Our first contact from executives of privately held mid market companies often comes in the form of inquiries about growth financing. Some know I lead The Service Industry Fund. Others have read about the intermediary role we play for clients when we identify good sources for growth financing among the various private investor groups, venture capital firms, funds, and angel networks. Lately, more and more of those requests have seemed out of sequence.
One company is operating in a rapidly growing global industry. Although they provide a superior product and service, they hadn’t been growing as quickly as their competitors.So they became convinced that growth financing to fund improved marketing was the next step. We were glad that they took our suggestion to make sure that they are generating sufficient profit from their products/services before pumping outside funds into their business. It turned out that they were losing money on 1/3 of their accounts, and the largest of their four revenue streams only generated profit in two customer accounts. IF they had qualified for growth financing and IF they had attracted a large number of new customer accounts, they would have quickly imploded. They weren’t undercapitalized. They couldn’t afford to invest more money in their marketing campaigns because they weren’t generating enough profit.
This is a huge reminder that the secret to accelerated growth with sustained profitability is to reverse the phrase. You must know what drives your profitability, then be able to sustain it before focusing on growth strategies. And acceleration comes last. Ironically, they were lucky that their competitors had been growing faster.
With focused effort, their profitability problem has been resolved. As I write this blog, the growth financing deal is being processed. Instead of marketing, the funding will be focused on the acquisition of state of the art technology. Not only will technology help this company continue to provide superior services for its customers, it will help sustain their profitability as they expand. The 13 investors of The Service Industry Fund would not have been interested at all if sustainability and scalability hadn’t been addressed first.
Aldonna R. Ambler, CMC, CSP has earned the right to be called The Growth Strategist®. She has won over two dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions. Her midsized B-to-B service, technology, and distribution clients get on…and then stay on…the published lists of the fastest growing privately held companies. All of her own service businesses (strategic planning, executive advisory, growth financing, radio show, speaking, and search) help privately held midsized companies in Achieving Accelerated Growth With Sustained Profitability®. Ambler is in her 8th year hosting a weekly peer-to-peer-to-peer online program at www.growthstrategistshow.com 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. Family owned businesses are being emphasized in 2011. Ambler is in the process of launching her 8th enterprise. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.
Known as The Growth Strategist®, Aldonna Ambler built and grew a suite of companies to help midsized B2B companies achieve accelerated growth with sustained profitability® A Certified Speaking Professional (CSP), Ambler has addressed over 2000 audiences and hosted a syndicated online talk show about growth strategies for 9 years. As a growth financing intermediary, Ambler raised over $1 Bil dollars for midsized companies. The winner of over 2 dozen prestigious national and statewide "entrepreneur of the year" awards, Ambler is available to speak about “profitable growth during any economy” and/or serve on the board of a growth-oriented privately-held company.