What to Do When You're Why Your Company's Growth Stalled Just as you'd do after a bad relationship, when your company's growth reaches a plateau, take a look in the mirror and say, "Maybe it's me."
By Steve Little Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
Just as you'd do at the end of a bad relationship, when your company's growth reaches a plateau, take a look in the mirror and say, "Maybe it's me."
Related: 5 Toxic People Who Will Stunt Your Business Growth
If you're in need of doing that, you won't be alone. Growth has been a challenge across the board in the United States. With the national GDP rising just 1.2 percent in the fourth quarter of 2016 -- compared to the 2.1 percent that had been anticipated, and the third quarter figure of 3.5 percent -- companies across the country are struggling to expand.
Yet, while market trends and changes can wreak havoc on many businesses -- in both the short and long term -- a company leader shouldn't immediately assume that that's the fault of those market forces if his or her company has plateaued. In fact, what many leaders don't realize is that they might be the ones preventing their companies' success.
It's not you, it's me.
Many founders make the mistake of thinking that the strategies that worked to launch their business are the same ones that will help it grow.
However, I've personally witnessed many promising companies flounder because their founders couldn't understand that the business they were running was no longer the business they began. Raising the first million is an immense challenge, but growing that to $10 million is an entirely different challenge that requires different skills and strategies. And the leaps from $10 million to $20 million to $50 million require similar perspective shifts.
Renewed enthusiasm for your original plan won't kick-start company growth. You may need to focus on an entirely different market, concept or product offering, and you may not even be the best person to do this. Follow these strategies to keep your growth going strong:
1. Begin with the end in mind.
In the past, businesses would stay with the same owners for years, largely because the innovation cycle and time to market were drawn-out processes, which significantly reduced the chance for a profitable, efficient, high-value exit. Technology has accelerated both of these processes; these days, less than 30 percent of family-owned companies make it to the third generation. The most profitable plan for a modern business is to immediately start on a value-growth exit trajectory.
Even if you wouldn't dream of selling your "baby," creating a strategic exit plan will actually increase your business's durability. It will pinpoint potential business constraints, determine what drives value in your company and even help you acquire funding.
2. Enlist the help you need.
To create your strategic exit plan, you'll need to determine what drives your business's value, implement a plan to maximize those factors and assemble all the necessary due diligence documentation. I often see founders and CEOs struggle to balance the challenge of doing all this work themselves with trying to continue to manage the performance of the business. But the task doesn't have to be hard.
Related: 5 Things Small Businesses Should Outsource
Your corporate executive team should remain 100 percent focused on continuing to meet those critical performance objectives. You should retain the services of experts to develop the valuation growth trajectory and map out the highest-return exit strategy.
Having an independent valuation done for your business will eliminate bias and offer a fresh perspective -- and maybe even open your eyes to potential stumbling blocks and opportunities for growth.
Seek out a partner with experience over a wide range of growth cycles who can help you boost your valuation or simply help you grow into new areas. Whether you just made your first million or need the push to get from $50 million to $100 million, someone with experience across multiple industries and stages of expansion can give you guidance that means the difference between stagnation and revitalization.
3. Step into a buyer's shoes.
Businesses are not bought -- they're sold. Companies aren't on shelves at a store, waiting for the right buyer to come along. They are (or should be) expanding, fluid entities that can adjust their focus to capture the attention of the buyers they seek and maximize their value by appealing to the proper audience.
Put yourself in a potential buyer's shoes for a moment. Although there's a single valuation opinion document, the price you ultimately receive is largely dependent upon the unique circumstances of the buyer. One buyer may be interested in your business in order to acquire your intellectual property. Another may be more interested in access to your customers or distribution channels.
What each is willing to pay will depend largely upon the value gain he or she will realize as a result of acquiring you.
Knowing what drives each one's value opinion will allow you to start with your baseline valuation so you can effectively position and package your business to optimize its value for the highest-paying buyer.
Here's how we raised a company's valuation by $40 million.
An example? When two founders of a regional trucking company approached us, their business's valuation was capped at $27 million due to its market position. At the time, the industry had a valuation multiplier around .85 or .9. While we couldn't surmount this multiplier to get a higher return, we could change it.
We found our edge when we discovered that energy-related equipment (e.g., pumps, generators, etc.) comprised the major portion of this company's payload and that it had procured software that boosted organizational efficiency. With this in mind, we repositioned the brand as an energy logistics company; as a result, the business's valuation increased to $67 million.
So, do what we did: Whether you sell or not, this process will kick-start and dramatically accelerate your company's growth.
Related: 3 Ways to Get Big Spenders to Acquire Your Startup
At a time when growth is hard to come by, be the company that stands out. Take a look in the mirror, and ask yourself whether you're the factor holding your company back. The more you broaden your perspective, the more opportunities you will find.
