Startup and SME growth
If you get your first customer but the next customer doesn't come, or if sales increase but your bank account balance is always tight, it may be a sign that your growth stage is changing. Korea Research Institute of Business & Branding finds management challenges that start-ups and small and medium-sized businesses need to solve at this stage.
Korea Research Institute of Business & Branding addresses management tasks appropriate to the company's growth stage and resource conditions. The main activities include verification of initial customers and markets, inspection of business models and profit structures, analysis of organizational, financial, and operational tasks at each stage of growth, design and evaluation of corporate support projects, and training and mentoring of entrepreneurs and managers.
institute has been expanding research on the growth of start-ups and small and medium-sized businesses in 2015 and has been analyzing management tasks and support systems at each stage of growth. From the perspective of sustainability, which looks at both short-term performance and long-term competitiveness and trust, we examine both ways to survive now and ways to grow for a long time.
How do you verify whether a start-up's initial customers are truly in demand?
The first customer introduced by a friend or the positive response received at an event is a welcome sign, but it does not show the demand in the market as a whole. Initial customer verification involves verifying whether the customer problem we assumed actually exists, whether the customer is willing to spend money and time to solve the problem, and whether similar customers can be found repeatedly.
Korea Research Institute of Business & Branding helps entrepreneurs write down a list of assumptions they believe in and verify the assumptions that can greatly affect the business if they are wrong. We first use methods that can be verified at low cost, such as customer interviews, small-scale sales experiments, and usage data.
What do you check about the business model and profit structure?
If sales increase, but the more you sell, the more you lose, growth increases risk. In examining the profit structure, we look at the cost of acquiring one customer, the profit obtained from each customer, and the point at which fixed costs are exceeded. In business model inspection, we draw relationships between who pays, who spends, and who delivers the product to customers, and look for weak links. We also consider which customers will leave and those who will remain when the price is raised, and which items of cost will decrease as the size increases and which items will not. This kind of inspection is also used to solidify the basis of the business plan before attracting investment or applying for support projects.
What challenges are different for start-ups and small and medium-sized businesses at each stage of growth?
There are many ways to divide growth stages, but the same thing is that the challenges of organization, funding, and operations change with each stage. The divisions in the table are examples to understand the flow, and not all companies follow the same steps.
| flow | organization | funds | operation |
|---|---|---|---|
| When to check the market | Entrepreneur makes most decisions | Save the minimum amount of money needed for verification | We frequently revise our products and methods according to customer response. |
| When customers increase | Divide roles and appoint first managers | Increased need for working capital and growth capital | Make repetitive tasks standard |
| When to expand your business | There is a need for coordination and professional management between departments. | Compare financing methods such as fundraising or borrowing | Stabilize quality and supply chain |
The OECD's Small and Medium Enterprises and Entrepreneurship Outlook Report (2023) also compares the conditions faced by small and medium-sized enterprises and start-ups with country-by-country data, showing that tasks differ depending on size and industry.
How are start-ups and small and medium-sized enterprises distinguished by law?
When applying for support or planning for growth, it is helpful to know where your company falls in the system. The scope of small and medium-sized businesses is determined by the “Basic Act on Small and Medium Enterprises” and its Enforcement Decree based on the size of each industry, and start-ups are determined by the “Small and Medium Business Startup Support Act.”
| Category | basis law | Summary of the standards |
|---|---|---|
| small business | Article 2 and Enforcement Decree of the Framework Act on Small and Medium Enterprises | The scope is determined based on size and independence, such as sales by industry. |
| start-up company | Article 2 of the Small and Medium Business Startup Support Act | A small business is a business that has been established for less than 7 years since the start of business. |
Detailed requirements may be subject to revision, so please check the original text of the law at the time of application at the National Law Information Center.
Do you also design and evaluate corporate support projects for public institutions?
Public institutions are one of Korea Research Institute of Business & Branding's main targets. The results of corporate support projects vary greatly depending on who is selected for support, how the support is provided, and what the results are viewed as. Based on research on management tasks at each stage of growth, institute examines business design to ensure that support reaches the point where the company is actually stuck, and evaluates what changes have occurred in the company after support. Since the evaluation results serve as a basis for revising the next project, it is better to determine in advance at the project design stage an indicator to compare before and after support.
How is education and mentoring for entrepreneurs and managers carried out?
What entrepreneurs need is a judgment standard that suits their company rather than a general theory. institute's entrepreneur/manager training and mentoring covers challenges at each stage of growth with examples and helps entrepreneurs learn how to independently examine their own business assumptions. Contents of each course Management education and company workshopsPlease continue checking here.
How do we examine short-term survival and long-term growth together?
In times of tight finances, it is easy for immediate sales to outstrip all other decisions. However, excessive discounts or deals with bad conditions can weaken tomorrow's profit structure even if they allow you to survive today. Korea Research Institute of Business & Branding helps entrepreneurs make choices by knowing the costs by writing down what imprint each short-term alternative will leave on long-term competitiveness and customer trust. When you put alternatives that are holding on and alternatives that are growing side by side in one table, it becomes clear what you are giving up for a while.
Startup and SME growth Frequently asked questions
Is it worth getting help from an external research institute in the early stages of starting a business?
The earlier it is, the greater the cost of making incorrect assumptions. Korea Research Institute of Business & Branding separately deals with tasks to be confirmed initially, such as verification of initial customers and market, and inspection of business model and profit structure.
Does it also cover business succession in family businesses?
Small and medium-sized businesses and family businesses are the content categories of institute, and the main topics are management foundation, resource constraints, professional management, business succession, and organizational change.
What should I check before attracting investment?
First, check the size and use of funds needed for growth, whether the profit structure improves with growth, and whether the organization can put the increased funds into action. Investment and financing are also topics covered by institute.
Can the research organization that runs the support project also be entrusted with the research?
The design and evaluation of enterprise support projects fall within the scope of activities of institute. There is also a method of identifying the actual challenges of the company being supported by linking it with a business survey by industry.
Who determines the growth stage?
institute does not determine the stage based on sales volume alone, but looks at the status of customers, organization, funds, and operations together to find the tasks that are currently being overcome. The basis for the judgment is confirmed with the entrepreneur.
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