Insights
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Seven areas to consider when growing your business
Over 70 years of advising businesses worldwide confirm a common truth. In the transition from today’s business to the next significant milestone, success is too often lost through fundamental strategic oversights. And while the business goals might include organic growth, gearing up for a sale, a merger or acquisition, or a change in model to embed sustainable solutions, there’s a recurring commonality in the mistakes companies make in the hunger and urgency towards positive change.
These oversights are common across both sectors and countries. They typically occur when the senior leadership lose objectivity – or determine incorrectly that they have the knowledge and expertise to navigate uncharted waters. This leads to increased business risk, and compromises the effective achievement of the goals they’ve set.
So, what are the most common oversights? Here are seven key insights to support you to take your business to the next level.
1. Defining the wrong strategy for the goal. Having set clear and tangible outcomes, many businesses insist on following a strategy built on their personal experiences to date; oblivious of the efficacy of wider (and often proven) market strategies. This is common for funding, sustainability, growth and wider strategies. If your ultimate goal is a merger, acquisition or IPO this can lead to you – and your business – to surrender equity or risk capital and reputation unnecessarily.
2. Does your board or leadership team have the right skills for ‘the climb’ ahead? It’s likely that many of your team won’t have the practical experience of taking a company to the heights you now want it to grow to. Or what navigating a business through the special needs change management entails. Some board members may have been perfect for historic phases of your growth, but can lack the specific skills to become C-suite and work alongside a more demanding set of future partners and shareholders. The value – and success – of a sale or merger will often live or die based on new partners’ belief in your management team being right for the next phase of the corporate journey they’re investing in.
3. Communication. Only too often the communication of a new business direction is treated as an afterthought rather than a driver itself of holistic change in its own right. This often adds risk to strategic success and can easily result in incorrect assumptions, employee demotivation and a decline in the very culture businesses have invested heavily in building over time. Effective, consistent two-way communication needs to be a priority from the outset.
4. Leveraging your business’s value creators. Many companies lose out by failing to identify (and communicate) the value creators they deliver as a business. Defining these objectively will help determine your market value to advisers, buyers and future partners. And can include balance sheet strength, customer base depth, risk profile and the quality of company information and processes.
5. Optimising strategic timings. Another common strategic error is to time a sale, merger or phase of strategic growth for when the company is ready rather than synchronise it with market context. Accurately auditing market appetite, sentiment and competitive valuations allows you to move at the optimum time – and valuation. A task often best delegated to companies such as our firm, who have proven expertise in delivering tailored approaches for businesses.
6. ‘Best guessing’ international expansion. When growth necessitates expansion into new markets, companies often assume that the model they’ve successfully built their domestic business on will perform equally well overseas. A common fallacy, operating through an agent, distributor or even from your existing office may be the optimum scenario. In defining the best distribution model, understanding established competitors as well as the prevailing business, legal and tax environments is essential. As is employing advisers with practical experience of the countries you want to succeed in.
7.Independent analysis and scrutiny of your goals and strategy. In medium-sized companies, the need (and resource required) to deliver on existing short-term goals often compromises the development and direction of a long-term strategy. A lack of objectivity from board members who have ‘always done things this way’ when change is required is also a common cause for the adoption of strategies unsuited to future growth. In strategy, objectivity can be as valuable a commodity as experience.
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