Entrepreneurs must look at controlling their ventures’ operations in order to prosper in both the short and the long term. Those unique control issues that face entrepreneurs include managing growth, managing downturns and exiting the venture.
How must the Entrepreneur Control for growth?
William Bissell, majority owner of Fabindia, which is one of the most popular shopping destinations of ethnic clothes and home furnishings in India, has taken an unusual approach to growth – slow down the process. Given the retail boom in India, one would have expected Fabindia would also be looking for resources to expand operations rapidly but Bissell is content with controlled growth.
The company has been growing at a compounded annual growth rate of 35 percent over the past few years, fuelled by growth in middle and upper middle salaried classes. What is even more impressive is that Fabindia has also managed to protect its margins during the growth.
Fabindia finds it hard to meet the demand for its crafted products – garments, home furnishings and furniture – sourced directly from artisans of rural India.
Bissell has no plans to come out with an IPO in the near future. He works hard to preserve his father’s philosophy at Fabindia of preserving craft and protecting the livelihood of the craftsmen and women. William Bissell, who has a strong commitment to rural India, sees himself primarily as an employment generator. Bissell claims that Fabindia creates one job for every one lakh increase in turnover and wants to increase its sourcing base from 22,000 artisans in 21 states to about 1000,000 by 2010. Although the slow growth approach may have taken more time Bissell and his partners felt it was worth it because they still have total control over what happens in the company.
Growth is a natural and desirable outcome for entrepreneurial ventures. In fact, it’s part of our definition of entrepreneurship. Entrepreneurial ventures pursue growth. However, growth doesn’t have to be frantic and chaotic. Growing slowly can be just as successful as Bissell proves at Fabindia.
Growth doesn’t occur just randomly or by luck. Successfully pursuing growth typically requires an entrepreneur to manage all the challenges associated with growing. This process entails planning, organizing and controlling for growth.
Planning for growth: Controlling is tied closely to planning. And the best growth strategy is a well planned one. Ideally the decision to grow doesn’t come about spontaneously but instead is part of the venture’s overall business goals and plans. Rapid growth without planning can be disastrous. Entrepreneurs need to address growth strategies as part of their business planning but shouldn’t be overly rigid in that planning. The plans should be flexible enough to exploit unexpected opportunities that arise. With plan in place the successful entrepreneur must then organize for growth.
Finding capital was one of the key challenges for Facebook founder and CEO mark Zuckerberg. A year after launching is social networking site; Zuckerberg secured $12.7 million in venture capital to fund his company’s growth. This financing helped Facebook grow from a networking site for college students to a site used by 19 million registered users form employees of government agencies to Fortune 500 companies.
Controlling for growth
Maintaining good financial records and financial controls over cash flow, inventory customer data, sales orders receivables payables and costs should be a priority of every entrepreneur – whether pursuing growth or not. However, it’s particularly important to reinforce these controls when the entrepreneurial venture is expanding. It’s all too easy to let things get away or to put off doing them when there’s an unrelenting urgency to get other things done. Rapid growth or even slow growth, does not excuse the need to have effective controls in place. In fact, it’s particularly important to have established procedures protocols and processes and to use them. Even though mistakes and inefficiencies can never be entirely eliminated at least an entrepreneur should ensure that every effort is being made to achieve high levels of productivity and organizational effectiveness. For example at Green Gear Cycling CEO Alan Schoiz recognized the importance of controlling for growth. How? By following a customer for life strategy, by continually monitoring customer relationships and orienting organizational work decisions around their possible impacts on customers, Green gear’s employees hope to keep customers for life. That’s significant because they figure that if they could keep a customer for life, the value would range from $10,000 to $25,000 per lifetime customer.