SMALL BUSINESS MANAGEMENT Chapter 13 Managing Growth




Chapter 13

Managing Growth

Two Guys & a Truck

Joe Six Pac

Jelly Belly

Small Business and Growth

 Earning potential of the growth business is much more significant

 Larger companies are also better prepared to handle downturns in the economy

 Larger growth business often have an easier time raising capital

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McGraw-Hill Ryerson. All rights reserved.

Small Business and Growth (cont.)

Growing business can usually attract and retain employees compared to small stagnant companies

Growing business can often be sold for more money than small firms with low growth stories

Copyright © 2014

McGraw-Hill Ryerson. All rights reserved.

The Business Cycle





Two Guys & a Truck

Problems Created by Growth

Owner-Manager Fatigue and Stress

Lack of Communication

Lack of Coordination

Shortage of Cash

Low Profitability

Problems Created by Growth (cont.)

Breakdowns in Production Efficiency

Lack of Information

Decreasing Employee Morale

Owner Lifestyle

Golf Gifts

Evaluating the Growth Question

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.)

Growth options

 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

Jelly Belly

Planning for Growth

The Expansion Plan

 set objectives

 determine alternatives

 select the best alternative

Planning for Growth (cont)

Understanding the Requirements of


Greater Management Depth

Intelligent Expansion

Additional capital

Financial Information

Organizational Change

Implementing Managerial Controls

Monitoring the External Environment