Sears, which was once a thriving department store, is dying a slow death and the company is grasping for cash in order to stay afloat. Last year, Sears borrowed $200 million from CEO Eddie Lampert’s hedge fund and most recently Sears agreed to sell Craftsman to Stanley Black & Decker. Under the terms of the acquisition Sears will get a cash payment of $525 million followed by a payment of $250 million after three years. It will also receive royalties from the sales for Craftsman for the next 15 years. Stanley Black & Decker is focused on strengthening its position in the tool market. In October 2016 the company announced it would acquire the tool business of Newell Brands, which includes Irwin, Lenox and Hilmor, for $1.95 billion.

From Success to Struggle

So how did Sears go from successful department store to its current situation? Of course many retailers have been hit hard – not just Sears. Faced with competition from online stores, traditional retailers are struggling to keep up. Macy’s is in the process of closing 100 stores in order to cut costs and Walmart is now offering free two-day shipping when shoppers spend at least $35 in order to compete with Amazon.

But, we can’t blame everything on competition. Competition is the very nature of business and there will always be changes to in the industry, which are beyond your control. It’s up to leaders to anticipate these changes and proactively develop a strategy in order to survive and even thrive when times are tough. Instead, Sears did nothing. Sears is not the only company to fall into this “strategy.” When things are going well, or at least satisfactorily, it’s easy to get comfortable and keep doing the same thing.

However, the result of doing nothing can be disastrous for your business. Think about Montgomery Ward, which was the Amazon of the 1800s, accepting and delivering orders by mail. But now the company doesn’t even exist. If Sears wants to avoid the same fate, it will need to be more innovative to fix its long term growth problems. Getting cash now is a temporary solution and it will be interesting to see what steps the company takes once they get the cash.

Are You Doing Nothing?

For business leaders today, I urge you to take a serious look at your business and marketplace. Don’t let yourself get too comfortable or get too caught up in the day-to-day tasks that you neglect the bigger picture. Any company that doesn’t remain on its toes can succumb to doing nothing.

No matter your current situation, you should always think about what could happen next and question your assumptions. Just because your plan works now, doesn’t mean it will work in the future. Where might the market be headed to tomorrow? In five years? Set aside time to look at your business strategy to make sure you answer these questions.

Photo credit: Mike Mozart via Flickr cc

Are you thinking about growing your business? In any business endeavor, having the right questions is often half the battle.

Join us for a new webinar on “7 Strategic Questions to Ask Before Pursuing Mergers & Acquisitions” on Wednesday, December 7. We will cover 7 powerful questions that have been tried and tested with dozens of clients at the outset of their growth programs:

  1. What business are we in?
  2. What is our core competency?
  3. What are we not?
  4. Where is our pain?
  5. What are our dreams?
  6. What is our risk tolerance?
  7. What is our company DNA?

Explore each question in depth and learn how they have immediate applications and a direct impact on your growth strategy.

After attending you will be able to:

  • Establish a firm foundation for pursuing strategic M&A and external growth
  • Use tools to examine your current business situation
  • Begin to develop an action plan for growth

Date: Wednesday, December 7, 2016

Time: 1:00 PM EST – 2:00 PM EST

CPE credit is available.

Photo credit: Ryan Milani via Flickr cc

On June 23 the United Kingdom voted to leave the European Union (E.U.). Many were shocked at the outcome of “Brexit” and the markets reacted badly. The day following the vote, the pound dropped down to the lowest level against the dollar since 1985, stocks in the U.K. and U.S. fell, and on June 27 the Standards & Poor’s rating agency downgraded the U.K.’s rating from AAA to AA. E.U. leaders continue to hold meetings to discuss the fall-out of Brexit.

In the middle market, Brexit has added to concerns for dealmakers who are already worried about the upcoming U.S. presidential elections. There are many questions about what will happen in terms of economics, regulations, taxes and business agreements. While most middle market companies are focused on the U.S. market, Brexit has the potential to bring about change for those who don’t trade directly with Europe.

Challenge or Opportunity?

While concerns about trade and the markets are valid, Brexit, like other tumultuous events, is also an opportunity for bold leaders who aren’t afraid to take action and be proactive. While your competitors are panicking about the future, you can use the current climate to your advantage.

For example, with the stock market plunging two common reactions are to panic about the future or take a risk and buy stock. If you follow the common sense maxim of “buy low, sell high,” your course of action seems self-evident. The day following Brexit, Barclays and the Royal Bank of Scotland’s stocks dropped sharply and trading was suspended briefly on June 27. But did the stock really lose 17% in one day, or was the market overreacting? One week later, the markets seemed to be stabilizing.

Consumers Favor Independence over Bureaucracy

Whether or not you support Brexit, the vote seems to indicate that people are tired of bureaucracy.  The same could be true from a business standpoint; people (your potential customers) now favor flexible startups over large, established corporations. They expect their voices to be heard and for businesses to listen to their feedback and address their concerns.

Think about the rise of Uber over taxis. Uber is nimble, fresh and technologically advanced – you can order your ride via mobile app, track your driver, and leave reviews. Pricing is typically cheaper than taxis and changes in real-time according to supply and demand. On the other hand, taxis are seen as slow and ineffective. “Uberization” is occurring across countless industries even traditional ones such as healthcare and financial institutions.

Take Action

Regardless of whether or not you agree with Brexit, there’s no point in panicking or digging in your heels wishing for the circumstances to be different. In business, it’s impossible to control market changes or shifts in consumer demand. In order to be successful, you must adapt and use these conditions to your advantage. Take action and put together a plan that will allow you not only to survive, but to thrive in a changing climate.

Poll: What do you think?

What impact will Brexit have on your business?

Brexit Poll Results

The poll is now closed. Responses are displayed above.

* The opinions expressed in this blog post are not meant to be used as legal or financial advice.

Feature Photo Credit: Iker Merodio via Flickr cc

One of the best ways to grow a business is by exploring different options. You and your leadership team should be willing to discuss and consider new ideas without being intimidated by the unknown or risk. Clinging to business as usual may feel comfortable now, but you may regret it years down the road when your business is struggling to adapt to a changing market. Exploring new opportunities may unlock untapped potential for your business; at the minimum, it will validate your current strategy.

I invite you to embark on this journey of exploration in our webinar, “Five Options for Growth,” on Wednesday, August 19. After this webinar you will be able to:

•Define the five growth options for your company
•Explain why external growth (acquisitions, joint ventures, etc.) can be the best option for your company
•Describe the current state of the M&A market using relevant statistics and indicators
•Begin to develop a formalized step-by-step M&A process for your company

CPE credit is available. Click here to learn more and register.

How well do you really know your company? If you’re the owner or the CEO, you might say you have a pretty good handle on it. After all, you’ve been there since the beginning and you’re the leader.

While that might be true, you may not really know everything about your organization.

I’ll give you an example. We typically have our clients conduct a cultural assessment in which the acquisition team — the CEO, other C-suite executives and senior-level managers — each are asked to draw an organizational chart.

In one case, the CEO drew a chart depicting a flat hierarchy with everyone one the same level. According to the CEO, the business had open communication and everyone’s opinion was equally valued.

What one of the managers drew was quite different. The top of the paper showed one person labeled “God” and everyone else was way down at the bottom in what looked like a zoo.

Company Culture Diagram

Company Culture: Obviously, the CEO and the manager had very different perspectives about the organization!

Obviously, the CEO and the manager had very different perspectives about the organization!

While this is an extreme case, I tell this story to emphasize the importance of doing a cultural assessment, particularly if you’re the leader of your company. Having a clear and accurate picture of your business’s culture is important as you embark on an acquisition program.

Are you looking for more ways to grow your business? Join our webinar with Mike Melo, President and CEO of ITA International, and learn how to use proactive, external growth to gain more business in any market.

This webinar highlights ITA’s journey in developing a successful acquisition strategy and growth program using the Roadmap to Acquisitions.

ITA, a global service company providing maritime and equipment primarily to the Department of Defense, encountered a harsh market environment during sequestration in 2013. Through the initiative, the company developed a proactive plan for growth. Employing careful research and our rigorous, proven process, Capstone and ITA identified over 100 acquisition prospects in a new, expanding market: Oil and gas. While the oil and gas market grows, so do ITA’s opportunities.

Hear this exciting story and learn about best practices and tools that you can apply to your own business.

Date: October 22
Time: 1:00 PM
Cost: FREE!
Register: https://www3.gotomeeting.com/register/980243222

Let’s admit it right away: This is a trick question. The correct answer is usually not the first answer.

Here’s a classic example from the annals of corporate America: Union Pacific thought they were in the business of railroads—the commonsense answer. In reality, they were in the business of mass transportation. Had they recognized this early enough, they might today be flying planes or building hybrid cars.

Here’s a more recent example. A client of ours supplying the upper end of the bicycle industry thought they were in the business of making brake mechanisms. Their special capacity was in lightweight solutions, and we resolved that they were in fact in the business of making racing bikes faster.

This realization led to a strategic expansion into gear systems. It took a process of careful self-examination to discover what now looks obvious but was not when we began.

So exactly what business are you in? Among all the mass of activity your company is engaged in, where is the beating heart? Step back, look at the big picture, and ask yourself: ‘‘What is our business really about?’’ The answer should be as short as you can make it:

  • ‘‘We are in the custom car auto parts business.’’
  • ‘‘We are in the investment advice business.’’
  • ‘‘We are in the residential community planning business.’’
  • ‘‘We are in the organic fertilizer business.’’

You may need to take several shots at this. There is a tendency to either be too granular (‘‘railroads’’ rather than ‘‘transportation’’) or too global (‘‘creating exceptional customer satisfaction’’). Remember that growth is your purpose. You need to define your business in a way that sets a trajectory broad enough for expansion and focused enough to stay on track.

So what business are you in? Don’t underestimate how powerful this apparently simple question can be. Your decision will almost certainly impact the trajectory of growth you choose.

What makes this so important is that in a world of rapid change and expanding global markets, you face an almost intolerable surfeit of opportunities. Without being anchored in a strong, unmistakable self-definition, you will be easily dragged this way and that.

*This post was adapted from David Braun’s Successful Acquisitions, available at Amazon.com