• Yasna Startup Academy

5 Stages of Business Growth: 4th Stage: Growth to Sustainability: Expansions and Rapid Growth




INCREASING MARKET COMPETITION:


The days of Monopolising the market is pretty much over, there is no such thing as “the only one’s on the market”, unless you really do have a unique unbelievable idea and product/service, that has IP and Patents globally. So this means whatever you do, what ever you offer, will have some form of competitor(s). So the best way to deal with this is to start a cartel and destroy all your competition right?


It all depends how you wish to approach this, either waste all your time and energy voyeuring on your competitors or remember a simple phrase “Competition breeds Innovation”. Like the greatest battles in history with the largest brands, Apple & Microsoft, Apple & Samsung, McDonalds and Five Guys, DC Comic and Marvel. They all have one thing in common, they all concentrated on one thing, making their offering better than the others.

Partnering is a quick and easy way to spread the “Word”, combine forces and spread the costs. Despite what you may think, even the great Gates and Jobs had their partnerships. This doesn’t mean sharing office space, but just like a treaty between countries, you outline areas which you don’t cross and ensure fairness across the market.

When you enter this phase, ensuring that you know everything in your industry sector, will make sure you survive. If you believe in your own hype and ignorance, it will be the end of you. A doctor will never be able to stop studying and they are always under examination themselves to make sure they know and practice the most up to date medical practices. This methodology fits in exactly the same way for business. Lose your focus and you will lose your market share, you will lose confidence of your board/employees etc and ultimately your business.


Alan Sugar – a great business man, started by selling heating solutions to neighbours by putting candles together and creating a self contained fireplace….genius! He is actually a very big example of a business failure. Amstrad was his biggest success and failure. In the 90’s he failed to recognise the rise in computers and thought he was going to ride the wave with his Amstrad cheap computers, the first cheap computers to market. He failed to realise Microsoft were on their heals. As a result they lost control of their price point as well as their competitors and they bombed. Furthermore as a reactive measure, they launched the Amstrad phones, a on screen system, a little too advanced, but most importantly flawed. It didn’t work as promised. Due to this huge mistake, he not only lost his control of the IT market, he had to sell up and concede defeat, as it would cost him too much to compete with the big boys now. Amstrad could have been the Microsoft or Apple we use today, if it wasn’t for this huge act of arrogance and failure to accept market competition. He simply forgot to read his market!!


ACCOUNT MANAGEMENT:


Management of accounts is probably the single most important facet of your business. So you have done all the hard work, how do you make sure they are happy and taken care of. Simple, how do you take care of a child? A pet? Yourself? You make sure you pay attention, to ensure they don’t starve. There is a simple method here, you ensure there is someone who ensures they check on their clients on a regular basis, ensuring they are fully taken care of. At the same time, ensuring they understand any changes or added services/products you have to offer them.


There is no such thing as different types of account management people. Account management/business development/sales executives, these are all the same people. The only way a client is fully taken care of is if the person who gave birth to that child ensures they look after them, feeds them and makes sure they are taken care of. Personally I have taken care of every single client I have ever sold to, because of the way I take on my sales. I build up such a trust, they will go with whatever I say. But I make sure I deliver every time. Trust is a rare commodity these days in business, build one with your potential client and you will have them no matter how high your prices go. How you decided to delegate, is up to you. Sales Executives, Business Development Manager, Account Manager, Client Relationship Manager.


I can not stress the importance of understanding your industry and your clients requirements as well as industry. If you call me up and say “hey Alex, tell me about your business” I will never speak to you again, furthermore, I will tell everyone I know never to use you, you could be Apple, I wouldn’t care. You call me and with a different approach and use the following “hey Alex, I just saw an something on the financial times regarding ethnic foods and noticed there are a few services we could provide you, that will really propel your business” I am all ears, speak more!! If you sound like an idiot wanting to have a chat, then you may as well speak to yourself in a mirror. Read your clients, if they send you an email with short responses, don’t send them a 6 page email. Send micro emails just to warm up a connection. Don’t always approach with a “sale” email/call.


Asking if you are doing ok, is a refreshing change. Hold events, dinners, drinks reception etc. Any way to keep a connection alive, more than just a sale, but almost turn it to a friend. Remember, unless they are godfather/godmother to your child, they are still only a client. Make sure you keep it professional. Understanding your clients personality as well as their industry, is crucial.


MOVING INTO NEW MARKETS:


I have been fortunate enough to travel across multiple continents in my life and see many cultures, both business and home. How you move into new markets is exactly the same method you have adopted from Stage 1 until now.

1. Define the Market

Clearly defining your market may seem like a simple step, but before you identify who you want to sell your product to, it is difficult to understand their needs. You'll want to consider the demographics, location, and common interests or needs of your target customers.

2. Perform Market Analysis

Expanding into new markets involves a great deal of market research in addition to target customers. You'll want to develop an in-depth understanding of market growth rates, forecasted demand, competitors, and potential barriers to entry. This is particularly important if you are looking to enter a relatively undefined market.

3. Assess Internal Capabilities

Much of your decision on how to enter a new market (build, buy, or partner) is driven by an internal capabilities assessment. During this stage, you should ask yourself questions like: How much of our core competencies can we leverage? Do we have sales channels/infrastructure/relationships in place? What time-to-market considerations exist?

4. Prioritize and Select Markets

Once you've completed the market analysis and internal skills assessment, it is time to prioritize potential markets for expansion. Markets should be prioritized based on the strategic fit and your ability to serve them. Answer questions like: Are there gaps in this marketplace that we can fill (and do so better than our competitors)? What value do we deliver to this market and how much are they willing to pay for it?

5. Develop Market Entry Options

Once you've selected an attractive market, you'll want to determine the appropriate level of organic investment vs. expanding through a series of acquisitions (or some combination of the two). If you have complementary infrastructure or sales channels in place, you might want to consider an organic approach to growth. The key steps here are to develop the business plan, case for investment, and implementation work plan, including owners, timelines, tasks, and key milestones to enter.

If you are entering an entirely new market, with limited core assets to leverage, you should consider a joint venture/partnership or acquisition. These options require target identification, prioritization, due diligence, deal negotiation and close. Prior findings can be leveraged to identify the appropriate mix of market entry options that is linked to the business's core competencies, assets, and overall strategy.


This list of key steps in creating your market entry strategy is high level, but it shows that to make the best decision for your business, you need to do your homework and consider all of your options around cost, risk and predictability. Success of any market entry strategy is driven partially by factors outside of your control but investment in these upfront steps should help you to mitigate the risk.


Every country has different laws and the slightest changes in law can have an impact on your business. Fail to assess this and you will lose more than your investments.


Tesco lost close to £2 billion with their venture in to the US, wiping off almost half their share value on the stock market, they missed a golden rule in expansion risk mitigation. Get out before you lose more than you have. Instead they poured even more money into marketing. Ultimately a combination of timing and piss poor planning, was their downfall, however they spent millions on R&D. They didn’t look at simple component consumer confidence in market and previous UK retailers success/failures. This was a multi billion pound organisation, with almost unlimited funds.


EXPANDING - VC's/MERGERS/FUNDING:


If you have done everything in the right way, this area should be so clearly defined, it would be as clear as water. When you have too many orders to cope with capacity at current level, you expand. Use the same model and add extra components, extra desks, extra factory, extra staff etc. Adding 2/3/100 of everything, in the anticipation that you will definitely make it, is wrong. You can always make a building taller, but removing bricks from a lower level and your building collapses. Yes buying in bulk is always fantastic and cost saving, but sometimes you need to concede on the extra costs, so you can mitigate that level of risk.


Venture Capitalists, Private Equity, Crowd Funding, Private Investments, Mergers – these are all pretty much the same thing. You give away a piece of your hard earned work and your life, in return for a wad of cash. These people, other than Private Investors and Crowd Funding, will only deal with you if you have a working model of some kind, something that has a proven concept that will make millions, not a few thousand, not hundreds of thousands, millions and billions. As a return, they will take anything up to 60-70 % of your company for it. What they will provide is some support for you to make it, money which gets released at stages of you delivering milestones and may be some mentoring. But everything runs in exactly the same way. You just are part of the big boys now.

Merging with another company is a loooooooong process. The bigger you are, the more issues. Who is the most profitable, who gets the bigger share, who’s name goes first and then you need to deal with the regulators.


Monopoly and Mergers commission. Is your merger going to affect other businesses in your industry in an adverse affect? Will you have too much power? Even if you agree all the other stuff, these people can veto the who deal. So before you show them your and they show you theirs, think about the possibility of all the components. A lot of mergers, eventually turn out to be hostile takeovers. Could mean a nice pay-out for you and a number of your former employees looking at the job ads.

Forming a company properly will determine whether you own it or you just become the person with the idea that has basically sold a multi billion £ idea for a few million. The lure of knowing you will be funded millions for your idea is sooooooooo attractive and tempting, that most will succumb to the lure. However you are now owned by the people who’s life is to make money. They don’t care that you started a business from your bedroom, whilst feeding yourself on tins of food, the sleepless nights, the night sweats, the sacrifices. They care about £££. Don’t bring it in, they shut you down anyway. They are not evil, this is how business works.


The legal documents that you establish at this stage are so important, they can define whether you are still the owner of your company or just a big shareholder. The difference here is, one you give the orders, the other, you get given some dividends from profits, but have no final say on anything.

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