At our company shareholders’ meeting in 2007, I announced our plan to achieve $100 million in sales by 2012. What I didn’t anticipate is that we would have to navigate through one of the steepest economic downturns in our history. At the end of fiscal year 2011, we will have doubled our sales, profits, workforce, and shareholder value. The reason I tell you this is because it lends credibility to our experience with growth.
Is your business prepared to grow? Whether it’s adding products, expanding services or entering into new markets, growth needs to be intentional and strategic. We all like to talk about growth, but that’s the easy part; execution is the challenge. At Marco, we begin our strategic planning in August as we prepare for the start of our fiscal year in November. Like most businesses, we will talk about growth – and how to get there.
Here’s how we can prepare for growth:
- Evaluate yourself and your leadership team. Do you really have the competency to accelerate growth and achieve success? Identify any gaps in skills or experience on your team that would prohibit you from achieving your goal. Being honest about what you see when you look in the mirror can be tough, but it is an essential first step to preparing to grow.
- Make the upfront investment. A company’s growth potential is determined by its operational processes, information systems, financial fitness, facilities, and, of course, personnel. As an example, prior to launching new service offerings, we make significant investments before we ever recognize a nickel in revenue. Staff needs to be recruited, salaries committed, and necessary training and certifications need to be in place before you can acquire your first new client.
- Select a strategy for growth. When we decided to take a fast track approach to expansion, we chose to achieve it through a combination of acquisitions and organic growth. We chose to avoid new market start up situations like we did in the Twin Cities. We lacked patience for the amount of time it took to achieve an ROI on a start up. We spent over 10 years and millions of dollars before we had a significant presence in that market. Conversely, our success with acquisitions has greatly improved our ROI. What took us 10 years to achieve in a start-up we can achieve in about three years.
- Start small. We started with a small acquisition in Detroit Lakes, Minnesota, to give our team an opportunity to “practice” integrating new markets, systems and people. This allowed us to critique our competencies and identify our weaknesses on a manageable scale without tanking the company. Without that first successful acquisition, we would not have been able to accomplish our ninth and most recent acquisition, adding over $10 million in revenue and 80 employees.
- Don’t underestimate organic growth opportunities. Although we’ve done many acquisitions, over half of our growth has been organic. Organic growth is about adding more products and services to existing clients, increasing market share in our current geography, or both. A recent successful example of our organic growth was developing and introducing managed services. We chose this recurring revenue model because of its predictability and resiliency. We have effectively used this strategy for expanding both our share of customer and market share.
- Expand where the profits are. Whether it’s a hospital, grocery store or a technology company, every business has certain products and services that are more profitable than others. Logic would suggest you expand the most profitable parts of your business that support a growth opportunity. This is exactly where you should put your efforts. At the same time, if it doesn’t fit your strategy and you’re not making money, get rid of it. We recently divested our office furniture and cabling divisions because they didn’t present a growth opportunity.
- Don’t shrink. The first rule of growth is don’t shrink. By that I mean, don’t lose a customer. For every customer you lose, you make growth more challenging. Plus, we all know that it’s harder to gain a new customer than keep one. Customer retention is a key element of growth.
Growth needs to be intentional and strategic. If profits are your primary motivator, then you’re probably better off focusing on your current customer base and controlling costs. As I shared earlier, growth requires front end investments that often won’t yield a return for 12 months or longer. I have had to make commitments to support investments knowing these would negatively affect our short term profits, but long term will contribute to our sustained success. By intentionally planning and executing a growth strategy, I’m confident Marco will achieve our $100-million goal in 2012.
