Do you have a plan in place for your New Market entry? Success comes to those who plan for it! This presentation asks crucial questions for every stage of your business: the start-up, the growth phase and the exit phase.
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Emerging Market Entry and the Catch 22's
1. The Catch 22’s in Business
Global Markets Business Coaching
2. How to overcome
the Catch-22s
of growing your business
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Global Markets Business Coaching
3. Contents
o The problem:
approximately 90 % of new market
entries fail
o Introducing the Catch‐22s
of growing a business
o Overcoming the Catch‐22s
of entering a new market
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Global Markets Business Coaching
4. The Problem
90% of new market entries fail
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Global Markets Business Coaching
5. The Problem
o The vast majority of new market entries won’t
survive to their 5th year and of these most won’t
con@nue un@l their 10th year.
o Overall, about 90% of these businesses fail.
o This represents a waste of @me, money and
talent and missed opportunity.
o People who set up their own business tend to be
well‐mo@vated and usually have talent or
exper@se in their field, so why is the failure rate
so high?
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Global Markets Business Coaching
6. The Reason
o There are 2 main reasons why businesses
cease trading
1. The owner(s) decide to give up
2. The business runs out of cash
o A cash flow problem is usually the result of an
unforeseen cash requirement.
o Why is it unforeseen? Because:
– It was due to unpredictable circumstances
Or
– You just didn’t look properly
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Global Markets Business Coaching
7. Where are you now?
o Do you have a good business proposi@on
or business idea?
o Does your business or business idea have
the poten@al to reach your expecta@ons?
o Is your business paying you more than
you could achieve working for someone
else?
o What would someone else pay for your
business today?
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Global Markets Business Coaching
8. What is your goal?
o How much would you like your business
to be worth in what @mescale?
o Is your business growing at the required
rate to meet this goal?
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Global Markets Business Coaching
9. Why will you succeed?
o You need sufficient Customers, Capacity and
Cash to achieve the reward you desire
without undue risk.
o A good Business Development Plan will show
you the quan@@es of each that you require at
every stage of your growth.
o It will also generate focus, mo@va@on,
confidence and success.
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Global Markets Business Coaching
10. The Catch 22’s of business
o To be successful, there are 3 Catch‐22s that you
have to overcome:
o The Entry Catch‐22: Achieving first base
o The Growth Catch‐22: Balancing growth
o The Exit Catch‐22: Financing ambi6on
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Global Markets Business Coaching
11. Introducing
the Catch-22s
of growing a business
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Global Markets Business Coaching
14. Business impediments
o A bad debt – even if it’s only delayed, it s@ll impacts your
cashflow
o A system failure – even if you’re backed up, you’ll be impeded
un@l it’s fixed
o A break‐in – even if you’re insured, you’ll be delayed un@l you
replace and reconfigure new computers or equipment
o A product failure – you may not have manufactured it, but if
you supplied it, you’ll s@ll have to deal with it
o An injury or sickness – if you employ two people and one
gets sick you lose a massive 50% of your capacity
o A landlord unexpectedly increases your rent – if you’re
barely making a profit the addi@onal cost will soon become
insurmountable.
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Global Markets Business Coaching
15. Growth impediments
o Growth requires more customers meaning
more promo@onal effort
o Extra capacity has to be financed un@l it can
be fully u@lized
o Extra capacity has to be supported, which
increases overheads
o Extra capacity has to be trained, which
impacts exis@ng capacity
o Recruitment mistakes can upset the balance
and reduce efficiency
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Global Markets Business Coaching
17. The Entry Catch-22
To grow to the first Funding is only offered
Stability Step requires after you’ve achieved the
funding first Stability Step
Global Markets Business Coaching
22. The Growth Catch-22
Your level of funding Your future earnings
dictates your growth define the level of funding
gradient and future worth investing
earnings
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Global Markets Business Coaching
24. The Exit Catch-22
Your desired exit The level of funding
valuation requires a increases the exit
level of funding valuation you require
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Global Markets Business Coaching
25. Overcoming
the Catch-22s
of growing a business
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Global Markets Business Coaching
26. Business Planning
o Business planning is the process of selec@ng
where your business could be in and in what
@mescale.
o The business plan has to detail the path most
likely to get you there.
o One of the most significant outcomes of
business planning is to es@mate your cash
requirement at each point along the chosen
path. And then:
1. Decide how you will fund it
2. Predict and mi@gate for any poten@al threats
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Global Markets Business Coaching
27. Business Planning Process
o Model it – Create a business model that links the 3 ‘C’s
Customers, Capacity and Cash. At this stage there is no
scale to the plan.
o Balance it – Balance the plan to the scale of ambi@on
and funding and generate a growth gradient that won’t
lead to the saw‐tooth profile.
o Sense check it – Check the scale of ambi@on makes
sense compared with the size of the market and conduct
a sensi@vity analysis
o Produce a business development plan
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Global Markets Business Coaching
28. Model It
o Link Customers to Capacity – For a Service‐based
business capacity refers to Resource Management, for a
Product‐based business it refers to Stock Management.
o Link Customers to Cash ‘in’ – The level of cash
received depends on the number of customers and what
they buy, how frequently they buy and for how long they
con@nue to buy.
o Link Customer Acquisi@on to Cash ‘out’ – The level
of Promo@ons to be funded depends on the customer
numbers required to meet the ambi@ons of the business,
which depends on access to funding.
o Link Capacity to Cash ‘out’ – The level of capacity
defines the infrastructure and the level of funding required.
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Global Markets Business Coaching
29. Balance It
o Balance the plan to the scale of ambi@on and
funding capability. Specify an Ambi@on Aim(s)
and Time Target to generate a Growth
Gradient.
o Process:
– Align customer acquisi@on and the Growth
Gradient
– Match overheads to the required capacity
– Explore op@ons for funding the cumula@ve cash
requirement
– Repeat the process un@l ambi@on and funding are
in balance
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Global Markets Business Coaching
31. Sense Check It
o Check the scale of ambi@on makes sense
compared with the scale of the market.
Conduct a Market Analysis and a Sensi@vity
Analysis.
o Process:
– Analyze market share over the 5‐year forecast
– Iden@fy key success factors
– Set each factor to worst case and review
– Set each factor to best case and review
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Global Markets Business Coaching
32. Overcoming the Entry Catch-22
o Strategy to overcome the Entry Catch‐22:
Customers – use highly effec@ve, but low‐cost customer
acquisi@on and reten@on ini@a@ves
Capacity – focus on minimizing in‐house capacity even at
the expense of profit.
o Don’t spend valuable cash on anything that isn’t
essen@al and outsource the rest.
o Reduce the cash requirement for growth.
o Show that the funding requested will get you to a
point of stability.
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Global Markets Business Coaching
33. Overcoming the Growth Catch-22
o Growth strategy – Plan the overall growth strategy like an
assent on a mountain. Work out what you plan to achieve for
each phase of the assent – all the way to the summit of
ambi@on.
o Balance ambi@on and funding – Find a balance
between ambi@on and funding for each growth phase. Define
the Ambi@on Aim, Time Target and Growth Gradient with a cash
requirement that can be funded.
o Growth phases – The heart model tends to heel over as
you add chunks of capacity. The more it heels over the more
cash it will be hemorrhaging and the more likely it will be fatal
for the business. Focus on cash during a growth phase.
o Stability Steps – As you arrive at a stability step, switch to
focusing on profit.
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Global Markets Business Coaching
34. Overcoming the Exit Catch-22
o To maximize the Business Valua@on you need to
maximize two elements:
Growth in the preceding years
Profitability
o This leads us to certain posi@ons on the business
growth curve.
o Scalable – Go for an investor who brings contacts that
can put the business on a steeper growth gradient than
cash alone.
o Not scalable – Use cash flow management and other
funding op@ons to reduce the level of cash
requirement and borrowing.
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Global Markets Business Coaching
35. Business Planning Service
o Business Strategy & Planning Service:
Our Business Coaches will model your business and
generate a balanced Business Plan.
Our Business Coaches will create your Business
Plan document to present all the figures including
projec@ons for Profit & Loss, Cashflow, Balance
sheets and Business Value.
o Ongoing Business Planning Service – A Business
Plan needs to be dynamic and responsive, so we’ll offer to come
back every 3 months to review progress, revise the plan and
maintain momentum.
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Global Markets Business Coaching
36. Thank you for your interest
enquiries@globalmarketsadvisor.com
www.globalmarketscoaching.com
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Global Markets Business Coaching