Only 25% entrepreneurs have a defined second line of management: Report

The ASCENT-EY report looked at entrepreneurs’ readiness for scalable growth and the challenges they face


Entrepreneurs need to understand that achieving growth is not enough; it also needs to be scalable for long-term sustainability and success. Photo: iStockphoto.
Entrepreneurs need to understand that achieving growth is not enough; it also needs to be scalable for long-term sustainability and success. Photo: iStockphoto.

Mumbai: Only 25% entrepreneurs have a defined second line of management, according to an ASCENT-EY report which looked at entrepreneurs’ readiness for scalable growth and the challenges they face.

The report, titled ‘How ready are entrepreneurs for the journey of scalable growth?’, studied entrepreneurs’ readiness across seven parameters—customer, leadership, people, operations, finance and transactions, risk management and technology—and found that people who invest in these seven drivers see higher financial success as compared to others

For instance, companies that offer customer-centric solutions (75% respondents) have twice the average revenue size of companies that do not have such solutions. Also companies that have set up a strong second line of management (25% respondents) have 3.5 times higher average revenue size compared to companies that do not have a second line of management, said the report.

Companies that segregate core and non-core activities (75% respondents) have approximately four times higher average revenue size vis-à-vis companies that do not segregate.

Interestingly, for mid-sized companies which have taken on board investors, the growth registered is 1.7 times higher than companies that do not have investors, said the report.

For companies looking to get external investors on board a strong corporate governance structure pays off. About 50% of the companies with a strong corporate governance structure which was about 10% of respondents have managed to attract external investors, as opposed to approximately 10% companies that do not have a corporate governance structure in place, said the report.

Also technology is an important growth driver. “Companies who used technology to drive growth have registered three times higher average revenue size compared to companies that do not use technology,” said the report.

The report was released at the first experiential learning conclave, themed ‘Growth. Disruption. Entrepreneur’, hosted by ASCENT, a peer-to-peer platform for entrepreneurs, founded by Harsh Mariwala, chairman, Marico Ltd.

“For me, the biggest and most interesting takeaway is the fact that investment in different processes which support customer centricity, leadership planning and operational efficiency, has a multiplier effect on the business and provides disproportionately higher returns to the entrepreneur,” said Mariwala.

“Entrepreneurs need to understand that achieving growth is not enough; it also needs to be scalable for long term sustainability and success,” said Pinakiranjan Mishra, partner and national leader, retail and consumer products, EY.

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