Managing the Five Risks you face at all stages of your business development:

1. growth risk

2. technology & production risk

3. marketability & competing risk

4. financial risk

5. team & management risk

Turn Risks into Opportunities!

6.

Expansion

– the company has product revenues, expands its production and diversifies into new areas

Organization: Decentralizing

Management:  Professional

Technology: Diversification

Funding Stage: 2^nd , 3^rd , Bridge

pp.

Problem

Solution

Action

6.1

Growth Risk:

• Moving into the new business environment, with new laws and regulations

• Customers in new areas demand special terms

• No coordination of operating plan with financial conditions

• No disaster recovery plan

• No control environment

• Reinventing your business model, experimenting extensively to find a successful new model and get to the next stage of growth

• Development of an awesome flexible and innovative company structure adaptable to changing internal and external conditions

• Development of an effective and flexible production systems responsive to change

• Stick to what you do best and apply it in areas no one has considered before.

• Reinvent your sustainable growth, competitive and differentiation strategies

• Master the balanced business systems approach

• Develop venture strategies

• Maintain a purposeful and organized search for new opportunities

• Build a coaching organization

• Develop strategic alliances and joint ventures to support your growth program

• Ensure staff participation in decision making; maintain good communication at every level of the organizational structure

• Define the focus  and develop a business plan for the expansion stage of your business. Treat your business plan as a work in progress

• Create a distributed centerless corporation

• Harness the power of diversity and manage cross-cultural differences

6.2

Technology Risk:

• Failure of proven technologies placed in the new environment

• Broadening and expansion of production lines draws resources from strategic development of the core technologies

• Establishment of an intellectual property management system tailored to the requirements of the expanded markets

• Management of project portfolio and prioritization between the core competence and expansion projects

• Development of the ability to adapt quickly to requirements of the new marketplace

• Development of an innovation-conducive environment in the company

• Top management participation

• Development of strategic technology development partnerships

• Reinvent your intellectual property management system to meet the challenges of the expanded market.

• Establish a technology intelligence system; carry out technology audit

• Set strategic priorities and actions and develop a business strategy supporting continuous innovation

• Build an innovation-friendly organization

• Harness the power of innovation – search continuously for new opportunities

• Introduce modern motivation techniques (e.g. equity participation, options) to make your existing and new staff to be innovative

• Establish partnerships to share the cost of short-focused research and innovations

• Develop licensing strategy

• Manage innovation separately through in-company startups or spinouts

• Acquire new technologies  and enhance strategic alliances

• Explore the opportunities for licensing out your technology or establishing joint venture with local partners in the new markets

• Study opportunities for mergers and acquisitions to best exploit your technological advantages

6.3

Marketing & Competing Risk:

• Competitor's fierce reaction to your penetration in their markets

• No relating marketing expenses to sales targets

• No key account programs

• Expand and re-target your marketing campaign

• Research of the new markets

• Research of the current market and its possible reaction to your expansion plans

• Reinventing market development strategy

• Development of marketing partnerships

• Research the new target markets, define your competitive strategy and positioning strategy; play competitive war games

• Adapt the laws of marketing to the new environment and develop your marketing strategy

• Expand and train your marketing team

• Unleash the power of your service-profit chain to gain more loyal customers

• Revise critically your marketing approach

• Develop realistic marketing concept

• Reinvent your marketing, advertising and selling strategy

• Develop marketing plan for the new markets

• Develop innovative product selling customer relationship chain

• Partner with your customers to create a future for both parties that is better than either could have developed alone

• Access new markets through exporting your technology, joint ventures, or franchising; reinvent your licensing strategy

• Establish strategic alliances and sales network in the new markets

• Use strategic questions the competitive war games approach to simulate the competitive environment, identify weaknesses, and make critical changes that produce a more complete and effective competitive strategy

6.4

Financial Risk:

• Increased cash flow and requirements

• Debt service exceeding cash flow

• No ROI and capital investment analysis

• Investments in unknown areas of geographical & channel expansion and broadened operating capabilities

• Operating costs reduction through  optimization of production systems

• Raising of venture capital for expansion of the business (second, third rounds) and/or for preparation of the initial public offering (IPO)

• Look at several measures of capital employment - not just one

• Work back to costs from what customers are prepared to pay

• Reduce inventory costs by developing lean production systems

• Explore new opportunities for fundraising: international financing; public stock offerings; strategic alliances; mergers and acquisitions

• Raise additional cash licensing your technology out

• Enhance shareholder value by adopting a leading-edge reporting model

• Upgrade you expense control system

6.5

Team & Management Risk:

• Turbulence caused by the need to develop new organizational structures

• New executives' values clash with the culture

• Layers slow decision-making

• Lack of delegation and employee empowerment

• No feedback & analysis of profitability & performance

• Blurred accountability for corrective action

• New staff recruiting

• Retaining key staff

• Fast decision making techniques

• New organizational structure

• Great leaders

• Professional management structures

• Winning teams

• Employee empowerment mechanisms

• Project leadership and team building

• Create the mindset of growth and establish the relentless growth attitude in your organization

• Manage by objectives

• Start with yourself, know your own values, strengths, weaknesses and use them effectively; practice effective self-management

• To be a successful manager, learn how to innovate

• Be an organization builder

• Develop your leadership skills

• Find, develop and manage high-level partnerships

• Reduce your own involvement and delegate authority to professional management

• Hire and leverage awesome people

• Do the feedback analysis as a matter of course to build on your strengths

• Gain really effective control by measuring performance and conducting a comprehensive business audit

• Make sure you communicate clearly and often with colleagues, superiors, and subordinates

• Establish management systems enabling better control, transparency, and customer relationships

• Organize staff educational programs; hire and train lots of people

• Develop information and decision support system driving the business