Managing Entrepreneurial Growth
Managing the companies’ growth has always been a challenge for the entrepreneurs. There is no exception for Mr. Hua, founder of Big Blow Noodle. He said: “I was scared when the shop was growing so fast in 2010. I did not know how to manage it and what strategies to apply in order to maintain the growth of the firm.” As a successful entrepreneur, he should know that businesses have both internal and external factors that determine their growth and sustainability. Internal factors, such as lack of staff, sourcing reliable suppliers, the limited size of the enterprise, inventory control and controlling costs, are just some of the challenges that entrepreneurs must encounter when their businesses are growing (Huntoon 1999).
Mr. Hua must be aware of these challenges and have knowledge on how to properly manage business changes which are associated with growth and expansion. For effective management of a business, the owner must devote most of the daily functions to his subordinates or juniors so that he can concentrate on the strategic business management. He should have known various concepts and principles of managing the growth and development of enterprises (Huntoon 1999). The following section discusses on issues relating to business growth and how to effectively manage it.
It is worth noting that not all business owners focus on business growth. As such, there are many personal barriers that have impacts on the firm’s potential to grow. Among such barriers is the type of personality the owner of the business possesses. Exploiting and effectively utilizing the company’s potential to grow requires active commitment by the manager to the business success (Rowe 2005). The owner-manager commitment to growth might be affected by the manager’s fear of growth associated with additional risks and lack of managerial and financial control. Another barrier is associated with the attitude of the owner-manager in terms of risks. The decision to develop in entrepreneurship is risky; thus, many owners of businesses choose not to take it. Taking a business risk should be accompanied with the knowledge on how to manage the growth when it occurs (Rowe 2005). Therefore, Mr. Hua should have understood the stages of business growth for effective management of such development. The stages of business growth are as follows.
The first stage of business growth is the new-venture development, which consists of the initial activities that are directed to formulating the business strategies and mode of operations. These are followed by start-up activities (the second stage). This stage encompasses the foundation work that is needed to create a formal business plan, search for capital, market research and development of the entrepreneurial team. This is the team that will assist in operations as the business expands. This stage is typified by strategic operational planning process that identifies the firm’s competitive advantage and sources of its funds.
After business start-up comes the growth period. This stage often requires major changes in the business strategies due to competition in the market and other external forces. Firms may find themselves out of business because they are unable to cope with the rapid growth of their ventures; Mr. Hua happened to find himself in a similar situation. Even highly creative entrepreneurs at this stage are either unwilling or unable to meet the administrative challenges that are presented by increased scale of operations (Mengistae 2006). The owner-manager should know that this stage is transitional from entrepreneurial one-owner leader to a more advanced team-oriented leadership. If the business survives this stage, it becomes a stabilized enterprise that can sustain itself in any situation. This is because business managers are well aware of their operational requirements.
The last stage is the innovation or decline stage. In this stage, the firm must be innovative in their products or services; if they remain irrelevant in the market – they die (Mengistae 2006). A business owner must, therefore, understand the growth stage of his enterprises and determine the key factors such as control, responsibility, change and tolerance of failure, which are attributed to the stage for effective management of the business growth.