Monthly Archives: October 2012

[video] The Triple / Double Option

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A Classic Barrier to Growth – Increased Cost of Credit

No duh…right?

I can still recall how it felt when my first business attracted its first line of credit.  During the years of great inflation of the late 1970s/early 1980s, the interest rate was close to 20% on our SBA guaranteed loan. My partner and I celebrated “Yeah…We Got the Loan!” but that was followed quickly by “Oh Dear.  We got the loan payments!”

Today, the interest rates on loans and lines are a whole lot lower, but they just aren’t as accessible.  The cost comes in other forms than just interest. Sometimes, it comes in the form of seeking venture capital earlier than you would have five years ago.  The deceptive increase in the cost of credit comes in the form of the hassle factor and increased administrative time spent on credit card companies.  Identity theft increases the cost of credit. The increased cost of credit comes in the form of distractions and lost opportunity as we all must keep a watchful  eye on what is happening at corporations like CHASE, CITI, and Bank of America…even if we aren’t shareholders or customers.

With our most progressive clients, one of the major segments in strategic planning retreats is focused on finding ways to diminish the impact of financial industry dynamics on the growth of their companies.  Ownership. Pricing. Channels. Strategic alliances.

What do you need to be less reactive to the financial industry?

 

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST®. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB clients get on…and then stay on…the published lists of the fastest growing privately held companies. She owns and operates a suite of companies that help privately held midsized companies achieving accelerated growth with sustained profitability® through opportunity & resource analysis, 4 approaches to strategic planning, executive advisory services, growth financing, and targeted search.  2012 is Ambler’s 8th year hosting a weekly peer-to-peer-to-peer syndicated on line talk show that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. An archive of over 300 interviews is available at www.GrowthStrategistShow.com. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.

A Classic Barrier to Growth – Development of a Location Disadvantage

The PIXAR movie, CARS, comes to mind. Route 66 was bypassed by the new Interstate and the sweet little town of Radiator Springs drifted into obscurity. Or NJ may come to mind. Several of the diners in southern New Jersey have been located on important traffic circles.  PONZIOs dominated the Erlton Circle in Cherry Hill where Kings Highway and Route 70 intersect.  OLGA’s Diner owned the Marlton Circle where Routes 70 and 73 come together.  Palla’s Diner attracted more business than McDonald’s at the Berlin Circle where Route 73 meets the White Horse Pike. As the population and commerce grew in Burlington, Camden and Gloucester Counties, transportation planners started to change the traffic circles (also referred to as “rotaries”) into multi-lane intersections with traffic lights and left turn lanes.  Elevation of Route 73 was involved in the replacement of the Marlton Circle.

The owners of the McDonalds store pulled out fairly quickly when change was eminent for the Berlin Circle. The long time owners of PALLA’s Diner chose to retire and sold their business. I hope they got a good price for it because they worked very hard for a long, long time.  The new owners of the diner renamed the diner THE PALACE Diner.  That was very bright because it simultaneously appeased long time loyal customers AND conveyed new ownership. But despite availability of a few small directional signs, the visibility of their diner dropped dramatically. Plus they don’t even have the benefit of McDonald’s high and easily recognized golden arches to compel people to bear right off of Route 73 as they head south.

If you choose to despite a location disadvantage, it doesn’t matter if it was your fault.  You must mitigate the disadvantage.  In my opinion, the owners of the PALACE DINER must step up their marketing to gain visibility and provide a compelling reason for people to view their diner as a destination…worthy of unscheduled right turns.

As a reminder, it is not just bricks & mortar-based businesses that can be slammed with a location disadvantage.  If your business is dependent on petroleum or other products moving in/out of the Middle East, blockades and wars pose a significant location disadvantage. And the dynamics of the Internet can also create location disadvantages. These days, what GOOGLE does impacts every business. Bureaus pay to position their speakers first, so a professional speaker, like me, don’t even own first place for our own names…unless we deal with it.

 

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST®. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB clients get on…and then stay on…the published lists of the fastest growing privately held companies. She owns and operates a suite of companies that help privately held midsized companies achieving accelerated growth with sustained profitability® through opportunity & resource analysis, 4 approaches to strategic planning, executive advisory services, growth financing, and targeted search.  2012 is Ambler’s 8th year hosting a weekly peer-to-peer-to-peer syndicated on line talk show that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. An archive of over 300 interviews is available at www.GrowthStrategistShow.com. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.    

BLAST PAST a Plateau that was Caused by FEAR

If you have been reading my blog posts over the past several weeks, maybe you trying to figure out which cause of a stubborn plateau your company is experiencing.  Good. Don’t skip that step because the underlying cause of the plateau influences what will be needed to BLAST PAST it.

Are you dealing with risk aversion, fear of lost control, or long term tolerance of a significant problem/limitation?  Those causes have some shared elements. The primary decision maker(s) may have been burned in the past and have become more skeptical with the passage of time. The memory of putting their home(s) on the line during the early years of the business may be a bit too vivid.  The owner(s) may be living with the consequences of promise(s) made several years ago when the situation was very different than it is today.  Or the owner(s) may have a whole lot less money saved for their retirement than they had anticipated, so they are not in the position to take risks any more.

It can be so tempting for younger, future focused, ambitious team members to conclude that business growth simply isn’t possible as long as the company is still led by people who fear change… even if there are understandable reasons behind those fears.  When the younger team members become increasingly pessimistic about their own future(s), they make career decisions that solidify the plateau. If/when bright young people leave to work at more growth oriented companies, the business is left with old ideas, followers, and fewer options for succession.  Ironically, the risk of training employees to become competitors increases when ambitious young team members remain employed by a risk adverse company.  And when bright young people stay with the fear driven company but give up on their career ambitions, productivity drops and the plateau can quickly turn into a freefall.

Breaking past a stubborn plateau that developed from owners’ fears involves revisiting the purpose of the business and finding ways to express respect for everyone involved.  Usually, these symptoms develop when the company really was an incorporated career for the owner(s).  The company was a way for the owner(s) to be paid to do what they liked to do.  Maybe increasing the value of the business wasn’t ever the primary goal.

When we are brought in to help with fear-induced plateaus, it has been important to evaluate how much longer the current owners want to work.  It has been important to at least imagine the business with a change of ownership/leadership to gauge the company’s resilience and potential value. And it’s been crucial to get a good sense of how much team members care about the business, the owners and their accomplishments, and remaining in the industry.

A few years ago, I was particularly impressed with one of our clients. The majority shareholder had been privately talking to prospective buyers.  At least he spoke up and shared that fact with their President who brought us in to lead strategic planning.  The process focused on the long term growth opportunities for younger team members while remembering the shorter term obligation to take care of the Founder.  They needed to hire an assistant for the Controller and some steps were tricky because no one could openly talk about each of the offers.  Wonderfully, a handful of great team members bought the business and the majority owner remained involved … just not in the same role. The legacy of the business was celebrated AND the next generation of leaders ambitiously embraced new vision, mission, and growth goals. Despite the lingering period of uncertainty around them, the company is doing just fine.

 

[video post] Blast Past a Plateau that was Caused by FEAR

[video] The Top Nine Causes of The Plateau Pattern™: Distraction

The Top Nine Causes of The Plateau Pattern™: Distraction

The President of a $20 Mil/yr service firm, Sam is a creative thinker.  He’ll come back with at least 2 new product/service ideas whenever he speaks at industry conferences on behalf of the firm.  He’ll discover a great new target market when he surfs the Internet or overhears casual conversations at social gatherings.

Is Sam’s company poised for growth? A plateau? Freefall?

No very short vignette can convey the entire story, but there actually is enough information here to cue relevant questions.  An entrepreneur’s creativity can be an optimizing or a limiting factor for a company’s growth.

Does Sam share his ideas or does he just think about them? Does he dive right in as he has new ideas and dilute cash and other resources?  Does Sam rush to start multiple businesses?  Does Sam assume he has to find new partners and employees for each idea and never offer opportunities to existing team members? Does Sam resist the establishment of an innovation process so the team can capture creativity, rank order opportunities, and turn ideas into real products/services?

Several of the 2012 guests on my peer-to-peer talk show, The Growth Strategist®, are a lot like Sam.  The ones who represent companies that are listed on the INC 500 all have invested in fabulous innovation processes so their companies can turn great ideas into new products/services.  Download shows featuring ZIRMED or DIALOGUE MARKETING to see and hear how they do it.

Distraction comes in many forms.  Some entrepreneurs have attention deficit disorder. Other entrepreneurs must invest in support services on the home front to keep chores and errands moving along.  Some of us have experienced the intense “distraction” of care taking duties with seriously ill spouses, parents, or children.  That experience can quickly make being the President of a midsized company feel like it is the distracting role.  Hmm.

 

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