Challenges Faced By New Ventures In Managing Growth Process

Challenges of Keeping with the Market:

Discuss about the Challenges Faced by New Ventures in Managing Growth Process.

The report aims at providing an insight into the challenges faced by the new ventures in managing its growth process. The report also puts forward an explanation of the challenges in reference to relevant examples. There are close to around 50 million new ventures launched each year. However, the question remains in the fact as to how many such ventures are able to survive the rough waves of the change that put forwards various challenges. Such challenges are not only gradually transforming the nature of the new ventures but are also bringing in a change in their overall functionality. The growth process of the new venture also faces different opportunities and problems leading to different solutions. However, recognition and overcoming of the common pitfalls is necessary for new venture to not only thrive but also grow. It is also crucial in ensuring the necessary steps for the management of growth process of the new venture and make sure that the chosen methods of today do not create additional problems for the future.

Challenges of Keeping with the Market:

New ventures usually do not perform an extensive market research before seeking for growth that can lead to the risk of making outdated business decisions there leading to the failure of the business (Ross 2013).

Case Example:`          

For instance, the new ventures should understand that there is a constant change in the business challenges that calls for the need of a constant market research. The more a new venture seeks growth the more the competitors notice them. Therefore, a new venture should keep note that the market-leading offer determining the growth of the venture may be no better in few months time. This will primarily lead to the shift of the loyal customers to the alternative customers providing better deal. This also leads to the squeezing of the sales growth, profit margins and the product age. A new venture also faces challenges in understanding the lifecycle of the products that helps in maximizing the overall profitability (Bjorkdahl and Holmen 2013). There might be challenges in the management of the growth process due to the lack of investment in innovation that helps in streaming profitable and new products into the market.

Challenges Faced In Planning:

While managing the growth process of new venture, revisiting and regular up gradation of the business plan is necessary. With the growth of the business, there should be an evolution of the strategy in accordance with the changing circumstances (Nunan and Di Domenico 2013). While seeking the process of growth most new ventures focuses on winning newer customer instead of maximizing the growth with the existing customers.

Challenges Faced In Planning:

Case Example:

For instance, the attempt of creation of new relationships of new ventures might pose challenges for it as it lowers the profit margin and the sustainability factor of the business. The existing business relationships on the other hand provide higher potential of the profit along with providing the required cash flow. The new venture will always try to adapt to the same business model for it growth process that might pose as challenging, as there are other available strategic options like franchising or outsourcing that helps in providing better opportunities of growth (Johnson 2016).  

The new venture might face cash constraint as one of the prominent factors in limiting the growth process (Scarborough 2016.). In managing the growth process, the business must make proper use of the finances in assessment of the newer opportunities and the business planning.

Case Example:

A new venture with limited flow of cash should overlook the promising opportunities of growth if adopting them implied starving the core business of the essential funding. The new venture will face challenges if it does not carefully control each element of the working capital that would allow in maximization of the flow of cash (Karadag 2015). The new venture might face lack of tight control over the overdue debts and credit management that also prove challenging for better management of growth. The new venture should also have an effective supplier management and better control of stock for ensuring business growth. While managing the growth process, the new business venture might also face challenges in holding the obsolete stocks and might undertake periodic cleaning.

Challenges of Dealing with Crisis:

In managing the growth process, new business venture lands up into a continuous crisis mode. Each new day put forwards newer challenges that take most of time of the management in finding the solution (Booth 2015). While managing the growth process, the new business venture need to specifically identify the approach that does not work.

Case Example

For instance, a short-term crisis of a new venture is always urgent and requires immediate handling. The new business might face challenges if instead of recruiting the right salesperson it spares time in soothing the irritated customer since the salesperson might lay the foundations for substantial newer growth in form of sales for the upcoming years. Thus, while managing the growth process, the business requires awareness for the newer priorities and problems. For instance, the business will increasingly remain at risk unless steps taken for protecting them. Identification of key growth drivers helps a new venture in overcoming the challenges.

Challenges of Dealing with Crisis:

Challenges in Choosing the Appropriate Systems:

Most business relies on the larger volume of the information that includes customer interaction, business contacts, employee details, and the financial records (Hair et al. 2015). As it involves handling a lot of information so, choice of the accurate system is necessary for the management of the growth process. Lack of a solid information management system a new venture cannot delegate the appropriate tasks and the responsibilities. The challenge lies in the fact that larger the business growth, the harder it becomes in determining the effective working of the different functions. Hence, choice of the exact infrastructure is vital for determining the business growth.

Case Example:

A new venture might face challenges in the growth process due to lack of policies, documentation and procedure. A new venture also needs appropriate contracts, terms and condition and the procedures for the effective employment. A new venture often makes use of the established standards of management as one of the ways in introducing the best practice. A system of quality control acts also helps in driving necessary improvements and in convincing the larger customers. Thus, to avoid challenges in managing the growth process, investment is necessary in the accurate systems necessary for paying both for the long and short term.

Entrepreneurs also act as driving force for the creation and growth of the new business. The entrepreneurs are also responsible for holding people. The abilities that help in launching the business is not the same that in determining the growth process (Griffin 2013). Thus, for managing the growth process the entrepreneur of the new venture might face challenges if he is unable to delegate in a proper manner, trust the management team along with providing the necessary detail of daily control. The new entrepreneur might face challenges if he is incapable of stifling motivation and creativity with necessary interference.

Case Example:

For instance, the complexity of the business encourages the entrepreneur to not only develop the time management skills but also learn in focusing important things (Thomas, Lorange and Sheth 2013). A new venture faces challenge when outsiders are not brought for providing help. The management of the growth process of the new venture faces challenge due to the lack of delegation of the responsibility for the specific areas that includes the appointment of the non-executive director and the different specialists. The business should make sure that someone with an experience should take responsibility of handling a newer opportunity. This is necessary when the business wants to make most of the opportunities.

Challenges in Choosing the Appropriate Systems:

Complacency acts as key challenge for the growth of the business. Assumption of the fact that the business would continue to be successful as similar to the past would be quite risky (Paunovic and Dima 2014). Lack of regular update in the business plan will pose as a challenge as it will not help the business in reminding the changing conditions of the market and accordingly help in creating a response.

Case Example:

For instance, an update in the plan helps in identification of the necessary actions required for changing the business and the manner of its operation necessary for managing the change process. This involves training and development of the employees, renegotiating the contracts for taking account of the increased volume and keeping up with the newer technologies.

Conclusion:

To conclude, one can say that the new ventures face various challenges in managing the growth process. Some of the challenges however die or attain success as was earlier expected. These new ventures might not have anticipated the obstacles and might not even know the means of responding. The challenges faced by new venture helps it in learning better management of the growth process. The business also undergoes sustainable growth by adopting optimized business systems and upgraded processes. This in a way helps the business in meeting the demands of the customer and in maintaining the standards of customer service and the brand.

References:

Björkdahl, J. and Holmén, M., 2013. Business model innovation–the challenges ahead. International Journal of Product Development, 18(3/4), pp.213-225.

Booth, S.A., 2015. Crisis management strategy : Competition and change in modern enterprises. Routledge.

Griffin, R.W., 2013. Fundamentals of management. Cengage Learning.

Hair Jr, J.F., Wolfinbarger, M., Money, A.H., Samouel, P. and Page, M.J., 2015. Essentials of business research methods. Routledge.

Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.

Karadag, H., 2015. Financial management challenges in small and medium-sized enterprises: A strategic management approach. Emerging Markets Journal, 5(1), p.26.

Nunan, D. and Di Domenico, M., 2013. Market research & the ethics of big data. International Journal of Market Research, 55(4), pp.505-520.

Paunovic, S. and Dima, I.C., 2014. Organizational culture and corporate entrepreneurship. Annals of the University of Petrosani Economics, 14(1), pp.269-276.

Ross, D.F., 2013. Competing through supply chain management: creating market-winning strategies through supply chain partnerships. Springer Science & Business Media.

Scarborough, N.M., 2016. Essentials of entrepreneurship and small business management. Pearson.

Thomas, H., Lorange, P. and Sheth, J., 2013. The business school in the twenty-first century: Emergent challenges and new business models. Cambridge University Press.