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5 Paths to Grow Your Business

Copyright © 2009 Feinholz Inc.

Republish: EasyPublish™ Published: 17Dec2008 Word count: 783 Viewed: 57 time(s) Get Free Content For Your Site

Much of my work with entrepreneurs focuses on building their business. Depending on their company's stage of growth, that has meant showing them various options, many they've given only a moment's thought to, and some they've never considered.

A manufacturer that I've been working with the past few months has grown from $2 million in sales to nearly $6 million in the past five years. Daniel, the owner, knows he doesn't want to continue running the company, so he's decided to sell his business.

He's savvy about the challenges in that arena - finding a compatible buyer who can appreciate the business, its client base, and the staff who have created the company's success. Yet he's found himself disappointed in the candidates his business broker has been able to bring to the table this past year.

He's come to recognize that a sale of his business might take many months, even a couple of years. And that means he needs to keep his attention on running and growing his business.

As we worked through his avenues for growth, we outlined 5 options. Some of these he's been using to build the growth to date. Others hadn't occurred to him.

Sell More to ... Daniel is in a high margin business, with few competitors. He and his sales team spend their time in maintaining their relationships with their long-term clients. As a result, he knows at a very early stage what his clients plans are, and how to package work that meets their needs.

His commitments from those steady customers have grown more than 10 percent each of the past 3 years. Additionally, one of his clients signed a single contract that brought in 20 percent more business to the company overall.

Sell To More ... The core industry Daniel's business has served is aerospace. In the past few years they've been a reliable flow of business, and will be for the next five years. However, regulatory changes have imposed a long stream of documentation requirements on vendors. The technical work has not changed, yet the overhead to deliver it has grown substantially.

In order to rebalance the business, Daniel's head of Sales has focused on bringing in clients from less regulated industries. As a result, the business has grown 30 percent per year without adding overhead.

Sell Other... Because Daniel had to set up a stringent documentation system, he's had a new opportunity. Part of his sales is now focused deliberately on clients who need a reliable production audit trail. They value a vendor who meets the relentless demands of government and has the system set up.

So Daniel has two paths for grown: A new target market, and a new service offering for customers. It's one they're ready to pay a premium for, too!

Sell For Others... As a result of being in his market for over 35 years, Daniel is very well respected. In the past 3 years he's formed strategic alliances with complementary businesses. As he works with his clients, it's become a regular part of his discussions to identify their needs for those other vendors.

He's broadened his role for his customers to one of a trusted advisor. And those other vendors are making referrals to him when they're with their own clients.

For industries where it is not a conflict of interest, Daniel can actually create a strategic alliance and earn a share of the revenue generated by his referrals to those complementary services.

Sell to Other... In addition to selling his business to a new owner, Daniel has the option of selling to one of his own competitors. The deal will only meet his personal needs if he's able to step out of running the business, so he'd have to find a new owner who knows his business and can let him move on in six months or so.

A Bonus Option... Be The Buyer What Daniel hadn't considered is flipping that option on its head: Daniel could actually go looking for a business to buy, with a younger owner or management team. They've have the understanding of the industry AND the energy needed to integrate the two businesses, and Daniel could shift to an 'owner' and 'chairman of the board' role and leave the daily operation to the new management team.

Having these options is a neat way for Daniel to continue his company's growth while he looks for his exit in coming months. And every one of these options can be high payoff for his company, and for yours.

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