1.5.6. Moving Frim Entrepreneur To Leader

Question 1

Common business difficulties when moving from entrepreneur to leader

Answer 1

1. Matching production to demand
   -For growth to take place, more demand needs to be stimulated
   -Can be done by targeting new markets, opening new branches, launching new products
   -Forecast demand in less familiar market
   -Overly optimistic will result in too much cash being tide up in stock= cash flow problems
2. Financing growth
   - To expand, Increase output=requires extra cash
   -Challenge is to find a way to raise finance without giving away too much of the business, or facing excessive costs of finance(loans, overdraft, selling shares
3. Over trading
   -Product becomes trendy
   -Boom in sales outstrips production
   -Big investment in new capacity
   -Sales still rising but cash outflows rise faster
   -Cash flow crisis due to over trading
4. Change in structure
   -More staff take on requires extra layers in heirarchy
   -To avoid spam of control getting to aide, managers or supervisors requires, but adding layers to organisation changes how business works

Question 2

Common personal difficulties when moving from entrepreneur to leader

Answer 2

1.Delegating
-Hard to move from making all the decisions to sharing some control with subordinates.
-Herzberg and Maslow felt delegation was effective way to motivate staff

2.Maintaining effective communication
—Information needs to flow upwards through supervisors and managers (bottom up communication)

3.Co-ordinating far more people
-Hard to develop personal relationships with staff
-Effective growth requires entrepreneur to develop management skills of co-ordination or employee effective managers who can take over this role

4.Keeping an eye on the big issues
-Should know exactly where the business should be heading, inspiring others of a vision of how busunsss is going to get there
-As business grows, subtle changes direction can take place
-Need to look out for big issues facing firm, like what to sell, who to sell to whilst ensuring management of resources is still taking place efficiently.