The Right “Vehicle” for Business Growth

Mae and Bob’s Business Growth Stalls

“I may as well be playing Whack-a-Mole” said Mae. “This stopped being fun a while ago.”

Mae (not her real name) was beside herself with frustration as she described the situation. Over 15 years ago, she and her husband, Bob, (not his real name, either) left their careers in broadcasting to build state-of-the-art videoconference facilities and events for corporations. They had grown their company to $15 million dollars annual revenues with respectable margins, relying on a combination of three anchor corporate clients, a gift for finding the best technical staff, and an incredible work ethic.

But over the last two years, revenue had plateaued and stubbornly refused to budge. Worse, initiatives intended to restart revenue growth were eating up profits, time and energy, and were causing unintended consequences that undermined any temporary gains.

“We underestimated how rapidly equipment prices would fall – when we started, a 4K resolution video camera rented for $3,000/day – now 4k is available in a $200 webcam.”

She shook her head. “We underestimated how quickly the cheap, low-end cloud-based services would improve. Zoom is eating corporate share from the expensive systems we sell, for $12 / person / YEAR in volume.

“Mostly, we failed to anticipate the millenials’ shifting attitudes toward big, in-person meetings – they’re fine with seeing 24 faces arranged in tiles on their laptop screens. Who needs boardrooms with custom videoconference setups?? We got complacent living off a premium market that is now evaporating.

“Bob isn’t coming out and saying it, but I know he is increasingly stressed about our personal financial situation. We’re in that perfect storm of kids entering college, parents aging a little too rapidly, and we’re behind in saving for retirement because everything is tied up in the business.”

She was quiet for a moment, then: “Bob and I have been a great team for as long as I can remember, but I won’t lie – we’ve been pretty abrupt with each other, with our staff, and with everyone in our families. We started our own business for the freedom it gave us to raise our family. Now, though, the price we’re paying – that our family is paying – is too high.”

Mae and Bob’s critical mistake was in believing that one business model, or ‘growth vehicle’ would take them as far as they wanted to grow, for as long as they wanted to grow.

A Vehicle for Business Growth?

You choose a vehicle – sports car, moving van, moped, snowmobile, earthmover – to match the mission ahead. Each vehicle has a different top speed, fuel economy, terrain requirements, hauling capacity and so on. Make the right choice and you not only deliver the goods on-time and on-budget, you enjoy the ride!

Business growth is much the same. Different stages of business growth demand different business models or “vehicles for growth” Growing from startup through $1 million revenues and 5 people requires a completely different set of characteristics (people, strategy, execution, cash) than growing a company from $50 million revenues and 120 people through an IPO (Initial Public Offering).

If you choose the wrong growth vehicle for the mission, or fail to change vehicles when the terrain changes, then you won’t enjoy the ride!

The Wrong Growth Vehicle

How might you tell if you are using the wrong vehicle or business model for your stage of growth?

  • Revenue growth slows despite your best efforts
  • Profits decline
  • Your best clients start shopping around
  • Your best employees update their LinkedIn profiles
  • Your banker takes increasing interest in your financials
  • Everything seems to take more effort but yields a diminishing return
  • Like Mae and Bob, your frustration and personal stress are increasing
  • You no longer enjoy the ride.

The Right Growth Vehicle(s)

Designing your optimal vehicle for growth is not a one-and-done thing. This is the art of Scaling Up a business. You are constantly evolving your strategies, models and execution plans, informed by and interacting with the environment and markets around it. Don’t think of a single vehicle or business model, rather a roadmap of current and future business models, all evolving and ready when you need them.

The good news is that the PROCESS for designing, managing and evolving your growth vehicles is actually quite consistent and straightforward, and is fueled by an owner’s vision, persistence and unending hunger to learn.

There are quite a few good processes out there, but for our small and mid-market business clients, Ann and I trust and recommend the Scaling Up Business Growth Process, created by Verne Harnish and adopted by over 20,000 organizations worldwide. Ralston Consulting Inc is certified by Gazelles International Coaches.

Your Next Steps

– Gary Ralston, © 2017 Ralston Consulting Inc.

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