Emerging Market Entry and the Catch 22's

The Catch 22’s in Business

Global Markets Business Coaching

How to overcome
the Catch-22s
of growing your business

2

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

3

The Problem

90% of new market entries fail

4

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? 

5

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

6

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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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?

8

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.

9

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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Introducing

the Catch-22s
of growing a business

11

Introducing the Catch 22’s

12

Business growth curve

13

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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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

15

Stability Steps

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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


Hockey Stick Profile

18

Growth Gradient
The Steeper the growth gradient the deeper
the cash requirement

19

Out of Balance

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The ‘Saw Tooth’ Profile

21

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

22

Balancing Ambition and Funding

23

The Exit Catch-22

Your desired exit The level of funding
valuation requires a increases the exit
level of funding valuation you require

24

Overcoming

the Catch-22s
of growing a business

25

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

26

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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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.

28

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
29

Balancing ambition and funding

30

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

31

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.

32

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.

33

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.

34

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.

35

Thank you for your interest
enquiries@globalmarketsadvisor.com
www.globalmarketscoaching.com

36

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