Start-up and growth

Planning The company can a ttract private equity. Private

equity is very similar to venture capital, but it comes
An entrepreneur secs a gap in the market and \>Vants to
at a later stage in the company's growth.
found (=start) a nev.• company. First some planning is
necessary. The entrepreneur has to: Maturity
Do market research and develop the product. All being well, the comp any continues to grow. This
Think about pricing, distribution channels, and
growth may be organic (through increased sales and
promotion. developing the product range) or by acquisitions/ take-
Raise capital ( = mo ney used to start or invest in.a overs (buying other companies).
business).
The capi tal 1nig ht come from the founder's own fu11ds, Exit strategies
loans fro1n the bank, o r money invested by other "fh ere a re va rio us exit strategies available to the owi;iers
people/ business partne rs . if they v.•ant to sell the company.
The business can be sold as a going concern(= as
Start-up
an established, profitable business) to other private
The founder is now ready to set up(= start) the individuals .
business. The first steps are to rent premises(= the The business can be sold to a competitor, or to a
buildings that a compan y uses), purchase equipment large foreign company wan ting to enter the market.
and supplies, and employ and train s taff. The company The compa ny that is taken over may or n1ay not
can now begin its op erations. keep its brand name.
One thing is certain: the first few years will be difficult. The company goes public. This means it is listed
Sometimes a start-up comp any can get help from on a stock exchange and its shares are sold to
venture capital (= money invested in a n ew business individual and institutional investors. The original
by a specialist company w ho work in high-gro•vth owners may continue to run the company.
areas like nc\.v technology). VC money is used to run
the business, pay salaries, etc in the early years. In Risks
exchange the VC company will take part o'.vnership of The m ajority of businesses fail(= go out of business).
the company and ho pe to sell it later for a large profit. There are many reason s, which include:
The fo unde r can ' t get a loan, perhaps because of
Growth
ins u fficien t collateral (=property yo u agree to give
In a successful business the nun1ber of custo1ners the bank if yo u fa il to g ive back the money you
grows, turnover increases, and eventually the company
borrowed).
breaks even and then ma kes a profit. Th e company
The company ca n't meet its monthly repay ments to
employs more sta ff and di v ides them into different
the bank.
functions : operations, sa les, marketing, accounts, etc.
The comp any fa ils to get enough customers.
The company develo ps a ne twork of suppliers. The Co1npeti tion from other companies.
brand name s tarts to become well-kno,.vn among Changes in the ma rket (d emand for the products
customers. falls).
What happens if the business needs to raise additional Poor manage ment of cash flow and / or insufficient
capital to expand its operations? There are various capital.
options. Management problems (eg the founder finds it
The company can ask the bank for a loan. difficult to delegate work to other people).
The company can issue ne\·v shares and sell them to Failure to integrate an acqui red business after a take-
outside investors. over.

1 Read the text for general understanding. 3 Highlight words yo u know passively, but don' t use
2 Read it again and underline the words you don't know. actively. Choose some to write sentences of your own.
Check their meaning. 4 Check pronunciation at macmillandictionary.com

8
 Exercises 2 START-UP AND GROWTH

2.1 Rearrange the letters to make words. Use the 2.4 Underline the correct word in italics.
definitions in brackets to help you. 1 The bank lends you I borrows you money.
1 enrtrepeenur entrepreneur 2 You lend money/borrow money from the bank.
(someone who starts a company and makes business deals) 3 So 'lend' is temporary giving /taking.
2 citapal capital 4 And 'borrow' is temporary giving I taking.
(money used to start or invest in a business) 5 The bank gives you a lend I a loan.
3 funoder founder
2.5 Complete the table below.
(someone who starts an organization)
4 prmee1ss premises Verb Noun
(the buildings that a company uses) 1 -· develop
...... development
2 distribute distribution
.................___ (activity)
5 puchrase purchase
(formal buy something) 3 promote . . . promotion
. . ................... (activity)
6 tunvorer turnover 4 employ employment
(the money a business makes = revenue) 5 own ownership. .... (activity)
7 seahrs 6 grow growth
shares
(the equal parts of a company which people can buy 7 expand expansion
8 compete __ _ _ _ _ (company)
competitor
and sell)
8 actisiquion . _. _ . . . __
acquisition - -competition
- -------------. (activity)
9 fail failure
(buying another company; = take-over)
9 cotellaral .. ..collateral
. . . _ ..... acquire
10 ·---·--·---·-·-·- ·-·- --·--- acquisition
(property or money that you promise to give the bank if 2.6 Complete sentence b) with one word. The
you cannot pay back a debt) meaning must be the same as sentence a). All the
1 0 damend ·······-·· demand
............ -·· ·-----·· words appear opposite.
(the desire or need that customers have for a product)
1 a) How are w e going to distribute our product?
2.2 Match an item on the left with an item on the b) What d.1stn·but1on · channels
------------------·---·---· are we
right to make phrases from the text opposite. going to use?
1 start-up equity 2 a) She was the founder of the business.
2 exit strategy name b) She set ......................................
up the business.
3 brand name company 3 a) The company is growing strongly.
. b) The company has strong ___________ growth _
4 a going concern market
5 private equity concern 4 a) This year the company will make neither a profit nor
6 a gap in the market strategy a loss.
-·-- -- - -- - - ------- - ----- b) This year the company will break _______ even _
7 do some market research a profit 5 a) Who supplies them?
8 employ staff capital suppliers
b) Who are their --·----·--·----·-·---·--·- s?
9 fail to get enough customers
staff 6 a) A lot of people know their brand name.
10 make a profit some market research b) Their brand name is very well- ____ ............... known ______ .
11 rq1se capital to get enough customers 7 a) They're an established business and they make a profit.
12 rent premises premises b) They're an established, . profitable ..... __________ business.
2.3 Complete the sentences with phrases from 8 a) The company is going to be listed on the stock
Exercise 2.2. exchange.
b) The company is going to go ...... public
·-----·-·-- .
1 The founder of the company is going to retire
9 a) Why did the business fail?
next year. I think he'll probably sell the business
b) Why did they go . . ... ________ of business?
out
as a going concern
-----·-· ______ . But first he needs to
10 a) Their customers were late in paying them so they
do some market.... research
. ........... to see who might be interested in
couldn't pay their bills.
taking over the business.
b) Their customers were late in paying them so they
2 If the company is going to expand, they w ill need to
flow
had cash ----·-----·------·----- ... .... problems .
raise capital . They can either ask the bank,
issue new shares, or try to attract _______ . equity
private ___ ______ . __ . See page 146 for some discussion topics.
3 She wants to start her own business and she thinks she
can see a gap in the market _ . She has money of her
own, so the first steps are to ___ __ _
rent premise in a
suitable location, purch ase equipment and employ staff.

Companies a nd s ectors 9
 Individual company profile

A company profile is a short description of a company. A company may look small but be part of a larger
A typical context for a company profile is at the group w ith a completely different name.
beginning of a presentation. We're part of the Media World group of companies.
We are a subsidiary of Media World.
Business activity Our parent company is Media World.
You usually start a company profile with a general The co111pany has tl1ree divisions.
introduction describing your business activity and
the sector you operate in (eg financial services, History
pharmaceuticals). Verbs to describe business activity The history of a company includes its milestones(=
include: design, distribute, export, i111port, make, events or achievements that mark important stages
manufacture, offer, operate, produce, provide, sell, specialize in its d evelopment). Verbs tha t are typically used to
in, supply. describe a com pany history include: be founded, begil'),
We offer a wide range of financial services. buy, be bought, concentrate on, decide to, develop, diversify,
We provide network solutions to the telecom sector. expand, grow, launch, n·1erge, move to, move into, open,
We specialize in software for the Ji.Im industry. purchase, stop, start.
We sell fashion accessories - our main products are The company was set up/ established/founded in 1998
shoes and bags. by 1ny father.
We're in the hospitality business. We moved our Head Office to Stuttgart.
We bought/ acquired/ took over a small local company.
Location
We were bought/ were acquired/ were taken over by
Here you might talk about your H ead Office, the
an An1erican con1pany.
location of your p roduction sites, etc. We merged with a Dutch company two months ago.
We're based in Toulouse./Our Head Office is in Toulouse. An important milestone was when sales passed $3 million.
We have around 20 offices all over Europe. We realized zue needed to diversify.
We have production sites in Ro1nania and Turkey. Sales grew rapidly in the Benelux region.
We have branches in Brazil and Mexico. Sales suffered badly when the law changed.
We entered/ moved into the US market.
Size I Markets The publishing division was sold off
There are many ways to ta lk about the size of a Our UK subsidiary was closed down.
company. You can talk abou t your market, the number The co111pa11y was broken up into four parts.
of employees, or use a financia l indicator such as sales We opened a new factory I plantI production facility.
(=turnover/revenue) or profit. The company recently celebrated its 50th anniversary.
We only operate in our domestic market. A key factor in our success has been our staff
We're an international company ivith operations in over
40 countries. Future
Our main markets are India and the Middle East. Tf you are giving a presentation, this is the part that is
We're the market leader./We're second in the market. likely to be the most interesting.
We have a market share of around 25%. We're going to open a new office in Indonesia.
Our main competitors are AstraZeneca and Pfizer. We're going to take on an additional 30 staff
We employ 200 people. I We fzave 200 employees. We're going to launch a new range of clothes aimed at
Our annual turnover is around €40 million. older wo111en.
Our operating profit last year lvas €15 rnillion. We're planning to expand into South-East Asia.
You can find 111ore infor1nation about our financial We liope to go public (= become listed on the stock
performance by looking at the Investor relations marke t) next year.
section of our website. Our ailn is lo be one of the top three biotech companies.

1 Read the text for general understanding. 3 Highlight words you know passively, but don't use
actively. Choose some to write sentences of your own.
2 Read it again and underline the words you don't know.
Check their meaning. 4 Check pronunciation at macmillandictionary.com

10
 3 INDIVIDUAL COMPANY PROFILE
Exercises

3.1 Match the beginnings of sentences 1- 8 with their 3 .6 Read the profile of clothing company H&M and
endings a-h. underline the correct word in italics. Not all the words
1 The company was found ed f('
I .•
appear opposite.
2 The company was set c·a H&M is a Swedish clothing company in the 'value
3 The company merged g
4 The company realized it needed f fashion' 1sectionlsector. It has clothes 2aimedlpointed
5 The company decided to concentrate [_J
h at all age groups and both sexes, but it specializes
3inlon clothes for young women. H&M has more than
6 The company changed its name [d
7 The company moved e 1,800 stores in 34 different countries and 4 employsl
8 The company was taken C!
b employees over 75,000 people. Its 5 Head Office/Top
Office is in Stockholm, although the 6principallmajority
a up by three sof tware engineers f rom Bangalore.
b over by a larger competitor,
of its clothing is 1 manufacturedlfactoried in Bangladesh,
c by three software engineers from Bangalore. Indonesia, Romania and Turkey.
d to Informatica Solutions. The company \Vas 8 establishedlfound in 1947 and
e into the Chinese market. opened its first store 9abroadloutside in the 1960s.
f to diversify. Today it has an 10intensivelextensive network of stores
g w ith anot her Indian software developer. throughout Europe, North America, the Middle East and
h on IT services. East Asia.
A key factor in H&M's success has been its
3.2 Write a sentence number from Exercise 3.1 next to 11
collaborationslcollaborators with 'guest designers',
its closest meaning below.
including Karl Lagerfeld, Stella McCartney, Viktor &
1 Some people started the company. .J_c._ and __ 2a
Rolf and Madonna. A recent guest designer was Jimmy
2 The company started selling its products in another
Choo, who designed 12a range/an arrangement of
7e
country. --····--
products not normally associated with H&M, like men's
5h
3 The company decided to focus on one thing. __
shoes. H&M also works with pop stars such as Kylie
8b
4 One company bought another company. ---·
Minogue to promote the 13brandladv ertising.
5 Two companies combined to form one company. __3g
_
H&M's main 14 competitorslconcurrents are US-based
6 The company knew t hat it had to develop new products
4f Gap and Spain's Inditex (owners of the Zara chain). It's
and activities. __
difficult to say which company is the biggest as 15 sales/
3 .3 Fill in the missing letters. sells differ from year to year and from country to country.
1 An event that marks an import ant stage in a process is At the time of writing Zara had the largest worldwide
called a m _____one. milestone 16 balance!revenue and the largest market 11 partlshare,

2 A company t hat is owned or con t rolled by anot her and so was the market 18 leaderlwinner. Gap was second
company is called a su .. . . . . ary. subsidiary 19
inlon the market and H&M third.
3 To sound business-like, say 'a k ___ tac__ ...r' instead of H&M has slightly 20 belowllower prices than its
'one of t he important t hings'. a key factor competitors. A recent Annual Report described how
3.4 Gomplete each sentence 1- 3 with the correct this was achieved: having fe\v middlemen; buying
adverb a-c. You will make three phrasal verbs. large volumes; having a broad, in-depth 21 knowingl
1 The UK subsidiary was sold b a up knowledge of design, fashion and textiles; buying the
2 The UK subsidiary was closed c b off right 22 produceslproducts from the right market; being
3 The UK subsidiary was broken a c down cost-conscious at every stage; and having 23 efficientl
proficient distribution.
3.5 Write a sentence
•
number from Exercise 3.4 next to Like other clothing retailers, these days H&M has to
the best explanation below.
pay a lot of attention to its social responsibility 24policyl
1 The UK subsidiary was losing money. The parent politics. It has to make sure that all 25 employslemployees
company decided it would be better if it stopped doing have good working conditions, especially in poorer
business completely. . 2c .... countries, otherwise it risks negative media coverage
2 The UK subsidiary was profitable, but it didn't fit the
and 26 damageldamages to its brand.
plans of t he parent company. Another company was
interested in the subsidiary and bought it . 1b
See page 146 for some discussion topics.
3 The UK subsidiary was too large. The parent company
d ivided it into several smaller companies, keeping one
3a .
and selling the ot hers. ·····-

Companies and sectors 11