Growth Archives - BOLLYWOOD SURKHIYAN

Zero to 60, How a Slight Fear of Broken Glass (Nelophobia) Led to a $60m Growth Opportunity

Nelophobia, the fear of broken glass, may have led to an idea that developed into a new business that went from zero to $60 million in just 3 years. We had a strong core business and a good idea. In 3 years we had a $60m business expansion without making an acquisition, without building a factory, with nearly zero capital investment, and a staff addition of… 3.

This series, Double-Digit Growth in a Slow Economy, discusses the methods that have successfully been used to drive growth when you aren’t able to count on a growing economy. We reference actual cases and companies that were transformed into growth engines beyond the natural buoyancy of economic growth. This installment discusses growth driven by entering new categories of goods as an extension of the overall growth strategy.

Growth through near adjacencies

Once you have strengthened your core business and can leverage those strengths, you will likely find the market is open to your expansion through near adjacencies. These are opportunities that directly leverage some or all of the elements of your core business. Leaping too far from the core business works for some, but it is more challenging, takes more resources, and most importantly it fails to leverage the strengths of the core business. Leveraging those strengths and resources is less of a distraction when the initiative is a near adjacency. Starting a.com business may be strategically important, but may not be a near adjacency. If it is strategically critical, you need to consider it a start up with its own independent resources. This may also help prevent building in too much of your current business model into what should be a truly new business. It is irresistible to use your current resources, but the differences in the business lead to distraction within your team and dilution of resources. For expansion that does not meet the definition of a near adjacency, establishing a start up is the preferred way to go. Once it is off the ground and has it’s own operational stability, you can consider strategic options to expand, integrate, spin off, etc. For this discussion it is important to define a near adjacency.

A near adjacency is an expansion opportunity that leverages a broad cross section of your core competencies. The more that can be leveraged, the easier to execute and build financial performance from your expansion initiatives. A near adjacency is often more financially accretive nah evident when looking at product margins alone. Because this expansion leverages so much of the current business’s strengths, the fall through to the EBITDA line is significant. If an expansion requires significant capital and staffing to manage it may not have the returns of an expansion that can fit within the envelope of the current business. Those that fit more neatly in the current structure are often lower risk for the same reason. Defining a near adjacency starts with defining the core competencies you can leverage. They have to be relevant competencies to your customers in order to create a value proposition for expansion.

Some potential competencies that are often leverage-able:

Key channel strengths and relationships
Sourcing and supply chain
Design
Engineering
IP or patents
Logistics and service efficiency
Relevant brands with equity in broad categories
Capacity – Physical space, processes, and people

A starting point is identifying strong channel relationships that can be leveraged or a strong product position that can be extended into a new geography. It is also helpful to have an objective scoring method to consider the benefits, investment, and risks associated with a category expansion.

Customer need is an important entry point

Expansion through near adjacencies may be opportunistic. It is important to listen closely to the customer’s issues. In more than one case, I have been asked to enter a new category of goods by the customer. They had a concern over their supply chain and saw our company as a strong supplier that could extend into something new. These opportunistic expansion opportunities are the most interesting since there is already an opportunity for interrupting the current supply arrangements. It is far easier to obtain an audience for your proposal when there is a need on the part of the customer. When it is not opportunistic, it is critical to create a value proposition that resonates with the customer or better yet, with the end user as well. The simplest is an advantage in the customer’s acquisition cost. Old-fashioned lower price is often too good to pass up. Do you have a cost advantage? If you do, it may work, but if you do not, it is likely all you will accomplish is reducing your competitor’s margin. They can respond to your offer of lower price. If that is the extent of your value proposition it is likely going to fail to secure new business for you or worse, end up providing a new business that has poor margins.

The expansion by near adjacency should lead to a stronger value proposition for the customer. It could be a group of benefits that individually need not be significant, but in total they are meaningful. Assuming you are selling to a channel partner like a distributor, dealer, or retailer the value proposition can be centered on driving their margins. If you are selling directly to a consumer or end user, the value proposition needs to offer an advantage to the user. In most cases we are better off not targeting acquisition cost as a means of entry unless we have a sustainable cost advantage in the goods.

Layering on improvements in the products that lead to better sales for your channel partners is an important opportunity to develop. Merchandising, packaging, simpler to install or service, a new design or features lead to a compelling case for the customer to switch. Hitting a multitude of benefits creates the most compelling position. A product that sells better than its predecessor is a great start. The customer has to believe they will have better business results taking on your new extension. If the incumbent has problems the bar is lower, but a package of clearly articulated benefits demonstrating how the customer’s business results are improved is the starting point. “New” isn’t enough. “New and improved”, you’re getting warmer.

Zero to sixty… Million

The company that had turned from a downslide to rapid growth with a 19% annual growth rate driven by gains in share, not an economic gift. We had achieved 100% of our largest customer’s shelf in our core category, 60% with our second largest, and 100% with our third. We were running out of growth runway. We had built a far more efficient organization that was designed for growth and performing so well, we were about to run out of share to gain.The Sales team was tasked to cultivate new accounts for our core products and expansion with smaller customers where we had growth opportunities. We quantified our available targets for growth with new and existing customers and it was quickly apparent we needed a new category of goods to offer. We began a project to look at categories we could expand in that would leverage our strong customer relationships, our supply chain, and facilities. I established a director of new category development to focus on developing new product categories to facilitate continued growth at a rate much greater than the growth of the economy. (Shout out to Pat Boehnen)

We needed a new category that we could leverage with our strongest “core” customers. They knew us best and we had credibility and competency in serving them. Our new category team created a solid list of opportunities and performed research around current suppliers, level of innovation, estimates of market size and used our scoring system to project which categories would offer the best opportunity. Nothing was a slam-dunk, but we initiated work on the top three areas to see if we could develop a new business. This is inherently long term compared to increasing sales of current products which are ready to ship, versus a set of goods that would take at least a year to develop if not longer. This emphasizes the point of having simultaneous effort to manage the company performance curve. We were growing at 19% and did not want to see growth slow to 5%. In the near term our sales team could fill the gap by selling our current goods more successfully to a broader customer list. We established more sales presence in our nearest international opportunity, Canada. It was the most serviceable area of geographical growth considering our presence. This continued our growth during the category development period until our new categories could start to bear fruit.

We needed a new category that offered a compelling advantage over the current suppliers, who by the way were likely years ahead in their own core category we sought to enter and beat them in. Yes, it is a tall order when you put it in those terms. You need an entry point. A stale category perhaps. A sleepy competitor. An innovation or technology you can bring to a category first. A cost advantage you can use to create a value for the customer. Better services that support your products. These are some of the forms of advantage you can bring over a competitor. As a start-up, you have to bring more benefit than just a tweak or two. If you cannot bring a significant advantage of your own, you need an invitation from the customer. They need to want a supplier change and see you as a company that has certain strengths. Perhaps the incumbent is struggling with fill rates, quality, or the most likely reason to stimulate change… they have initiated a price increase.

Our new category team was doing a nice job identifying opportunities and began to design products and programs to test with our supply chain as well as with key customers. In each of the three highest ranked opportunities there were challenges. The category you wish to enter need not be fast growing. Often times companies feel they need to chase the fast growing segment or geography in order to grow. It is nice of course, but you overlook current mature revenue that is there for the taking in larger categories. Not to mention that fast growing categories invite more new entrants. As the new entrant, we seek to grow much more by share gain, not through normal category growth rate. We would rather not duke it out as we get our bearings in the category with others entering at the same time.

US based companies with reasonably strong share positions often are lured into thinking international growth is key when they look at markets growing at faster rates than the US. We all chased BRIC countries a few years ago and found significant barriers. We look at growth rates and think that is where the growth is. US companies work in the largest economy on the planet. I think international growth is an important strategy, but if you have strength in the US, you can grow even when the market growth is at a slow rate. There is a lot more share to gain where you have assets and a solid understanding of the market than an overseas start-up. This emphasizes the opportunity offered by category expansion over other forms if you can leverage your presence. While our category development team was modest with a staff of 3 people, they were making good progress on the conceptual aspects of the initiative.

Neophobia? (I didn’t know what it was either)

We were part of a conglomerate and I was attending a meeting with our second largest customer where my peers also attended. Halfway through the meeting a senior VP from our customer looked across the room in my direction, but veered to my right to another business unit president and said, “you guys need to get into the shower door business.” That business made bath fixtures like bathtubs and shower units, so it made prefect sense. Unfortunately, they had been in it before and found it was a difficult category. Bulky, easy to damage, high return rates, too many combinations to stock which were slow moving, enough to push back almost before the words were spoken. Not to mention that business was working on a new innovation in their core bathing fixtures business that was taking up most of their resources. I quietly noted the idea rather than express an interest. After all, our business didn’t really have the right set up for shower doors. We sold decorative hardware. About 1/3 of the business was decorative bath hardware as I started to grasp for a reason to think we could meet the challenge. My first thoughts were those of a normal human being. What were all of the problems with this idea? Bulky packaging that would not work in our automated distribution facility was just the first of a long list. Managing through a manual pick and ship process was possible. Then Nelophobia set in. The possibility of shards of broken glass in our distribution centers… That we need to do something about, yes we could package the glass separately so it could be protected. Solving this problem for a purely self-serving reason led to a fantastic innovation and a $60 million dollar win for our company.

One thing leads to another

Protecting the glass was the key? Not entirely. Thinking of the product in a completely different way than the incumbent supplier was the key. Shower doors are packaged with an aluminum frame available in 4-5 colors, glass panels were available in 5-6 patterns, and hardware to install. They are not assembled, so why do the parts have to be in one package? Our customer carried 28 combinations in stock and inherently, not the right 28. Splitting the product into 2-3 selectable packages that allowed for mix-and-match merchandising would change the entire consumer experience. I quickly realized that we would have over 100 combinations in stock. It turned out to be 115. As far as manufacturing and sourcing, we could easily source the components if packaged separately by type. A glass pack sourced directly from a glass supplier and an aluminum frame pack from an aluminum extruder. Great news, I don’t need to capitalize a glass factory and an aluminum extrusion business. At the proper scale, perhaps a big capital outlay would make sense, but if available capacity exists, why not start and leverage someone else’s unused fixed overhead first? All of this was in my notes and the meeting was still going on. The concept was drafted in as little as 20 minutes after thinking about the reasons why I could not lead us into the shower door business and looking for a way around each problem. When the meeting adjourned, we had a smaller summary meeting with the group from our parent company. I said, “I think we can take on the lead on shower doors.” There was silence, initially. Oh my god, was this Jerry McGuire’s memo in real life? It made no sense and we were just getting our mojo back in our core business. Why on earth go into a business that the logical peer company wasn’t interested in?

We had an innovative idea. That’s why.

And, we had command of our core. I tried to cover it by explaining my notes on the subject. No time for PowerPoint… All I needed here was not to hear a veto. I didn’t need to hear enthusiasm, just not a barrier to develop the concept. One key influencer said, “Let them take a look at it.” Perfect, saved by one open mind that happened to be someone who had more insight to our strengths. The next day I sat with our category development team and reviewed the concept. This one had not even been on the radar. We needed to put a tad more thought into the opportunity and the challenges. One thing for sure, the category was ripe. The incumbent supplier was resting and not beloved, but neither was the category. No one was tending to this business as a part of their core. The major home centers gave it minimal space. Returns were amazingly high at 18%. Sales were flat. Inventory turns were very low. Of course, the retailer didn’t have the right combinations in stock. We had a good team for the task. They realized the value of the invitation. There was available share to gain even though the category wasn’t growing very fast. A part of the learning of this initiative is that the category need not be a growth category if it is incremental to your business and you have a good deal of share to gain. In this case we happened to make it a growth category by improving the consumer experience.

Within a matter of weeks we had become convinced this was a great opportunity and we had all of the makings of a strong entry. We had an invitation form a customer that sold maybe 30% of the industry. We had a competitor that was not investing. We had a category that needed a fresh approach, and we had a great innovation. We began formal development in multiple prongs, engineering the product, sourcing, and merchandising. We requested a formal review with the customer and a date was established. We only had a few months to prepare. Merchandising development was key. We could easily enough engineer the product and early signs in sourcing gave us confidence we could come close to our cost targets. However, if we could not present this in the retail aisle in a compelling way, it might not sell. Most of our efforts were to mock up and test the in-store presence. We set up a 24-foot display in our warehouse and began tinkering. What was the best way to get this across? Anything that differs from the norm is a risk. Consumers and channel partners can be slow to change.

Bring in the critics.

We started bringing in consumer groups to our mock store. The feedback was enormously helpful in refining the presentation and led to a 1-2-3 selection process. The consumer figured it out pretty quickly. We set our refined displays and had our first exposure with the decision makers from the customer. The feedback was good, but a little subdued. Reading the tealeaves I think it was apparent that this was more different than they expected. They weren’t prepared for a different model. Typically they were focused on a different price for goods that looked like a simple replacement of the existing. We weren’t attempting to be cheaper. We were attempting to be better. They could see merit, but… we were not a shower company. The incumbent… was part of a highly respected multi-billion dollar leader in the fashion bath industry globally. How do we reconcile this? We leveraged our peers. The branding was borrowed from our sister company, which had become the leading brand in faucets. We had a winner, but we had only played a pre-season scrimmage.

Based on the initial review of the concept, a full line review was scheduled. This would include the incumbent and would invite them to bring their best ideas to the review. Fortunately, they did not feel at risk and didn’t offer much of a challenge to our concept. What wasn’t known at the time is that the customer was mounting a strong push for value through price reduction. The fastest way to realize a price reduction is with your current suppliers. They can discount starting at 8:00 AM tomorrow or better yet, retroactively. Even if we were cheaper, it would take a year or more for us to get into all stores, which is the point you would realize a savings.

We weren’t cheaper.

We were better. Our tests indicated a strong increase in sales of 15% over the current products. That in a category offering almost no current growth. It would be a competitive advantage over other home centers. Our return rate projection was 50% lower than the current program because the parts were separately packed. The leading reason for return was miss-cutting the aluminum channel. If you do that on ours, you only try to return the “defective” aluminum channel… But, the incumbent was the only one in a position to provide better costs tomorrow morning at 8:00 AM and even if we had identical costs, the retailer would have to wait 12 months or more to realize it. It was a matter of goal alignment. We truly had a better value on the table, but we could not address the goal the customer had to achieve. We lost in the final outcome.

Now what? We are months in and we lost…

We had a great concept and it was a matter of time before something leaked and our great concept became the incumbent’s great concept. It happens. We loaded up the truck and moved to another customer. This time we had no invitation, but we did have a great concept and it was well developed through our research. The quality of the concept was evident immediately, but this was one of the least attractive categories in the fashion-bathing aisle. It was slow moving. Unlike trying to gauge the age of a tree by counting the rings, you don’t have to kill a shower door to know how long it has been there. Dust is the first indicator and there was plenty. It just wasn’t a target category for a big change, but maybe it should be. Maybe that is why the dust is there. We won a test market, 50 stores to try it out, hardly enough to get our supply chain working. We would have to subsidize it during the test. We needed about 10 times that number of stores to get leverage with suppliers. These weren’t necessarily the top 50 stores in the country mind you. It was a test that if we passed would definitely speak to the benefits of the program. The test was set and after some adjustment and work with the store associates we started to see the results we expected. We tweaked some things and added some price points. The program did exactly what it was designed to do. The consumer responded well and sales were up in the high teens as a result. Returns were far lass than half. The initial success and our lack of scale presented challenges to meet demand. You would think a small store count would make it easy, but in this case it was a challenge because we lacked scale with our supply chain. Challenges aside, we ironed out a very good program that was then installed in 200 stores, then to 1,000 stores, and then to 2,000 stores. The program went from zero to $60 million in 3 years. $60 million in new revenue for a business that was $220m in revenue at the time, quite a growth curve.

The lessons here are that to grow in adjacent categories or customers you have to find leverage-able strengths. These are much more important than a market that is growing. You grow through share gains for 3-4 years and that does not mean the market has to lift you. Of course in years 5+ growth will be slower, but you are working on the next growth program to continue fueling your engine. Going for a large, mature market with a new approach is an excellent way to grow your share.

Expansion or Growth in Business Organisations

Expansion or growth in business organization simply means increase in size and capacity. It also involves product diversification, machinery, better package for workers, good network, reduction in downtimes, waste reduction, disciplined workforce, less accident report, profit maximization, cost saving etc. The issue of expansion or growth is a mirage without human efforts, which ranges from operating machines in manufacturing organizations, taking decisions, movement of goods, source for raw materials and marketing of the finished products. Any organization that must embrace expansion or growth in its business activities must first put the interest of their entire workforce at heart because they are the pivot for expansion and growth. Without expansion/growth, organizations stand the risk of collapsing whenever competitions set in. Expansion/growth makes an organization stand firmly during adverse conditions as proceeds from other business activities are used as a supplement to set the ailing firm back on track.

A story can be told of two soap-manufacturing companies in Aba, Abia state, Nigeria; namely International Equitable Associates (I.E.A.) and Paterson Zochonis Plc, (PZ) who started soap production the same year. The former, which had no policy of expansion in its programmes had been facing a difficult time to stand on its foot while the latter an apostle of expansion had become a household name in Africa with branches and depots scattered all over the continent. It is because of this lack of visions regarding to expansion and growth in most organizations that had been the reason why some of these business organizations had become extinct and moribund.

Keys for Expansion/Growth

1. Good Policy/Decision Making: An organization with a good policy /decision making usually stands the taste of times due to the type of policy or decision embarked upon by its owners in the day-to-day running of the business. If an organization embraces a wrong policy or decision in their business activities, its collapse is imminent.

2. Good Planning: Any organization that does not plan well must collapse. This involves actions to take, when to take and strategies to adopt in the course of reaching the set objective. An organization with a bad planning method can never grow because it lacks the technical no how to achieve the required goal.

3. Strong Financial Base: This is one of the most essential factors that enhances expansion and growth in business organization. Without a strong financial base, company’s policies, visions, and aspirations can never be actualized because about eighty percent of the actions to be taken depend solely on this. Business organizations should endeavor to make money available in pursuance of its goals and objectives with regard to its expansion policy.

4. Research: Without research, no organization will stand. It involves an insight into the world of possibilities and impossibilities as it affects organizational progress, growth rate, obstacles, products, market demands, etc. It is a mirror in which the future of every organization is seen based on the data available from the day-to-day running of the business. It also shows a trend on which the company operates in terms of total outputs, product demand and product consumption.

5. Accountability: Any organization that does not embrace proper accountability in their daily activities is doomed. Proper accountability reveals the financial status of any organization.It is from this that a company knows whether it is gaining or losing thereby making plans on how to check the anomalies. It also reveals where a company should intensify effort to maximize profit and curtail losses.

Things to watch for in a Business Organization’s Expansion/Growth

i. Motivation: Every organization must motivate their entire workforce if it plans to embark on expansion. Every true expansion/growth must start from the motivation of the entire workforce as this brings out the best in them and make them work more efficiently. An organization without motivation of its entire workforce cannot boast of expansion because they are the brain behind any move to attain greater heights.

ii. Product diversification: An organization with a lot of goods and services in high demand credited with its name is without doubt expanding. This is very important, as profits will be coming in different areas, which enhances its stability.

iii. Networking/versatility: This is one of the things to watch. It tells about the locations, involvements and your activities around the globe. Without networking, a company’s expansion policy is never complete.

iv. Affiliations: An organization that has a strong expansion program usually affiliates with another with such policy, so that they can share ideas, etc to attain greater heights.

v. Annual Accounts: This shows a company’s profits, losses,access etc. It is a yardstick to ascertain the financial strength of an organization.

Advantages of Expansion/Growth

a. It creates popularity,respect and recognition among business organizations.

b. It maximizes profits when properly harnessed.

c. Proceeds from diverse business activities can be used during adverse conditions.

d. Business organizations with expansion programmes usually have strong stable foundations when fully implemented.

e. Development is easily achieved, as the society is flooded with innovations and basic infrastructures that improve the standard of living.

Disadvantages of expansion/Growth

a. It is very expensive.

b. It creates room for embezzlement if not properly monitored.

c. Decision taking is sometime delayed in order to consult all the appropriate quarters.

d. It is very difficult to manage as the various units are scattered in various locations.

e. Some managers from other units try to be independent, which creates rivalry among the top echelons of the organization.

No matter the disadvantages of expansion,business organisation must endeavor to embark on it(expansion) because it is a platform for a solid foundation and stability.

Reasons For the Slow Growth of Entrepreneurs in India

The definition says, Entrepreneurs assemble and allocate resources including innovations, finance and business acumen in an effort to transform innovations into economic goods. The saying goes like “Take the plunge and lead the way”. An entrepreneur is definitely not afraid to take the plunge.

Why is the Indian entrepreneurship scene so grim?

There are many obstructions that ail a budding entrepreneur in India. That’s not to say that there aren’t any entrepreneurs in India. It is just that the number is of entrepreneurs springing up is not that encouraging a figure.

Let us look into some of the reasons.

1. Lack of family support: This is an issue that’s plaguing entrepreneurs worldwide more so in India because of the stronger family ties that we Indians have. Family support is always absent in cases. Parents always prefer their progenies to take up a standard 9-5 job rather than take up a risky business venture where there is absolutely no guarantee that the venture will work out and there is always a very high level of risk involved.

2. Government regulations: The few ventures that break free from the shackles of the usual problems get entangled in the antiquated policies of our government. The very fabric our administrative system hinders the organic development of entrepreneurial ventures.

3. Lack of Internet penetration in India: World over the majority of the innovations occur in the internet space. In India the internet usage percentage stands at a meager 5% and this is number makes it really difficult to bring in money and the few entrepreneurial ventures that actually get graced by venture capitalists run in to problem later on during the course of operation.

4. Indian education system: The main reason there is very low innovation in this field is because of our educational system. Right from its inception our educational system has hardly had any focus on innovation. It is like we have been trained in rote learning rather than apply our minds. Without a killer innovative idea there is no way an entrepreneurial venture can sustain itself beyond the initial stages.

There are basically two types of the entrepreneurs

1. Those who come out with a completely new idea

2. Those who bring in a new idea and tweak it for the targeted market.

India being a developing nation hasn’t made much progress in the innovative direction. Since the technology in India is basically playing catch up to the developed countries, there is not much we have achieved in terms of the new ideas.

The most basic way Indian entrepreneurs can succeed is by trying to adopt methods and models that are already successful abroad and adapt it for the Indian market. This will definitely mean a low initial cost. If done well this can definitely lead to really good returns.

Most of all what we really need is to mold young minds and encourage them to think differently. They should be encouraged to let go of their inhibitions and actually take the plunge and tread a path that’s not yet been explored. This has been made possible by the starting of Entrepreneurship courses that are being taken up by colleges at the graduate and post graduate level.

Solve Funding Issues to Finance SME’s Growth Plans

SME’s are developing rapidly and flourishing enormously worldwide. Since its initiation and establishment, there some extremely important and basic requirements to be met and adopted. These requirements include; infrastructure and employment requirements, a developed information technology infrastructure along with funding sources, which is the most important aspect of the sustainability of these SME’s.

Funding sources are the strengthening pillars for such small and medium-sized enterprises.

SME (small to medium enterprise) is a convenient term for categorizing businesses and other organizations that are somewhere between “small office-home office” (SOHO) size and the larger enterprise.

Unavailability of timely and adequate funds has an immense adverse effect on the growth of these SME’s which in turn affects the growth of the Indian economy. Such insufficient funding sources serve as the crucial barrier in the development and sustenance of SME’s.

The economic development in India is hugely dependent on the performance of small or micro and medium enterprises. They are the powerhouse of innovation, entrepreneurial spirit and enormous talent, which is required for the nation’s development in the economic sector.

Indian SME sector:

This sector contributes to the industrial output, provides employment to masses. They also contribute widely in exports. These organizations produce quality products for national and international markets.

The presence of SME’s is greatly acknowledged. The manufacturing sector is rapidly advancing because of the contribution of these organizations.

Undoubtedly, these SME’s are performing their best, despite their limited sources. Still, there are multiple cases of these organizations facing funding issues.

The solution for funding issues faced by SME’s:

The government has been taking initiatives like setting up the National Manufacturing Competitiveness Council, announcing National Manufacturing Policy (NMP) and much more to energize and boost the manufacturing sector.

Banks have made stable strides to support SME’s. However, such approaches by banks for funding are limited and restricted because by controlling and managing risk, they ultimately create value. Thus, banks are not always a rightful solution as a funding source.Access to capital markets is rare, in the case of SME’s. Therefore, such organizations hugely depend on borrowed funds from some financial institutions and banks.

Mostly commercial banks provide extended working capital and financial institutions provide investment credits. Universal banking services, working capital, and term loans are becoming available for SME’s for funding.Meanwhile, the traditional requirements of finance are still actively in use, for creating the asset and working capital.Globalization is generating a demand for introduction and development new financial and support services.

The RBI should issue necessary guidelines to all banks on credit flow. Moreover, the Government should work rigorously to create an environment conducive for growth for the SMEs that restrains the need for capital and debt.

Setting up SME-targeted banks that provide priority to lending to the SME sector.

Financing schemes for SMEs can be formulated and be beneficial. These might be highly risky, but promises great returns. There is also a need for a reduction in the interest rates. SMEs has been paying high-interest rates for bank loans. The loan structure should restructure, on an urgent basis as lower interest rates are an extremely important need for SME’s.

Delayed payments are yet another major area of concern for SME’s that lead to reduced working capital.

Recycling of funds and various business operations are majorly affected due to delay in dues settlement. Defaulting customers are mostly large enterprises and the SMEs due to fear of losing business are not able to report against them.

An automated portal could be established by the government, wherein SMEs makes available their customer detailings.The government can also send automated reminders to defaulting organizations, in the cases of payment defaults.

As it is well known all over that, for the government, the Budget is an occasion to set up new financial goals and economic goals, allocate financial resources and provide policy directions. During Budget presentations, the Finance Minister announces new policies, schemes, projects and allocates finance for the development of several sectors of the economy, to meet the overall goals of socioeconomic growth.

For SMEs, the potential sources of finance are very limited. However, their usefulness is limited because of mostly practical problems. Crowdfunding also supplies chain financing are some funding sources.

Some more funding sources for SME’s

The owner, family, and friends of SME

An excellent source of finance. Mostly, such investors, invest not just for financial gains and are willing to accept lower returns than other investors. However, the key limitation, for most of these organizations, is that, that the finance they can build personally, from friends and family, is limited.

Trade credit

SMEs can take credit from their respective suppliers. It is however just short-term and, if the suppliers are big companies who have identified and categorized them as potentially risky SME, the possibility to extend may be limited, for the credit period.

The business angel

A wealthy individual who is willing to take the risk of investing in SMEs. However, they are just found in rarity. Once such an individual is interested they can become useful to the SME, as they have great business plans and contacts.

Factoring and invoice discounting

These sources help the organizations to raise finance. It is only short-term and is mostly more costly than an overdraft. However, with the SME growth rate, their receivables will grow thereby the amount they can borrow from invoice discounting will also rapidly growing.

Leasing

Leasing assets is a better option rather than buying.them, as it avoids to raise the capital cost. However, leasing is mostly possible on tangible assets.

Listing

An SME can become quoted by acquiring a listing on the stock exchange. Thus, raising finance would become less of an issue. But before listing can be considered the organization must grow to the considerable size that a listing is feasible.

Supply chain financing

SCF is new and is somehow different than the methods of traditional working capital financing, such as offering settlement discounts, as it promotes collaboration between the buyers and sellers in the supply chain.

The venture capitalist

A venture capitalist organization is mostly a subsidiary of a company that has worthy cash holdings and might need to be invested. Such subsidiaries are at high-risk, potentially high-return part of their investment portfolio. To attract venture capital funding, such organization has to have a business strategy and idea, that may help to create, high returns that the venture capitalist is seeking. Thus, operating in regular business, venture capitalist financing may be impossible for many SME’s.

The above mentioned are the various solutions for SME’s to deal with the issue insufficient funding sources.

5 Explanations For The Stock Market’s Growth!

Although, some people experience, stellar results, while others, discover far less profitable experiences, the American stock market, is a major component, of the overall United States economy! What specific indexes mean, and represent, and, the reasons, they go, up, or down, is, often, a somewhat, complicated one! For more than, the last 6 years (prior to the pandemic), we have witnessed, an unprecedented, growth, in stock’s performances. President Donald Trump, often, seems to point to, these performances, as proof, of his superior handling of the overall economy. However, many studies, indicate, only, about one – third of Americans, control (in terms of stock ownership) over two – thirds of all stocks owned. In addition, detailed studies of many aspects of economic – related areas, show the so – called, wonderful, Trump economy, to be, parallel, and a continuation of the last 3 years of the Obama administration. With that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, 5 possible explanations for the strength, and, apparent, growth, of the stock market.

1. Few options for investments/ investing: With this prolonged duration/ length, of record – low (or nearly), interest rates, other investment possibilities/ vehicles, have lost much of their attraction, because, bond and bank interest/ dividend rates, are so low! The Federal Reserve has, also, recently, indicated, there are no plans, to raise these rates, and changed, their guidelines, for evaluating inflationary risks/ responses, etc. As a result, obviously, investing in stocks, has gained, its attractiveness!

2. Tax advantage of capital gains: Profits/ gains, from stock gains, known as capital gains, are treated, favorably, by our tax code. Obviously, this makes these vehicles, even, more popular, for some!

3. Seeks growth, over – time: Historically, investing in quality stocks, over, the long – run, has been, a great way, to protect yourself, against inflation! This is far different, from, seeking speculation, and quick – bucks!

4. Some smoke – and – mirrors: Beware of smoke – and – mirrors, especially, when it comes, to politicians, playing politics, for their personal/ political agenda/ gain, and/ or, self – interest! There is a significant difference, between, a strong stock market, and, the overall economy, which includes, jobs, job quality, inflation, and overall, economic strength!

5. Risk/ reward, and seeking higher/ better profits: Reality is, stocks go up, and down, and a wise investor, considers, the overall, risk/ reward, and his personal risk – tolerance, patience, understanding, and how it fits into the overall economic plan (personal financial planning).

Historically, stock prices, and the overall, stock exchange, fluctuates! Over – time, used properly, and wisely, investing, in these, is a smart/ wise component of one’s overall, personal, financial plan! However, the stock market, is, often, not, an indicator, of the overall economy, nor its strength, and weaknesses!

The 4 Major Components of Business Growth & Profit-Building Success!

Your business can be broken down into 4 segments or component parts.

I call these as the 4 MAJOR COMPONENTS of a business.

Through extensive research and study of the most successful businesses worldwide, I have likewise determined that there are 4 common focal points found in a successful strategic plan for Business Growth and Profit-Building. These common focal points, or 4 MAJOR COMPONENTS, are interrelated and can be made to fit together like the pieces of a puzzle.

When you clearly identify them in your own business, and then strategically harness their power to function cohesively, the 4 MAJOR COMPONENTS can produce EXPONENTIAL business growth. And that kind of business growth leads to an increase in bottom-line profits!

So what are these 4 MAJOR COMPONENTS to a successful strategic plan for business growth and profit-building?

Let’ briefly explain what these 4 MAJOR COMPONENTS are, and what they have to do with developing a strategic plan to successfully grow your business and increase your profits.

The 4 MAJOR COMPONENTS

MAJOR COMPONENT 1 is your business’ VISION, GOALS, & MISSION.

When you consider your business’ VISION, GOALS, and MISSION, your chief aim is broken down into 2 parts. First, you must carefully analyze and clarify what direction your business is currently heading in right now. What is your VISION for your business? What are your personal goals and business objectives? And finally, what is your Mission for your business? Do you have these 3 clearly set out? You need to in order to start seeing real growth in your business.

Second, you must determine whether you need to change course to develop the business growth you want and the increase in profits you need. Having clarified your VISION, GOALS, and MISSION, you will then know in what direction you want to steer your business to generate the business growth and increased profits that you want.

As you work through and implement any business growth plans, keep referring back to MAJOR COMPONENT 1, your VISION, GOALS, & MISSION.

MAJOR COMPONENT 1 is the guiding direction for your business, just like a compass pointing to “True North”.

MAJOR COMPONENT 2 of the business growth and profit-building process is your Business Operating Systems, Management, & Training.

I liken MAJOR COMPONENT 2 to the engine that drives a car. When you consider MAJOR COMPONENT 2 in your own business growth plans, you accomplish 4 things:

1. You undertake a review of your business’ engine; that is, your staff and contractors. How can they play a positive role in growing your business and increasing your profits?

2. You consider your hiring practices. How they can impact your successful business growth at the front end…, when you hire others to join you.

3. You evaluate and design your management and training processes to support the business growth that you are striving for. And,

4. Most importantly, you strategically develop the specific operating systems that your business must have in place to effectively and efficiently run your business; whether you, the business owner, are there on the job, or not.

Are you driving a sputtering jalopy or a precisely tuned race car? MAJOR COMPONENT 2 answers that question.

Once you’ve got MAJOR COMPONENT 2, your business systems, running smoothly, it’s time to start filling up the tank.

MAJOR COMPONENT 3 of your business growth plan is Strategic Marketing, Lead Generation, & Lead Conversion systems.

When you consider MAJOR COMPONENT 3 in your business growth plans, you must analyze your systems for servicing your current customers and clients, for identifying and obtaining more of your Ideal customers and clients, for marketing to your unique target market, and for converting more prospects to bring in more sales and increase your bottom-line profits.

Finally, a successful business growth and profit-building strategic plan must never leave out the all-important topic of MONEY.

MAJOR COMPONENT 4 of your business growth plan takes a hard look at Financial Position, Cash Flow, & Reporting.

In MAJOR COMPONENT 4, your primary focus is to review the systems that you have in place to know where you’re at financially, to handle your money, to control it, and to keep it coming in. What changes do you need to make in your financial operating systems to ramp up your business growth? Where is your money? How is it being spent? Do you have operating systems that you have designed and put in place to control expenses and costs? Is your money coming in consistently? What Cash Flow “production” strategies are unique to your business? Are there any other “production” strategies that you can implement immediately? Are there any other ways that your business can “manufacture” additional Cash Flow?

Well, there you have them.

Those are the 4 MAJOR COMPONENTS of a successful strategic plan to grow your business and increase your profits.

First comes knowledge. You have it.

Now, must come action!

So it’s time for you to take action.

ACTION STEPS:

Follow these 4 steps and get your business growth plans roaring like the powerful sound of a race car crossing the finish line in first place!

1. Write out on a sheet of paper each of the 4 MAJOR COMPONENTS of your business as outlined above.

2. Analyze each MAJOR COMPONENT in comparison to your present business operations.

3. List the focal points lacking in your business compared to each MAJOR COMPONENT.

4. Come up with just 1 action that you can take to improve in each of the 4 MAJOR COMPONENTS.

If you’ve completed the 4 action steps, then you’ve got some momentum going. Constantly focus on the 4 MAJOR COMPONENTS of your business. Keep working on improving in these 4 MAJOR COMPONENTS.

Because if you do, you’ll be developing a successful and proven plan not only to grow your business, but to increase your profits as well!

This article is an excerpt taken from the MasterMind Business Growth System, as written by noted Business Growth Expert and Attorney, Miguel Mendez, Jr., Esq.

Business Development Strategy For Innovative Business Growth

The evidence is very visible and many have already spoken that innovation is the core element in creating new versions of growth. Long-term business growth requires an authentic innovation. However, it is not easy to detect what kind of innovation shall click and that will lead to platforms of development. And there are a lot of ideas to invest on and the time it takes for an invention to be innovated into a product requires patience. These big challenges mean managers usually send away truly innovative prospects as it is too risky, and the growth imperative stays unfulfilled. Nowadays, professionals concerned have developed proven ideas to improve the probability of success in innovation business growth and this is through business development strategy.

The innovators’ solution offers tips in making and sustaining growth in the globally competitive market. Disturbance is inevitable, but companies who can grasp the process can harness it and they can actually take advantage of disturbing growth. To take advantage of disruption and create new growth business, managers need to make counter-intuitive decisions. There are different identified areas in addressing business development strategy and some of them are:

According to research balancing not aligning is the key to create future platforms for growth. Strategic planning is also another helpful way as it combines elements of scenario based planning to real options and the result is a portfolio of flexible strategies provisioned to execute arrangement of contingent strategies.

Good and innovative ideas do not usually occur by chance and most successful companies have well designed processes, structures and tools to motivate and manage idea production. From ideas appear innovative strategies to be used in executing the plans. Ideas are effective plans and if they are already implemented, they can make a great difference. Ideas can be best achieved through group collaboration and team work.

Creating a new way for the business to grow is a way to unzip the process of innovation and it is through creating innovation-driven growth business all over again. Managers should be challenged in a way that they should best manage the capabilities of the company to deliver innovation. A best business development strategy will help identify the processes capable and incapable of accomplishing. That’s why a good plan is needed beforehand so all involved can look at and visualize all possibilities on how the business will go. In order to survive, learn how to apply these strategies at work.

Business Plans: The Key to Success and Growth

Are you planning to open a small enterprise? If so, you should read and follow the tips and suggestions mentioned below.

Opening a small company is not that easy due to the numerous processes you need to undergo and factors to consider. Before you start your task, you need to formulate your own business plan and to know its significance.

What is a business plan?

It is a vital tool to all types and sizes of business enterprises. It serves as their calling card and compass that guide businessmen in whatever actions and endeavors they pursue. It serves as a communication tool in selling, marketing, advertising and investing. It serves as the foundation of your company and the key to short-term and long-term success.

When meeting with investors and lending companies, it is your business plan that do most of the talking because it presents your business concept and ways of achieving your goals. Because of its importance, you have to craft and to formulate an effective and efficient business strategy. When formulating your own plan, you need to include your projected sales, monthly expenses and projected sales. You need to include the type of location you are looking for and ways of marketing your products and services.

If you want to open a store or retail shop, you need to plan how to promote your products. Do you want to have a walk in store? Do you want to sell your items via the Internet? Do you want to enable Internet ordering? What types of delivery methods you want to follow? These are some of the questions that you need to answer to formulate an effective business strategy.

Importance of business plan:

It helps you clarify your business prospects and development
It provides a logical framework on how you can develop or how you can pursue your business strategies.
It serves a benchmark on how actual business performance can be reviewed and measured.
It serves as a basis for discussion with investors, lending companies, banks and shareholders.
It serves as a framework which your company or business enterprise must operate.
It acts as the key in raising additional sources of funds or finances.
Things to consider when writing a business plan:
You must clearly define your target market.
You should determine your business requirements in relation to levels of detail and contents.
You need to map out the structure of your business proposal.
You should decide the probable length of your plan.
You must identify the main issues that need to be addressed within your plan.

To formulate an effective plan, you need to think, discuss, research and analyze. Always remember that two heads are better than one, thus, you need to convene and discuss matters with shareholders and business partners.

If you have difficulty formulating one, you can always hire a profession business planner or business consultant to do the task for you or make use of free business templates found in variety of business planning sites.

Why Android App Development Is Beneficial for Businesses Seeking Growth and Visibility

Recent stats about the behavior of customers online have revealed that the use of mobile apps to purchase things and to gather data has increased in leaps and bounds. Today, brands are getting purchase orders through mobile apps and are also able to keep the customers engaged through various ads and activities. Android mobile app development has gained much popularity these days and enterprises are also creating customized mobile apps that solve the customer issues and add value to their business. So, if you are planning to capitalize on the popularity of mobile devices through apps, then Android should be on top of your list.

Developing an Android app can be beneficial for your business if you are willing to reach out to the mass. The smart device and touch screen enabled Google platform is used by more than 80% smartphones and 60% tablets all over the world. So, it can be said that Android is dominating the market with its strong presence. Since the devices running on Android are available at remarkable prices, they are the first choice for the users. It is in fact reasonable to build an android business app for the leading digital market.

Ideal to interact with customers:

Any channel that is adopted to reach the products or services should be open and easy. If users have to purchase devices that are very costly, then your business goals will not be attained. With regular features and upgrades, today’s smartphones offer advanced computing features and are able to match any laptop or desktop in terms of their utility. Since Android mobile users are in large numbers, business owners can often target huge market by creating business apps.

No investment in development tools:

Android comparatively has a low entry cost as it offers Software Development Kits for free to the developer’s community and this reduces the development and licensing costs. Same is with the varied tools and technologies, which are open source and are available for free. Developers are not supposed to charge any fees for the tools that are offered by Google as they are available for free.

BYOD preference:

Android holds over 83% of the market share and this is quite evident. For organizations that are adopting the BYOD policy, it is feasible for them to opt for Android as their enterprise app development platform as it is available for a wide range of devices and business can target users of all economic groups. And overall BYOD environments also require heightened security and Android platform offers high security features, so that users can easily share information and make transactions without any issues.

Smart working:

With Android app development, you can put flexibility and power of the platform to work anytime and anywhere to create best in class productivity apps. Android offers more options for customization that are based on the specific needs of the business and also the changing trends of the market. It is easy for the developers to tweak the existing apps and add more features and functionalities to make them more contemporary. Android is the best mobile platform between process architecture and applications.

Free options to choose distribution channels:

Google offers the freedom to distribute your apps from any medium that you prefer. There are no hard and fast rules that you have to put your app on Google Play for its distribution. You can either distribute it on your own or use any other ad platforms for distribution. In case you want to create an internal enterprise operation and are not willing to launch the app on the store, then you have complete freedom to do so and Android gives you this opportunity. According to your choice of promotional strategy, you can now easily reach your end users through various channels.

Easy adoption:

Mobile application design trends are evolving and this requires that your app is continuously updated. This can only be done by experienced Android app developers. Android apps are scripted in Java language together with the help of rich libraries. So, anyone having knowledge of Java can work on them. Usually Java programmers find it quite easy to adopt as well as develop script code for mobile apps. In case of any crashes or bugs, any developer having Java programming proficiency can easily resolve the errors effectively from the android app.

Thus to conclude, if you are willing to maximize your customer reach through mobile applications, then targeting the Android platform will help you to transform your business into a profitable venture.