Achieving Sustained Profitable Growth - Getting to the Next Level

 

There is a fundamental reality about business performance that can be paraphrased like this "every organization is perfectly designed to get the results it is getting – whether they are the results you want or not".   Has the rapid growth and success of the early years slowed or does your revenue oscillate making it hard to sustain at that next level?  Businesses grow to the extent of their most significant limitation – and frequently the limiter is something that contributed to the current growth.  The following questions highlight some of the key areas where the limitations created by change occur.

 

How do decisions get made that affect customers, revenues, expenses, operations and your company's reputation?

 

Do you know how your organization makes a profit?

 

Many business owners find themselves feeling that their business has hit a plateau or ceiling that it cannot seem to get beyond. While typically viewed as a sales or market problem, it may more likely be the symptom of one of the less obvious but very common limit to growth in the owner lead/managed company.  Have you ever experienced:

•  Fixing a problem only to have it roar back months later with bigger negative impact?

•  Feeling as though the harder you try the less capable the team around you seems at solving emerging problems?

•  Demand never gets large enough or sustains long enough to provide the comfort to "fully invest" in the plan?

And two special situations:

•  Spending more time and effort on sorting out family issues or dynamics than moving the business forward (this is a unique but common scenario for family businesses)

•  The seasonal nature of the business causes significant momentum loss requiring a "cold start" and playing catch up every year.

We have the experience, tools and desire to find, correct and move beyond your self inflicted and other naturally occurring limits to growth.  With time, experience and guidance our clients build the frameworks that allow their organizations to stay vigilant for and move beyond these constraints.

 

Planned Change in Leadership or Day to Day Management

 

How will the company perform when there is new leadership in place? For many organizations, this is the multi- million dollar question. But there are many factors that must be recognized and addressed well in advance of any transition that will dictate not only how smoothly it goes but also what the organizational results will be beyond the transition event itself.

 

So to which end of the spectrum does your organization fall?

 

There is a good chance that the company will fall apart without the current leaders/managers.

 

- Or -

 

Things will go on just like they are no matter who is in charge – this organization runs fine so the next leader should leave it as it is.

 

In either scenario, what really constitutes success? Would either be an enticing situation for the next leader? What does it say about the value of these companies in the future?

 

For many owner lead organizations, even the anticipation of this transition can create instability and set off lengthy periods of roller coaster performance. There are many transition scenarios, and each organization has a unique history, set of players and a culture that shape how it needs to be approached and implemented. Is your organization prepared?   We have helped many organizations, including family businesses, successfully and productively transition leaders and other key players.

Considering Acquisition or Merger

 

Whether you are considering an acquisition or merger or have recently transacted one, the odds of you achieving real value growth as a result are not on your side. The numbers are staggering. By most estimates, over 70% of all acquisitions and mergers fail to produce the value increases expected and half of those actually lose value ( 1 + 1 = less than 2). The most commonly cited reason for the vast majority of these "failures" is a miss-match of cultures. Or to put a point on it – there is an underlying difference of values, beliefs and character which lead to inappropriately assessing how the other company really works and how you need to integrate the cultures to sustain and build value.  These factors are typically difficult to assess and are not addressed in due diligence but will be the primary source of difficulty once the organizations start "living together".

 

Do you have an effective way to get at the true character of the other organization?

 

How much is being put at risk if you don't?

 

If M&A is part of your growth strategy will it result in exceptional organizational performance or a protracted period of mediocre results?  We have deep expertise at demystifying working cultures and helping leadership teams to redefine performance and deliver it in the new environment.

Harvesting Full Value for Your Business in an "Over Time" Sale

 

So your plan is sell the business, but in today's environment, very few transactions involve a truck load of crisp cash being dumped at your front door, which you are able to gather up and walk away with. Far more common are earn-out structures that limit an outside buyer's risk by tying the ultimate amount paid out to actual performance over a multi-year window. So what is your strategy to mitigate your risk of a smaller payout than might be expected?

 

If you are selling to "outsides" are your expectations realistic of what the company can produce "after a change of ownership" with their differing priorities?

 

What if your plan is to sell to "insiders" and you are counting on a stream of "retirement" dollars over an extended period?  Have you put your future financial well being on a sustainable platform of exceptional organizational performance that you have confidence in?

 

Each sell scenario has different implications, but real value is real value and no matter the strategy, selling outside or selling inside, the performance of the company after the transition matters.