The possibilities may be endless, but your resources are not. For many business owners with limited time and money, deciding which ideas to pursue can be a challenge. Here are three ways to prioritize your options for growth:

1. Start with your company vision

The best way to make sure you’re moving in the right direction is to take a step back from all of your ideas and begin by looking at your vision for your company. Who do you want to be as a company? When you have a clear picture of your goal in mind, it will be easier to visualize what steps you need to take in order to achieve it. Without a clear vision you could end up pursuing options that actually drag you in an opposite direction.

2. Use tools to stay objective

While it’s natural to be somewhat subjective, after all business growth is exciting, you don’t want to make decisions based on emotions alone. Try bringing objectivity into your decision-making process by using tools to evaluate and compare your options. When it comes to external, growth, we typically use the Market Criteria Matrix to evaluate the best markets for growth and the Prospect Criteria Matrix to evaluate acquisition prospects. This tool can be adapted to evaluate any opportunity for growth.

Keeping your vision in mind, develop about six key criteria of your ideal opportunity. Next, you develop metrics to quantify the criteria. For example, if one of your goals is to expand your operations to the West Coast, one of your criterion would be location and the metric could be located on the West Coast. Give each option a rating using a 1-10 scale and see how well the options compare to each other and to the criteria you’ve established.

3. Gather data

Making a decision without the proper information can be a big mistake. Conduct research to validate (or invalidate) your assumptions. You don’t have to uncover every granular detail, but it will be helpful to have an understanding of trends and how they will impact your market in the future. One of the best sources of information about the marketplace is your customers. Try identifying the needs and wants of current and future customers. It may even be as simple as conducting a customer survey or asking your sales department for input.

While it can be overwhelming to process through all your options for growth, the good news is that you have many options! Hopefully these three suggestions will help you organize your thoughts as you plan your next steps.

Photo Credit: Bs0u10e0 via Flickr cc

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

On yesterday’s M&A Express videocast, The Hidden Power of Minority Ownership, I mentioned Marcus Lemonis, a businessman who turns around struggling businesses in the CNBC show, the Profit.

I’ve written about Lemonis before on the blog, and how he really prefers to use minority ownership so that the founders or original owners of the business continue to have a stake in it. A good operating agreement and dispute resolution are key to the rules of engagement of how you’re going to do business together – whether it be with a majority or a minority investment. In my blog post, I discuss this issue more in depth. Here’s the repost for those of you who may have missed it:

Why You Don’t Need a 51% Stake to Control a Business

“I always take control, but I did not buy 51 percent. Control doesn’t have to be 51 percent. I think people get confused by that.” Marcus Lemonis comments about minority investment on Squawkbox are spot-on.

When asked to elaborate, he explained, “I just document everything: full financial control, full operational control. I can have 10 percent [invested in a company]…and I’m still going to [run it]…”

When I speak with executives or owners about minority investment as an option, I usually hear the same pushback: We don’t want to do minority investment because we want to control the business. Well, as Lemonis’ comments demonstrate, control and minority investment are not mutually exclusive. You do not need a majority stake or 100 percent acquisition in order to have control.

Perhaps you do not have sufficient funding to acquire 100 percent of a company, or you would like to diversify your investments. You may still be able to use minority investment to achieve your strategic goals. Find out what parts of the business are important to your growth strategy and write them into your purchase agreement. Perhaps you need full control over one specific product line of the business. Make sure to document your desired level of control in the agreement.

Another idea is to build an option for purchasing further shares or a complete buyout into the agreement. You can even make this option contingent on specific performance conditions.

Minority investment is one of those pathways to growth that’s often overlooked. Don’t let this opportunity pass you by because you have misconceptions about “control.”

Check out Lemonis’ full interview on Squawkbox.

“I always take control, but I did not buy 51 percent. Control doesn’t have to be 51 percent. I think people get confused by that.” Marcus Lemonis comments about minority investment on Squawkbox are spot-on.

When asked to elaborate, he explained, “I just document everything: full financial control, full operational control. I can have 10 percent [invested in a company]…and I’m still going to [run it]…”

When I speak with executives or owners about minority investment as an option, I usually hear the same pushback: We don’t want to do minority investment because we want to control the business. Well, as Lemonis’ comments demonstrate, control and minority investment are not mutually exclusive. You do not need a majority stake or 100 percent acquisition in order to have control.

Perhaps you do not have sufficient funding to acquire 100 percent of a company, or you would like to diversify your investments. You may still be able to use minority investment to achieve your strategic goals. Find out what parts of the business are important to your growth strategy and write them into your purchase agreement. Perhaps you need full control over one specific product line of the business. Make sure to document your desired level of control in the agreement.

Another idea is to build an option for purchasing further shares or a complete buyout into the agreement. You can even make this option contingent on specific performance conditions.

Minority investment is one of those pathways to growth that’s often overlooked. Don’t let this opportunity pass you by because you have misconceptions about “control.”

Check out Lemonis’ full interview on Squawkbox.

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“We have a strong vision and a clear plan for growing the company in the future,” Sarah, the CEO, told me with complete confidence during a recent strategy session.

Her CFO disagreed: “We have no vision.”

Various members of her executive team shared similar sentiments privately with my team and me. Many expressed anxiety; they had no idea where the company was headed.

So what had happened? How could the CEO be 100 percent confident while her team was plagued by doubts?

This scenario where the CEO has one vision in mind while others within the company have another is a classic example of a disconnect between leaders and their teams. The worst part of the misalignment is that the CEO thinks everyone is in agreement.

Differing perspectives about a company’s future can arise because:

  •  The vision has not been communicated clearly – Perhaps it was a simple communication issue. Either Sarah had not fully described her vision or the team was having difficulty understanding what she had told them. This could be solved by restating the vision and answering questions about the company’s future.
  • Disagreement over the vision – On the other hand, maybe Sarah did share her vision, but her executives disagreed with her on the direction of the company. In this case, it would be helpful to have an open dialogue about why people disagree. Perhaps Sarah was a visionary with a great idea that the executives couldn’t quite grasp yet. Or, perhaps she was too wrapped up in her own perspective and was missing warning signs that the executives could clearly see.
  • There is no vision – Sometimes, a CEO does not actually have a clear vision to lead the company forward, even if they think they do. Sarah’s ideas may not be fully developed, or her perspective may be unrealistic given the current market. In this scenario, the first step would be for Sarah to acknowledge the problem and work with her executive team to develop a strong vision for the company.

In this case, Sarah did have a vision but had failed to communicate it clearly to the rest of the team. And, most of the executive and management team was afraid to express their concerns with her. This is understandable. It can be intimidating to disagree with your boss! During the strategy session, we used our role as third-party advisors, and some proprietary tools, to facilitate a dialogue that clarified and deepened everyone’s understanding of the company’s vision.

Having these conversations is necessary for successful strategic growth. You can’t be successful if half of your team is lost or confused. If you find yourself in this situation, I encourage you to foster a dialogue with your team. Try an internal strategy meeting, writing down your vision statement and creating a culture where people can speak openly with you.

Because people can be hesitant to be honest with you, sometimes you might need to use an anonymous survey to get feedback.  Or to break through the communication barrier, you can host a strategy session facilitated by an outside third party, like the one we had with Sarah and her team.

Remember as the CEO or president you’re not single-handedly taking the company into the future. While you might be the leader, it takes a team to help a company grow and execute a strategy. Make sure everyone on your team is following the same path.

At first glance you may ask, “Why in the world would Warren Buffett buy Duracell?”

One explanation is financial. Through a bit of fiscal engineering Berkshire Hathaway is able to avoid triggering significant taxes. The Duracell transaction, is essentially a merger through a stock swap. Berkshire will give P&G $4.7 billion of the shares it now owns and P&G will infuse $1.8 billion in cash into Duracell before the deal closes in 2015, Reuters reports.

The financial aspect aside, it is puzzling why Warren Buffet wants to acquire Duracell. The battery industry is a fairly mature market. What more can he do?

We may be tempted to think “mature” equals “boring,” but there is still room for creativity. The Duracell transaction is just one example.

Last month, Berkshire Hathaway acquired Van Tuyl Group, an $8 billion automotive dealership. Again, this is a mature industry. The reality is that Berkshire Hathaway sees this acquisition as an opportunity to consolidate and to add what we call “optionality.”

Now, not only will Berkshire Hathaway sell you a car, they may offer a preferred rate at Geico insurance, an after-market warranty package and even financing. By acquiring these businesses, Warren Buffett is able to bundle and sell more things under the family of Berkshire Hathaway.

Even if you are in a mature market, I challenge you to creatively look for growth opportunities.

Many credit union leaders are taking a closer look at strategic M&A as a way to accelerate company growth.

Capstone Managing Director John Dearing spoke to a packed room of credit union CEOs and board members at the “Reaching Your Members in the 21st Century” Conference hosted by CU Conferences in Las Vegas on November 11.

John talked about the strategic rationale for pursuing acquisitions and how they can be a powerful tool for growth. To be successful, credit unions must start with strategy and vision before jumping into deal execution. Throughout the M&A process, using tools for objective decision-making is also critical to moving forward in the right direction.

John drew on his experience of executing acquisitions and growth strategies with credit unions and CUSOs to provide useful suggestions for credit union leaders seeking acquisitions. Several conference attendees said the presentation provided extremely valuable information for credit unions that might be considering mergers and acquisitions.

“Reaching Members in the 21st Century” was hosted by CU Conferences, a leading conference provider for the credit union industry. About 70 conference attendees discussed the latest industry trends, from using technology, to adding value for members, to mergers and acquisitions.

If you a have questions about mergers and acquisitions for credit unions, contact Capstone today!

Read more about M&A for credit unions: Credit Unions Growing Through Mergers – Why You Should Too!

Entrepreneurs rarely face the challenge of having too few ideas. In fact, like most entrepreneurs and business leaders you probably have a multitude of great ideas for growing your own business.

Your biggest challenge may be figuring out which of all the alternatives is the best way to get from where you are now to where you want to be.

We recommend using a systematic process to sort through all your ideas and create an action plan. Here are some steps in that process:

1. Think about your vision.

Where do you want your company to be in a year and in ten years?  All your initiatives should help you move toward this goal. If an idea isn’t helping you achieve your vision, then maybe you shouldn’t spend time on it.

2. Prioritize your ideas.

While all your ideas may seem wonderful, upon closer inspection you’ll likely find that some are more worthwhile than others. For example, if you envision taking your business national in the next five years, you may rate ideas that help expand your geographical presence more highly than those that do not. Use tools such as the Opportunity Matrix or Weighted Criteria or even a simple pro-con list to help you objectively sort through the possibilities and organize your thoughts. These tools will also give you the confidence that you are selecting the best and most important ideas for growing your business.

3. Get focused.

Without clear focus it’s difficult to move forward. If you’re all over the map, you won’t apply the time and resources needed to grow. Rather than diluting your efforts develop a plan focused on one goal and concentrate mostly on that. You can always modify your plan as time passes and your goals change.

4. Execute your plan.

As Nike puts it, “Just do it!” There comes a time when you need to move from thought to action. If you’ve done the upfront work on planning your growth strategy, don’t be afraid to pull the trigger.

By following these steps you’ll identify the ideas that will help you create a pathway for growth.

For the last couple of years, corporate America seems to have been playing it safe when it comes to growth. Currently U.S. corporations are holding on to a record $1.65 trillion in cash.

Are you in a similar position, perhaps? Cash may not be your “security” blanket but you may be unwilling to take the risks needed for growth.

Based on my daily interaction with midmarket companies, I would advise you to be proactive about your business growth. Failing to do so allows your competitors and the market to control your future. What good is cash if you don’t use it to grow your business?

Fortunately, it seems that some U.S. businesses are getting off the sidelines and putting their money to use. Many are investing in mergers and acquisitions, according to a report by the Association for Financial Professionals. In fact, this is the first year-over-year decline in cash reserves since 2011.

This trend reflects a growing confidence in the U.S. economy and it also demonstrates a profitable way to use cash rather than just letting it sit around.

But what about your company? Are you “playing it safe”? It’s not too late to take a proactive, strategic approach to growth. Here are four suggestions for putting your money to work rather than hoarding it:

  • Mergers and Acquisitions – Use M&A to grow quickly. Add a new customer base, enter a new market, or gain a new technology or capability. The core benefit of acquisition is that you have a ready-made solution you can use on day one, without building it yourself.
  • Stock Buybacks – Public companies will use excess cash to repurchase their own shares if they believe the price is undervalued. While stock buybacks don’t create any real growth for the company, they increase the earnings per share and can be a tax-efficient way to distribute earnings to investors.
  • Research and Development – For some, organic growth is a better pathway than M&A. Invest in the future: What will your customers want in a year from now and in 10 years? Use your money to develop new products and services. See how you can be best positioned for future growth.
  • Plant and Equipment Upgrades – Updating your physical assets can help you become more efficient, reduce costs, improve your services, and prepare for future growth. For example, upgrading plant equipment might improve safety and reduce down-time caused by accidents. Upgrading your software might allow you to process more orders per employee and build for scale.

Whatever course of action you decide to take, don’t sit on the sidelines or cling to a false sense of security. If you’re not growing you’re dying.

*This post was originally published on LinkedIn

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

Credit unions increasingly are using M&A as a growth strategy. According to NCUA data, 90% of mergers in recent years have been voluntary and have realized greater success than involuntary mergers.

“Properly planned and executed, mergers can continue the core mission of your credit union,” said Dominic Carullo, NCUA Economic Development Specialist on NCUA’s recent webinar, “Merger Best Practices for Credit Unions.”

We wholeheartedly agree with NCUA’s assertion that credit unions need to consider M&A as a growth strategy.  According to Economic Development Specialist Bob Jones, “A recent Filene Research study looked at member value post-merger and found that on average member value improved for credit union members, and it described these improvements as immediate, material and persistent.”

New positions often were created for partnering staff and officials during a merger, making the deal a collaboration and a “win-win.”

In working with credit unions and CUSOs for more than 10 years, we have found this to be true. In the credit union industry, as with any other business industry, carefully planned strategic acquisitions and partnerships can yield great success and exciting new opportunities.

If you’re still feeling skeptical about mergers, here is why you should consider them as a growth strategy.

Merger Benefits for Credit Union

  • Improved financial condition – Credit unions in a financial decline can gain stability through merging with a financially stronger credit union.
  • Expanded or improved services – Credit unions that have merged can leverage economies of scale to provide better and new services.
  • Expanded membership – By merging, credit unions expand combine their fields of membership. The newly merged credit union now reaches members it didn’t have previously.
  • Succession plan – Typically larger credit unions attract more talented staff, ensuring a succession plan.

Merger Benefits for Members

As credit unions reap the benefits of the merger, they are passed along to their members. Benefits include:

  • More or improved services
  • Lower cost of services
  • Better loan and dividend rates

Whether or not you are actively considering using M&A in the near future, it’s important to have an understanding of M&A. As more credit unions begin using proactive acquisitions which change the industry, equipping yourself with the right tools for growth, including M&A, can prepare you to execute your growth strategy at any time.

To view NCUA’s webinar “Merger Best Practices for Credit Unions,” visit their website http://www.ncua.gov/resources/oscui/pages/videos.aspx

 

“The danger with a mergers-and-acquisitions boom is that chief executives could allow themselves to get carried away by the thrill of the hunt, reducing their focus on internal investment projects that might have a better chance of bearing fruit,” says the New York Time’s Dealbook column.

M&A activity has reached record highs and shows no signs of slowing. The $2.2 trillion in announced deals globally this year is an increase of 67% over the same period a year ago. This may be good news, but there are accompanying risks.

More mergers and acquisitions typically are a positive sign for the economy, but as activity increases so does the number of failed acquisitions. Executives can make irrational deals driven by excitement or pressure for acquisitions rather than strategy, because cheap capital is available or because others are executing deals.

This year we’ve already seen the failure of a few large acquisitions: Pfizer – AstraZeneca, Fox – Time Warner, Sprint – T-Mobile. Even completed acquisitions still may fall short of expected synergies.  We’ve seen a large number of tax inversions and consolidations, which are primarily driven by cost savings. This is concerning because once you’ve cut costs to become “leaner” and more efficient you have to employ another strategy to grow revenues. I’ve rarely found cost savings to be a strategy for long-term growth.

To further understand this phenomenon of irrational deal-making we can explore the M&A cycle that can be categorized into four phases.

  • Phase 1 – There are few mergers and acquisitions due to sluggish economic conditions.
  • Phase 2 – M&A activity increases as financing is readily available in an improving economy.
  • Phase 3 – Activity is robust: executives feel more confident about the economy and they execute more deals.
  • Phase 4 – The market is frothy and executives start making “dangerous” deals driven more by excitement and momentum than strategy. Premiums can rise to 100% in this final phase.

The excitement from the M&A boom in Phase 3 drives the onset of riskier deals in Phase 4 that are more likely to fail.

It’s natural to be enthusiastic about a deal, but avoid getting swept up in the excitement and acting on impulse without focusing on strategy. Following a proven, systematic process can help you objectively evaluate your M&A opportunities to make sure they are aligned with your growth strategy. I recommend you develop a strategic acquisition plan before you jump into searching for prospects or executing a deal. Using a process will minimize your risks, help you avoid making a bad acquisition, and increase your chances for a successful acquisition.

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Choosing the best option for growth.

More often than not we find our clients have too many choices rather than too few. The difficulty lies in prioritizing options and determining which one is the best path forward.

You may find yourself in a similar situation. With so many options how can you choose?

Although it may be tempting to tackle this challenge by deeply analyzing each option, first take a step back and evaluate your own business.

  • What is your core competency?
  • What are your current capabilities?
  • What are you strengths and weaknesses?
  • What is your vision for the future?
  • Where do you want to be tomorrow? In a year? In five years? In 10?

This self-evaluation is critical in determining your best options for growth. After all, if you don’t know where you are going, how can you possibly select the right path? With the foundation set you’ll have a clearer idea of which options will actually help you meet your goals and take your business down the right path.

Although imitation may be the sincerest form of flattery, it doesn’t guarantee success. Assuming that the success of one business assures the same result for yours is a bit absurd because fundamentally the two companies are different, each with its own challenges, strengths, cultures and dynamics. You may think this concept is self-evident, but I’ve seen many executives approach their business strategy this way.

It’s important to remember that businesses in the same industry, even competitors, have very different strategies. For example, think about how Target and Walmart operate. Blindly taking another’s strategy and dropping it into your business would be like using a blueprint for an apartment high-rise to build a single-family home in the suburbs. It just doesn’t work.

That’s not to say you can’t learn from others or adopt best practices, but ultimately you – not your competitors – should drive your business strategy. Focus on yourself: identify the best opportunities and best growth strategies for your company. Leave the copying to the cats.

Photo Credit: Christian Holmér via www.christianholmer.com cc

Facing a stagnant market, retailers of consumer staples have turned to aggressive discounts to drive growth. According to the Wall Street Journal, more than 50% of consumers’ purchases include markdowns!

More Discounts is NOT More Growth

Businesses in non-growth or declining growth markets understandably must find new ways to capture market share. However, offering more discounts is not a long-term strategy. As Deutsche Bank analyst Bill Smitz puts it, “When we look at some of the promotional pricing out there, it’s pretty clear someone has lost their mind.”

If consumer demand is shifting, no matter how many attractive discounts you offer you’ll never be able to increase your market share or grow revenues in the long-term. Discounts do not grow revenue or spark confidence in the market.

Pockets of Growth

Despite a decline within some sectors in the consumer products industry, there are pockets of growth, especially in organic and fresh foods. Now more than ever we’re seeing that you can’t make blanket statements about a specific industry.

So, while cereal or soda companies may be struggling to grow, makers of fresh juices or organic snacks may be thriving. Really, one must dig deeper to full understand the industry dynamics and the best path forward for your business.

Hopefully, retailers will move away from discounts and instead focus on sustainable ways to grow revenue, like expanding products and capabilities or moving to new geographic markets.

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I was invited to write an op-ed for the Credit Union Times for their focus report on growth strategies.  While there are a variety of options to consider when exploring implementing new products and services to grow, credit unions can only grow by meeting the needs of future members.

I offer five ways to pursue growth in my piece in the Credit Union TimesKnowing When to Grow, When to Go.

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Verso Paper announced that it would acquire NewPage Holdings in a deal worth $1.4 billion. NewPage rejected a similar offer from Verso in 2012, also valued at $1.4 billion. So what changed this time around? Quite simply, it’s the environment: Both paper companies realize the paper market is shrinking and that’s not about to change any time soon.

One of the top reasons for acquisition is to expand in a declining market. Acquiring a bigger portion of a waning market allows a company to maintain or even increase revenues while waiting for the market to rebound. The Verso Paper-NewPage acquisition fits into this category.

The paper industry is facing stiff competition from online and digital media and is under pressure from environmental issues. According to the Manufacturers Alliance for Productivity and Innovation (MAPI), production in 2013 was flat compared to 2012 and the market is expected to grow just 1% in 2014. Compared quarter-by-quarter, paper production momentum declined by 6%. To survive, the two paper companies need each other. By combining they can own a larger slice of a smaller market and leverage cost synergies from economies of scale.

If you’re in a static or declining market, don’t despair! There are plenty of creative solutions to ensure your company grows despite what’s happening in the market. Analyze your current position, think about your growth options and develop your strategic plan.

If you have any questions, feel free to reach out using the comment box below.

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Apple’s growth has slowed significantly. USA Today reports that its gross margin dropped for the fifth straight quarter to 36.8% of sales and that iPad sales are down by 16%.

Apple CEO Tim Cook has recognized Apple is in a mature, slow-growth market.  If a company that grew steadily through the recession and whose stock price peaked at $700 in September 2012 can go through slow growth, your company can, too!

Even an extremely successful company like Apple is vulnerable to changes in demand, customers, markets and disruptive technologies. It’s not enough to create a good business plan once – you must remain strategic and reinvent your plan every day. Always ask, “What happens next? What’s the next big thing for my company?”  The “next big thing” for Apple may be the iWatch.

Change is the very nature of business, and those who stand still lose out big time. Two companies that come to mind are Montgomery Ward and Kmart. History is not always a guarantee of future success.

So what do you do if you’re in a mature market or if growth has slowed? You can focus on both organic growth and external growth, which includes acquisition. But before you select a specific path, return to your business strategy. Consider these questions: “Where are we now?” and “Where do we want to be?”

Be sure that any plan is strategic, and always look for opportunities for growth.  This way, when there are changes in demand or changes in the industry, market or competition, you will be prepared, having already anticipated them as best you can.

 

 

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Sometimes organic growth can be achieved by dramatically cutting costs. I call this the “jellyfish strategy” : you go up when the tide is up and out when the tide goes out. There may not be many natural predators, so you will survive, but this approach is unlikely to drive long-term expansion.

Note, that being the lowest cost provider is distinct from being the lowest priced. We have a client that makes quality dog food cheaper than any other player, but they sell it at market price. Their strength lies in their operations and technology, and all the benefit goes to their bottom line.

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
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When you hear the word “grow,” you probably think of getting bigger:  having more customers, more markets, more products, or more revenue. I prefer to see growth strategy as a way to recalibrate your company, enabling you to become increasingly focused and effective. Recalibration is a continual necessity today, because economic and technological changes are remapping the business environment at such an extraordinary rate. This means growth can sometimes mean doing less of something. It can mean shedding customers. It can even mean divesting whole divisions of your business. Naturally, you may find contraction counterintuitive to your idea of growth, but in my experience, recalibration is an essential first step in your path to successful acquisitions.

 

Photo courtesy of FutUndBeidl