your business discussion points on starting and growing your business

Your businessdiscussion points on starting and

growing your business

Resources to help you startSmall Business Victoriahttp://www.business.vic.gov.au/BUSVIC/HOMEPAGE

CPA Australia - Knowledge Portals - Leadership and Managementhttp://www.cpaaustralia.com.au/cps/rde/xchg/cpa-site/hs.xsl/knowledge-leadership.html

IS GROWTH IMPORTANT?

• Depends on where you are in the life cycle of the business

• Start up• Second stage• Maturity• Exit

Traditional business life cycle

Sigmoid curve

Critical items to manage

• The customer and the proposition• Competitive advantage – your unique place in

the market• Return on investment – the investment story• Scalability• Pricing and margins

Focus as an entrepreneur• Focus on the problem you solve – what is your market

offering• Charge and collect on sales• Keep customers happy and the business generation model

working• Prepare cash flow and budgets• Monitor performance weekly and manage cash daily

Supply chain solutions – what worked

• Market change created niche opportunity• Large competitors targeted top 50 companies

– we targeted next level down• Built a great team and had fun• Managed cash carefully and had good

relationship with bankers

A growth trajectory – Supply chain solutions

0

2000

4000

6000

8000

10000

12000

Revenue(ooo's)

Profit(ooo's)

Supply chain solutions – what failed

• Competitors targeted business and board chose not to sell

• Competitors targeted top staff and we couldn’t retain them

• Internal division and dispute• Lost focus

Avoiding common traps• Have enough money to cope with growth – equity – suppliers –

clients - banks can help• Capacity constraints – systems and people – be prepared so you

can cope with extra workload – have a system in place when you start

• As your organisation grows it changes – be aware of what to expect and prepare for worst case or back off – manage the downside risk to ensure survival

• Employ people who are better than you• Prepare for exit from day one – even if you never do

Funding gap

Capital raising exampleAmount raised Stage Company value Source Owner's equity Value of owner's equity

$50k Seed $50k You 100% $50k

$100kStart up $500k FFF 80% $400k

$500k Early stage $2m 20/12 60% $1.2m

$2m Expansion $8m P/E 45% $3.6m

Exit $10m $4.5m

Some suggestions• Clear goals about what you do (and make the choice about

what you won’t do)• Be objective – get an advisory board/independent advice in

need• Don’t get greedy - raise enough capital and share equity• Hire right – people to do the job not who you like – and get

diversity in the company• Know when to recruit

ResourcesBarry J Moltz You need to be a little CRAZYhttp://barrymoltz.com Michael Bungay Stanier Do More Great Work http://www.domoregreatwork.com Al Ries and Jack Trout Positioninghttp://www.ries.comJim Collins Good to Greathttp://www.jimcollins.comDr. Tom McKaskill Invest to Exithttp://www.tommckaskill.com