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Business Growth: Ascend to Higher Peaks

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Rodger Stephens

on 28 January 2014

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Transcript of Business Growth: Ascend to Higher Peaks

Business Growth:
Ascend to
Higher Peaks

Agenda
Rodger Stephens
Myths of Growth
About this Presentation
Introductions
Myths of growth
Where this information came from
About growth
Growth questions to ask
The gas pedal approach
Growth is more than a strategy
Four ways to grow
How we can help



Manage it to create value Unmanaged destroys value

Is Bigger better? +Bureaucracy, rules, admin, managers, systems
Destroy entrepreneurial soul
Outgrow management

Continuous, linear? Irregular with plateaus

Survey
54 high growth companies
23 states
Avg 9.6 years in existence
Avg rev $60M ($5M -$350M)
Products, services, hybrid companies

+ Experiences
Consulting firm specializing in business performance for small and medium service businesses in the Washington Metro Area
Certified Public Accountant (CPA)
Chartered Global Management Accountant (CGMA)
10 years managing a finance department
St Anthony Publishing
Reuters America
15 years in information systems industry = BUSINESS PERFORMANCE
Edgemark Systems
Cognos Corporation
Oracle Corporation
Does your company win the prize for performance?
Growth stresses people, processes and controls
Requires owner, management to change into leaders
Growth changes what you do, how you do it
Growth drives change in everything, including you

Growth Questions
Growth Preplanning
Why
How
How much
How much can we afford
Staffing? Enough? Skills
Hiring, training regimen
Quality

Good business modeling is a must!



The Gas Pedal Approach
Plan for growth with people, processes, controls
During growth, sometimes ease off the gas
Allow a catch up pause
Allow for acclimation

The growth guage cannot be on "redline" for the whole trip!
Growth is More than Strategy
Is managing growth about having a good strategy?

Strategy consist of 3W's
What do we sell?
Who is the buyer?
Why do they buy from me?

Yes, but there's more...
Growth is More Than Strategy
Constant Improvement?
Hiring people adaptable to change
Team culture
Emotional employee rewards
Monitor straining seams
Know limits of processes, systems

No room for complacency or arrogance
Beware "I have everything right!"

People, processes, controls don't last
May work in early stages, but don't with growth

$5M revenues vs $25M in revenues

Outgrow information systems
Promote into management
Change reporting and metrics
from depts

You can plan for this!

Hitting a Growth Plateau
Be premindful and prepared
Prepare people, processes, controls to reach a planned level
Expect turbulence
Management reacts to turbulence
Plateaus happen

Management needs to think strategically to reignite growth
Remeasure: Limits vs today
Four Ways to Grow
Improvements
Innovations
Scaling
Acquisitions
Improvements
Improving Existing Business

Innovations
New Business

Not limited to unique

Recombine or reconfigure existing products/services in a new way

Copy from another industry or competitor
Idea
Product/service


Acquisitions
Purchase markets, competitors, customers, brands

Operate New markets, segments, products, services, etc

Scale through existing customer base

Purpose: Increase your scale up possibilities
Scaling
Allow for growth
Using "improvements" method
Apply to more geography, more customers...
Doing both
multiplies your results!
The Natural Organic Growth Experience
1)Geographic expansion
2)New complementary products/services
3)New customer segments with existing products
4)Complementary services for existing customers
5)Cost efficiencies
6)Technological productivity
7)Acquire new products, services, customer segments
8)Shift from selling products/services to solutions
9)Start over at the top, and improve all at once!
Most companies grow in the same ways and in the same order
There are no guarantees of success

If you want to grow

Increase your changes of success

Grow smart!
Provide consulting services to guide you
Advise management on the process
Advise, Train staff on task performance
Perform a project leader role
Business Modeling
Business Cases
More

Make an assessment and recommendation

Provide materials for you to guide yourself
Are You Prepared to Grow?
Growth Risk
s
Culture
Customer Service
Cash Flow
Supply chain
Distribution, delivery

3W's are not enough for success

Operational Excellence
+ Constant Improvement
= Success

People can be overwhelmed
Processes have limits
Controls require conditions

New international designation
Recognizes management accountants
Discipline and skill
Guide critical business decisions
Drive strong business performance

Unmanaged Growth Story
Grew to many stores to quickly
New food products introduced
Lost focus, quality, employees
"Growth and success can cover a lot of mistakes" - Howard Schultz
Most closed stores were open for only 18 months
Food products diluted their image of coffee
Service and product quality suffered
Employees needed retraining

"Get Efficient"
What's your capacity?
Can management lead?
Can you change?
Improvement Example
Prize Performance Client/Service Company Common Theme

Revenue growth depends upon employees learning new skills
New skills = higher utilization = higher revenue generation
Growth Constraint: How fast can they learn?






The team's improvement depends upon everyone learning
Every student a teacher
Every teacher a student
Pick any two!
Faster, Better, Cheaper Roofer Example
Better-Faster : Does the best work in town, and can get it done on short notice. Charges a premium.
Faster-Cheaper: Fast and cheap sacrifices quality.
1) material quality or 2) skill of the person doing the work
Better-Cheaper : Rare it is. Few do this, better = premium price. customers wait. e.g. moonlighter
Innovation Example
LA Dept of Transportation and Xerox
LA Express Park
Demand based parking pricing
Parking Guidance


Mobile apps display:
available parking
variable pricing

Results:
Underutilized parking down 5%
Parking congestion down 10%
Parking revenue up 2%

Scaling Example
Prize Performance Client
Improvements
One Truck
8 customers/day 1 hour/customer $200/customer = $1,600/Day

4 customers/day 2 hours/customer $491/customer = $1,964/Day

One truck increase $364/Day
5 truck increase $1,820/Day

Scale up
Generate demand for more customers
Map a strategy and timeline to add trucks
Generate even more demand - customers or zip codes
Repeat

Acquisition Example
Prize Performance Client
Residential Home Cleaning Company
Before
70 client homes
Cleaning 1x/week
Staff of 6

After
200 client homes
Cleaning 1x/week
Staff of 12
Max staff utilization
100% client retention
Increased referrals
Purchase
Direct Competitor
Same service area
Client list only

Cash flow financed
60 days paid
Seller support for transition

SHA solutions is a certified woman owned small business providing government and government contractors with systems engineering, logistics, information technology and professional solutions.
Owner and CEO of SHA solutions, Karen has 29 years of experience serving government and government contractors. She began as a senior programmer, analyst and IT manager, then later excelled as VP of Business Development at Subsystem Technology, Inc and Preferred Systems Solutions, Inc. serving USCG, FAA, DHS, USCG, NASA and more.

Karen brings considerable experience in
Technology solutions
Operations
Supply chain
Logistics
About Karen Bricker
How We Can Help
www.cimaglobal.com
"Transforming Callenges Into Solutions"
People, Processes, Controls

Rodger Stephens, CPA, GGMA
rodger.stephens@prize-performance.com
703-629-4960

Karen Bricker
kbricker@shasolutions.com
703-489-8083
Full transcript