles on business success.
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