2. OBJECTIVES Identify the life cycle stages of a new business
Comment on the invention stage of a small business Discuss the
importance of the start up stage of a small business Describe the
growth stage of a small business Distinguish between the maturity
and harvest stages of a small business
3. Life Cycle Stages of a Business Click Mouse Reveal Next
Phase Stage1 INVENTION Stage 2 START - UP Stage 3 GROWTH Stage 4
BREAKTHROUGH Stage 5 MATURITY Stage 6 HARVEST
4. INVENTION Creation or identification of opportunity
Safeguarding of intellectual property Product liability Market
research
5. INVENTION - PROTECTION OF IP Safeguarding of inventions,
designs, know-how, skills and names According to the Patent Office,
intellectual property rights (IPR) allow people to:- own their
creativity and innovation in the same way they can own physical
property
6. INVENTION - PROTECTION OF IP 4 main types of IP that
business owners should consider protecting in the early stages of
business:- Trademarks product or service as a brand that allows it
to be differentiated Patents for new and improved products and
process that can be applied Copyright for material such as music,
films etc Designs that specify appearance such as shape, texture
etc.
7. INVENTION - PROTECTION OF IP Play Intellectual Property
Rights in SA
8. INVENTION MARKET RESEARCH OR PILOT STUDY FOCUS GROUP made up
of a small representative target market group selected from a wider
population brought together for a limited amount of time PILOT
STUDY or experiment is a precursor to a full-scale launch, which is
particularly useful to ensure if all operational parameters are in
sync
9. INVENTIONS Play inventions
10. INVENTION - PRODUCT LIABILITY Blame the designer or
manufacturer for malfunction, loss, injury to a person or damage to
property Insurance products exist, e.g.. Product liability
insurance cover for damage or injury caused to another person or
business
11. START - UP For many this is the only stage that a small
business may experience! It is by far the most difficult to survive
Without a sound business plan it is impossible to get a business
off the ground and running
12. START UP - CHECKLIST P68 Module Manual
13. START UP - CRM Customer Relationship Management Research
shows that it costs 5 x as much to get a purchase from a new
customer than from an existing one! Establishing a customer base is
expensive THEREFORE once you have gained a customer do not lose
them. Strategy to attract and retain customers is called CRM Should
capture 2 important elements, contact data and performance data
Microsoft Outlook, Business Contact Manager, Dynamics CRM
14. START UP CRM Database P70 Module Manual
15. GROWTH STAGE Initial stage of planned losses until
breakeven and then increasing revenue How business managed and how
able to compete in its market place will determine survival Must be
able to respond to changes in external environment Internal
environment will also be challenging, e.g. cashflow, leadership
etc.
16. GROWTH STAGE GENERIC GROWTHSTRATEGIES Lifestyle or part
time firms provide sufficient profit to supplement salary but is
not usually sufficient to live on Traditional small business
smallest full time businesses with one operating site. Provide
sufficient income for owner and family High performing small
business grow at rates of 10 15% per year, adding employees and
locations. High levels of professionalism in order to maximise
turnover & profitability High growth ventures achieve growth
rates of 25% or more. Aim to become big businesses with external
funding
17. BREAKTHROUGH STAGE All about expansion Business reaches
point where there is sufficient revenue to justify its existance
Fixed and variable costs are covered Cash & good credit record
can be used to raise finance Business hierarchy developed, delegate
authority Acute cash problems can develop during periods of rapid
growth and also operational efficiencies. Very careful management
required
18. MATURITY STAGE Business stable enough to survive most
unforeseen circumstances Can pull through most market dips Owner
very experienced and knowledgeable More extensive systems in place
Owner may be looking for exit strategy
19. HARVEST STAGE Can get declining profits Take heavy losses
and eventually fail or cease to operate Ideal goal for business
owner is to harvest the effort they have put in over the years All
exit strategies are legally, financially and operationally complex
Must employ professionals to assist
20. HARVEST STAGE WAYS TO Selling the firm Sales to strategic
buyers Sales to financial buyers Sales to employees Releasing the
firms cashflows to its owners Offering stock to the public rare and
very difficult Issuing a private placement of stock capital raised
from private investors
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