When you think growing your business in 2017, you probably picture hiring more sales people, opening a new branch, developing additional products or acquiring state-of-the-art technology. Today I want to introduce a new concept for consideration: growing by exiting a business. Before you immediately dismiss the idea, take a moment to challenge your assumptions about company growth and allow yourself to be open to a new perspective. The reality is in some cases exiting may be the best path for growing your company.

Here are three ways exiting can help you grow.

  1. Get Focused – By exiting non-core business lines you can be focus on what you’re really good at. Take P&G for example. Over the last few years the company has adopted a strategic focus and shed over 105 brands in order to focus on 10 fast-growing categories. Shedding these non-core business lines will help P&G become more profitable. You may have some business lines you want to divest so that you can refocus your strategy and resources on what you truly excel at.
  2. Avoid Losses – If a part of your business is no longer profitable, you should evaluate whether or not you should keep going. Maintaining a business simply because you’ve always done so is not a good reason. The world changes and it may be that your customers no longer have a need for this product. For example, it would be crazy to continue manufacturing VCRs in today’s world.
  3. Grow Your Bottom Line – While overall sales or number of customers may shrink if you exit a market, your overall profit may grow. We once worked with an American manufacturer who made millions of die-casting products for various industrial customers. Unfortunately, many of their customers were purchasing cheaper products from China. Faced with this competition, our client decided to reinvent themselves into a maker of specialty components for the aerospace industry. They sold their old equipment and purchased the latest technology. As a result, their customer base shrunk tremendously, but profit rose.

When we hear the word “growth,” we automatically think about “more,” “bigger,” “expanding” not “less,” “smaller” or “shrinking.” While many would never consider exiting a business in order to grow, I encourage you to consider it as you develop your strategic growth plan.

Learn more about growing your business in our webinar 5 Options for Growth.

Photo credit: Maxime Guilbot via Flickr cc

As a leader, it can be difficult to determine the best way to grow your business. Some leaders find themselves stuck in the same rut and struggle to generate new ideas to spur growth. They realize business as usual or what worked 10 years ago will no longer work in today’s market. On the other hand, other leaders have too many, rather than too few new opportunities. With so many exciting options, they may find it difficult to determine which path is best for the company’s future.

Whatever position you may find yourself in, a useful way to explore your opportunities of growth is the 5 Options for Growth Tool. This tool helps you organize the various pathways for growth that are available to your company:

  1. Organic Growth
  2. Minimizing Costs
  3. Exiting the Market
  4. Doing Nothing
  5. External Growth

Each of the pathways listed are valid ways to grow a business. But which one is the right one for you? First, start by listing all of the opportunities that come to mind in each of the categories, no matter how crazy they may seem. Brainstorming in this fashion will help you organize the ideas you already have and help develop new ones. By considering all of the possibilities listed above you can thoroughly explore your options, organize your thoughts and make an informed decision.

Learn more about growing your business in our upcoming webinar “5 Options for Growth” on January 21. CPE credit is available.

5 Options for Growth Webinar
Date: Thursday, January 21, 2016
Time: 1:00 PM ET

Photo credit: Barn Images via cc

Have you considered all your options for growth?

I have found that some leaders are limiting their potential for company growth because they fail to examine all the possible ways to achieve it.

Some are stuck in copycat mode, constantly mimicking the strategies of their competitors and playing catch-up. Others struggle to come up with new ideas. Even leaders of companies that are growing may be missing out on key opportunities.

Five key options to consider when it comes to company growth are organic growth, minimizing costs, external growth, exiting the market and doing nothing.

Even if you think you know which option is best, I recommend you consider them all to create a complete picture of the possibilities that lie before you. This equips you to make an informed decision about the best way to grow your company.

Capstone will be exploring the five options for growth in our upcoming webinar on December 11.

You will learn to:

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

Don’t let opportunities pass you by. Learn how to best position your company for success by joining us for this foundational webinar.

Date:  Thursday, December 11, 2014
Time:  1:00 PM ET
CPE Credit available.

Register: http://attendee.gotowebinar.com/register/3419240731938664450

The polyolefins industry, like so many others, is evolving significantly. Growth in emerging markets and Asia has skyrocketed while European and North American markets have matured.

Last week I was invited to speak at the Future of Polyolefins Conference 2014 in Dusseldorf, Germany, where top executives from key industry players such as Borealis AG and Clariant gathered to discuss industry dynamics and trends.

A resounding theme throughout the conference was the seismic shifts in demand and production the polyolefin industry. In the near future Europe will move from a net exporter to a net importer as it closes several polyolefins facilities and reduces capacity.

If regulations change, the U.S. will export more polyolefins to fill part of this gap in production. China is also ramping up its polyolefins production to match growing demand in Asia, but even with additional capacity demand will soon outstrip production over the next ten years.

Several speakers also stressed the need for diversification in order to smooth over volatility in the industry.

In this new paradigm leaders are reassessing their growth strategies and are considering external moves like strategic alliances, joint ventures and acquisitions.

In my presentation, “Strategic Alliances, Joint Ventures and M&A – the Route to Success,?” I encouraged conference attendees to consider their five options in building their growth strategy:

  1. Grow Organically
  2. Exit the Market
  3. Be the Low-Cost Provider
  4. Do Nothing
  5. Pursue External Growth

It’s important to realize you have a choice when it comes to planning your growth strategy. By evaluating all five options, you are better equipped to make the right decision and confidently execute your plan.

Photo Credit: Ian Sane via Compfight cc

If your company’s organic growth has hit a plateau or is in decline, leaving the current market may be your best option. If the odds against your success are rising steadily, I strongly encourage you to think about divestment.

After seven years, British supermarket chain Tesco is exiting the U.S. market. Tesco is selling its Fresh & Easy stores to Yucaipa, owned by American Ron Burkle. Since entering the U.S. market in 2007, Tesco has unsuccessfully sought to accelerate growth and reach profitability in its stores by changing store interiors and product ranges, and through stronger marketing. Tesco’s investment in the U.S. has cost about $2.85bn in losses.

Some executives find it hard to even consider divesting a business. They may feel the need to stay the course, given the time and effort spent or because they are emotionally attached to the business. It’s important to avoid using these “sunk costs” as a rationale for blindly continuing down a loss-making path. I recommend using measurable criteria to determine if the market is the best place for your business.

Remember, getting out of one market may allow you to enter another market better suited to your core competencies.

 

Photo Credit: Ian Muttoo via Compfight cc

If your company’s organic growth has hit a plateau or is in decline, leaving the current market is an option that should be seriously considered before you embark on any other growth solutions. As I previously mentioned, growth does not necessarily mean getting bigger. Sometimes the best pathway to growth is to get out of the market you are in. For example, last year, Nike divested Umbro and Cole Haan. This will allow Nike to focus on its core competencies and the areas they want to grow.

Nike

Divestment will allow Nike to focus on its core competencies

This post is part of a series on considering your options for growth. Read the introduction here. The five pathways to growth are:

  1. Grow Organically
  2. Exit the Market
  3. Be the Low-Cost Provider
  4. Do Nothing
  5. Pursue External Growth
Image courtesy of llamnuds

Last week, Wendy’s announced it is divesting the Arby’s chain and focusing on growing Wendy’s.  Exiting or divestiture is one of my Five Options for Growth and many executives often think of it as retreat rather than growth.

I say otherwise.  Yeah! to Wendy’s.  As the Wall Street Journal reported today this… “is an industry where the only viable ways to grow are to steal market share from rivals or expand overseas….”  This will allow Wendy’s to plow more resources in growth rather than being hampered by Arby’s dismal prospects.  For perspective buyers this signals more deals may be coming this year.