Strategic Options for Growth & Expansion

What is your 2011 plan for growth? 

1. Improve Profitability
   
   
2. Sell additional products and solutions.
   
   
3. Sell to different customers.
   
   
4. Acquire market share through corporate development M&A.

 

Our research shows that the top barriers to growth and operating efficiency this year will include:

X Legacy Business Model. Has your model evolved and adapted to the current competitive landscape and market conditions? Have you kept pace with changing customer demands?

X Profitability inefficiencies. "Best-in-class" performance is created through consistent daily execution by front-line employees, supported by variable cost structures, and continuous improvement behaviors conducted by employees and supervisors.

X Lack of Brand Credibility: this is why your team is not selling more.

X Price-to-Value Perception: this may be why your margins are lower than competitors.

X Disengaged Workforce: an unmotivated and unfocused workforce causes quality and service issues. What are you doing to get employees' best efforts? 

 

 

Profitability Efficiency
As a result of the economic uncertainties of the past few years many firms have been in “maintenance mode." Until sales pick up, many executives are frozen. But, what executives need to understand is that only with a change to their strategy, offerings and business processes will they be able to unfreeze themselves. Which of the following is your strategy to achieving improved profitability?

• Improve margins (pricing and/or efficiency)
• Improve productivity ("rate x Q")
• Improve your portfolio: add additional products, services, solutions, items to resell, partner

Only the most efficient and most resilient business models will create wealth. To protect your business the majority of the following measures are required:

1. Identify a Profitable Niche.
• Be #1 or #2 in each market or change. Only sell and deliver a value-proposition that the market will position you as the #1 or #2.  There is no wealth or sustainability if you are third or below in your market.
• Repetition increases marketing response rates and effectiveness. We recommend that marketing connect with your target audience at least eight times per quarter with distinct, relevant and compelling impressions.
2. Attract, Retain, and Grow Customers.
• Step one: Create Raving Fans that most need your core value-proposition.
• Step two: Choose your Options for Revenue Growth
3. Invest in Your Assets.
• Improve your product portfolio and marketing and customer assets. Build strong bonds with clients through recurring revenue model, portfolio management, customer lifecycle management, and brand equities. Create solutions and programs to ensure the business demonstrates strong ROI to customers and long retention tenure.
• Leadership > Develop your Human Capital Assets. 
• Scalability > Reengineer your processes to be 80% more efficient.
• Invest in and develop your management science so that your business has the ability to adopt and adapt.
4. Have an Expert Advisor Quarterly Update Your Business Plan, Action Plan and Budget & Forecast Model.
• Focus on only your top two (2) Priorities or Initiatives at a time. i.e. focus on uniqueness: uniqueness of the business model, business processes, and offerings.

Success in this economy will be a direct result of increased skill and effectiveness of your entire executive team. Businesses must remove people dependency to create scalability while simultaneously investing in your people to increase the probability of success.

While this uncertainty poses a challenge, significant opportunities do exist for growth through innovation and investment. Nimble businesses that can respond and change to effectively reposition and compete differently and better. 

 

GoToMarket
Assuming a significant market, the opportunity to create wealth is dependent upon the most efficient means to grow.

Sizing the cost of customer acquisition (what we call "Unit of One Economics"), client retention, and client NLTV (net lifetime value) is paramount to growing more efficiently and effectively than competitors and substitutes.

Assuming an efficient economic model is in place there are a number of parallel methods which can be deployed to ensure growth and expansion such as:

• Sell "Add-on" products, services, and reseller solutions.
• Corporate Development & Acquisition of "books of business."
• Alternative Distribution through channels, alliances, global joint ventures, online, or eCommerce.

 

Outsourced Corporate Development
The time is right to acquire capabilities and "books of business" due to the following:

• Many motivated sellers. The number of baby boomers looking to retire over the next few years is enormous coupled with the number of both investors looking for exits and founders that are tired and looking for a change will result in over a trillion dollars in transactions over the next few years.
• A well performing business can add significant value to its operations and clients by providing more holistic offering.
• Many industries are undergoing significant change.
• New laws and regulations are eliminating niche providers due to rising complexities and costs of doing business.

Acquisitions can include but are not limited to add-ons, rollups, commercialization of IP, recapitalization, management buy-outs/buy-ins, and spinouts.

Implementing your strategic vision within the constraints of available capital and resources makes owning and managing a business a real challenge. Today’s operating requirements creates complex challenges to grow. These economic realities place more stress and new constraints on leadership to make the right decisions and adjust their financial models and business dynamics.  In this economy, it’s critical that leadership maximize the entire spectrum of opportunities, including those initiatives around M&A and Corporate Development.  By employing specific tactics, processes and best practices that mitigate both investment and execution risks, your business objectives can be achieved.

Learn more on our Management Science Resources page.