SMALL BUSINESS
MANAGEMENT
Chapter 14
Managing Growth
The Business Cycle
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Introduction
Growth
Maturity
Decline
Problems Created by Growth
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Owner-Manager Fatigue and Stress
Lack of Communication
Lack of Coordination
Shortage of Cash
Low Profitability
Problems Created by Growth (cont.)
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Breakdowns in Production Efficiency
Lack of Information
Decreasing Employee Morale
Owner Lifestyle
Evaluating the Growth Question
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Is the business one that can grow ?
Is the business owner prepared to
make the effort ?
Does the owner-manager have the
capabilities to grow?
How should the owner-manager
pursue growth ?
Evaluating the Growth Question (cont.)
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Growth options
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new markets for the product or service
increased sales by increasing frequency
of use.
add new products or services or modify
existing ones.
new uses for present products or
services
acquire other small companies
Planning for Growth
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The Expansion Plan
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set objectives
determine alternatives
select the best alternative
Planning for Growth (cont)
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Understanding the Requirements of
Growth
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Greater Management Depth
Intelligent Expansion
Additional capital
Financial Information
Organizational Change
Implementing Managerial Controls
Monitoring the External Environment
Concept Checks
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1. What concepts can help the
owner-manager deal effectively with
growth problems?
2. What are the four stages of the
business cycle?
3. What are the problems created
by growth?
Concept Checks
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4. How can the owner-manager deal
effectively with growth?
5. Why don’t small business owners
use more formal planning?
6. What are the steps in the growth
plan?
7. What are the requirements of
growth?