Time To Think About Growth Again

The United States and Florida economies appear to be improving substantially. While there are significant lingering problems (e.g., high unemployment; depressed housing prices), for most of us things have gotten a lot more stable. For many companies, it’s time to think seriously about growth again. Let’s examine a few thoughts about growth that may be helpful to innovative companies as we enter what will hopefully be a prolonged positive economic cycle.

I believe that innovative companies should never stop thinking about and planning for growth. Though conditions became very tough for most companies during the recent recession, and certainly will again at some point, it’s crucial for these companies to keep thinking about growth even when they are not actually growing. Periods of low or no growth are substantial opportunities for strategic growth planning. As an innovative company, you need to be in a position to be first in line once growth opportunities resume.

The key to a successful growth strategy for an innovative company is maintaining flexibility. As we’ve seen over the past few years, it’s very difficult to accurately predict the vast number of factors that will affect your company. You clearly need to plan for a number of positive and negative contingencies that could influence your company’s growth. You need to put your company in a position to both mitigate and minimize problems and to be able to take advantage of opportunities. Strategic growth planning is essential here – you need to minimize making important growth decisions in a reactive mode as much as possible. A flexible growth plan will maximize your company’s value and its chances of success no matter what happens.

There are many different paths for growth, but several may be available to many innovative companies. First, there’s organic growth. This is the steady increase in sales of products and services (and hopefully profitability) as a company expands its business operations through normal channels. Growth through acquisition is also a key component of many companies’ growth strategies. Expansion financing is often required for both of these growth models. If the company’s shareholders seek an exit event, a successful growth strategy may culminate in such things as the sale of part or all of the company or an initial public offering of the company’s securities. There is no single preferred growth strategy – what’s right for a particular company will depend on numerous internal and external circumstances. Many companies also combine these strategies or use different strategies at different times. The key to success is to maintain flexibility in your growth strategy and avoid getting locked in to any specific strategy.

The good thing is that many components of the various growth strategies are uniform. For example, there’s no substitute for improving and strengthening your company’s operating results. This is a critical component of any strategy. No matter what occurs and what route a company takes, the numbers will be an important factor in building and increasing the company’s value and increasing its available options. It’s also crucial to stay on top on the status of the various components of your company, its industry and its prospects so that you can anticipate trends and maximize their value. There may be a great short-term window of opportunity for your company to do an initial public offering, for example, but you could be left behind if you haven’t anticipated and planned for this opportunity and if you haven’t stayed flexible enough to proceed with it.

From my standpoint, it’s very nice to be able to legitimately discuss growth opportunities and possible exit events after a prolonged absence! Hopefully your company will have the opportunity to take advantage of these opportunities. To maximize your company’s chances of success, stay informed and stay flexible.

For more information, click here to contact Bob White.