Small and medium enterprises in India donot scale up due to several factors, lack of Finance, regulatory hurdles, physical constraint of the management.
Equity can play a major role in scaling up thebusiness. Few business entities know the value of their equity. A running profitable business can command very high valuation, which means very low dilution of equity to raise the resources. Scaling up will also help the management to hire better manpower, which will improve the physical capability of entity to handle larger business. Apart from it will ensure the perpetuity to business, if second generation is unwilling to join the business. The original promoters may gradually dilute the holdings in favour of willing to continue or enjoy the dividends, if the company is well managed by professionals, as is the case with ITC, LT, Infosys etc.
Scaling up of small and medium enterprises into large ones will trigger more competition, forcing them to be more efficient.
Equity can play a major role in scaling up thebusiness. Few business entities know the value of their equity. A running profitable business can command very high valuation, which means very low dilution of equity to raise the resources. Scaling up will also help the management to hire better manpower, which will improve the physical capability of entity to handle larger business. Apart from it will ensure the perpetuity to business, if second generation is unwilling to join the business. The original promoters may gradually dilute the holdings in favour of willing to continue or enjoy the dividends, if the company is well managed by professionals, as is the case with ITC, LT, Infosys etc.
Scaling up of small and medium enterprises into large ones will trigger more competition, forcing them to be more efficient.
No comments:
Post a Comment