Post on 19-Jan-2016
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TECH START UP DAY- 'GROWING PAINS ?'
PROF. HANS CRIJNS, VLERICK PARTNER
© Vlerick Business School
IN THE E.U.
New companies represent the most important source of new employment: they create more than 4 million new jobs every year in Europe.
Moreover, when new enterprises are founded, they grow more slowly8 in the EU than in the USA or emerging countries
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“Every morning in Africa, a gazelle wakes up.
It knows it must run faster than the fastest lion or it will be killed.
Every morning a lion wakes up.
It knows it must run faster than the slowest gazelle or it will starve to death.
It doesn’t matter whether you are a lion or a gazelle.
When the sun comes up, you better start running”.
- Thomas L. Friedman (in “The World Is Flat”)-
© Vlerick Business School4
“DEATH VALLEY”
$
Time
EBIT 2
EBIT 3
“Start and seed” Upcoming growth
EBIT 1
GROWTH : HOW ? WHEN ? WHO ?
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WHEN ? ENTREPRENEURIAL PROCESS
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PersonalAchievementLocus of controlAmbiguity
toleranceRisk takingPersonal valuesEducationExperience
PersonalRisk takingJobdissatisfactionJob lossEducationAgeCommitment
SociologicalNetworksTeamsParentsFamilyRole models
PersonalEntrepreneurLeaderManagerCommitmentVision
OrganizationalTeamStrategyStructureCultureProducts
Innovation Triggering event Implementation Growth
EnvironmentOpportunitiesRole modelsCreativity
EnvironmentCompetitionResourcesIncubatorGovernment policy
EnvironmentCompetitorsCustomersSuppliersInvestorsBankersLawyersResourcesGovernment policy
Source: Based on Carol Moore’s model, presented in “Understanding Entrepreneurial Behavior”.
© Vlerick Business School
THE ENTREPRENEUR : WHO ?
6 Source: EFER, Europe’s 500
Life style
StaticStatus Quo
LocalLimited
Internal resources
Self employedDefends against competition
Risk Averse
Survival
Value oriented
GrowingVision opportunistic
GlobalExpanding
External resources
Professional teamSeeks competition
Risk taking and sharing
Success
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FAILURE AND GROWTH
Overall in EU – start-ups :
+/- 30 % start ups disappear after 1 year
> 50 % start ups leave the stage within 5 year period
+/- 10 % is a “gazelle” (1 % a real)
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GROWING COMPANIES FINANCIAL PROFILE
produce higher added value per capita (more productive,
but employ personnel with a higher cost per capita,
are clearly more profitable in all aspects,
have more debt financing,
have a lower liquidity
and have a higher risk, have a higher chance for failure MT
Growing co’s (gazelles) vs non growing co’s
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THE NEVER ENDING GAME?
AG - The Entrepreneurial Manager
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OPPORTUNITY TEAM
RESOURCES
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GROWING PAINS ?
The unexpected Operations Customers etc…
“Death valley”
Working Capital
“A plan” with a “B team”
“Management experience”
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CAUSES OF FAILURES
1. Causes due to personal characteristics of the management.
Mistakes concerning management (61%)
Indirect causes (6%):- Death of the entrepreneur- Team/family problems
2. Causes due to financial structure of the company (25%)
3. Exceptional exogenous causes (9%)
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GROWING PAINS ?
1. Recognizing Growing Pains and Assessing the Need for Change
2. Structuring ? Strategic Planning/Business model/ Organizational Structure/ Management and Leadership/ Organizational Control/ Performance Management/Corporate Culture
3. Financing growth ? Cash management/working capital needs/Bank loans vs Equity (risk capital)
4. Close to the customers / …market/ competitors/suppliers/…
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ENTREPRENEURSHIP AND MANAGEMENT
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EN
TR
EPR
EN
EU
RS
HIP M
AN
AG
EM
EN
T
Initialdiscovery
Opportunityrefinement
Marketmaking
Resourceacquisition
(New) co-ordination of(new) resources
Co-ordinationof oldresources/on-going activity
Discovery process
Exploitation process
© Vlerick Business School
“NOTHING CAN START
WITHOUT VISION AND ENTHOUSIASM,
NOTHING CAN LAST
WITHOUT SYSTEMS AND METHODS”
“FIRST THERE WAS ENTREPRENEURSHIP, THEN CAME MANAGEMENT”