video production company whose sales were flat and client projects were slowing down. They definitely weren’t growing. This was post-recession, so the overall economy and market weren’t a big factor. In fact, indicators suggested that business was actually picking up for competitors. I was brought in to help develop a strategic growth plan. One of the challenges was obvious.
The closely held company was in the middle of a partner buy-out. One of the founding partners decided to exit the business to pursue creative work. At the same time, one of the company’s key producers left. While the exiting partner felt like dead weight at the time, turns out he was carrying more of the load than initially realized. So, the remaining partner was not only saddled with an expensive buy-out, she was also left to perform essentially three full-time jobs. To make it even more fun, the
company was paying off a loan taken to make a necessary upgrade in equipment, computers and software. Even though business was slow, the remaining partner didn’t want to let any of her creative staff leave since talent in the market is hard to come by. Payroll, debt and the buy-out were killing cash flow at a time when new business was slow. Ah, the joys of owning a business! But, let’s not berate the remaining partner too much. An owner’s vantage point from inside the business at ground level, mired in muck and regular day-to-day dredging, it is often not so clear. From the outside looking in, issues are much clearer. The partner’s assessment was that she had an income problem. If she
Is Growth Good?
I work from an assumption that growth is good. I am not a hardliner like some who believe that if you aren’t growing, you’re dying. But, I am probably closer to that position than not on the overall growth strategy spectrum. It is important to qualify that assumption: it isn’t that any growth is good. The important distinction is that profitable growth is good. Growth is also good because it is simultaneously an offensive and defensive business strategy. Offensively, you strategically determine what resources you are going to use and how to use them to expand your business. If you are profitable and the economies of scale work, you will make a lot more money. That is good. Growth is also important defensively. If you aren’t growing, but your competitors are, whose share of market do you think they are taking?
April 2019 ❘ 25 ®
could get her revenues up to previous levels, all of the other issues would be resolved. This is why I was brought in. She wasn’t wrong. But, I had a different take. I didn’t think she would be able to get back to those higher income levels before filling the management gap and making sure what business she did have was profitable. The key question is: do you want the growth to be a blessing or a burden. If you grow when you aren’t profitable, you’ll likely end up with just bigger problems.
Filling The Gap Fast-forward three years. The video production company is profitable and growing. The buy-out is complete and they are just shy of their highest revenue benchmark year. Of course, the health of the economy helped. What did we do?
A Special Offer For ICI Members ICI members will now be able to access my online course, “How to Build Your Growth Strategy” and receive 25% of the price. Check it out in the Resources section of the ICI website at
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After several strategic planning sessions and coaching, the best options were revealed. First, an up and coming video director was promoted and given a small equity stake in the company to fill the creative void left by the exiting partner. While painful, the owner decided to reduce headcount but retain key staff while converting the remaining to freelance. (Turns out the freelancers loved this option because it freed them up to take on side projects and make more money.) She sold some company assets that reduced the equipment debt and accelerated the buy out. This freed up the owner’s capacity to focus on long term, profitability, business development and marketing initiatives.
Making sure the critical management positions are in place before you grow
is essential. But, you can’t just fill the void with bodies. If growth is in your sights, then it is just as critical to ensure that each of the management team members have a growth mindset. Make sure that your leadership team is passionate about growth. Openly discuss your expectations of their role and contributions to company growth. Is each team member making growth a priority and enthusiastic about what needs to grow?
Take Action Here’s a challenge for this month: Is a management gap of either form killing your growth? What changes can you make now to make sure you have 100% of your management team in place with a growth mindset? Next Month: Growth Killer #2 – Working In, Not On, Your Business
Recommended Reading Clockwork (Michalowicz) Edge Strategy: A New Mindset for Profitable Growth (Lewis, McKone) The E-Myth Revisited (Gerber)
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