Below is an excerpt on how to set the stage for company growth, from Andrew J Sherman’s book “Essays on Governance.” Andrew J. Sherman is a partner at Jones Day in the Washington, DC office ([email protected]) and focuses his practice on issues affecting business growth for companies at all stages, including developing strategies to leverage intellectual property and technology assets, as well as international corporate transactional and franchising matters. He has served as a legal and strategic advisor to dozens of Fortune 500 companies and hundreds of emerging growth companies. For more of his work, visit his page here.
Setting the Stage for Growth
When laying out a game plan to grow a company, first, it is critical to establish an understanding of the foundation that must be put in place in order to allow a company to begin its growth path. Before you can prepare a company for growth, you need to analyze its strengths and weaknesses. Looking for what’s working well serves to concentrate your efforts where you have the best chance of success. Looking for strengths enables you to also spot the weaknesses.
Let’s start with four internal areas:
- Costs and revenue. Examine every part of your business. Is revenue rising or falling? How about profit margin? Which divisions or departments stand out? Why? Do you enjoy a strong, positive cash flow?
- Personnel. Do certain employees show exceptional skills or produce outstanding results? Where in the company is the strongest management, organization, and planning? Do you have the talent on staff to handle anticipated growth or would you have to hire new personnel?
- Operations. Are the areas that seem to be trouble-free functioning with little supervision and always delivering results? How do the managers in these areas achieve such consistent results?
- Philosophy or mission. Do you have a written statement describing your company’s philosophy or mission? If so, does it define the essence of your business exactly, so that you know which kinds of activities fit your company’s goals and which don’t? Is the company diluting resources by engaging in any activities outside its mission? Have you developed a set of company core values, and have your employees embraced those values?
Now let’s look at three external areas:
- Market. Is the company’s market share—its percentage of estimated total business available—increasing or decreasing? Is the market strategy based on careful research or on instinct and hunches? Is the customer or client base shrinking?
- Competition. Do you know exactly who the company’s competitors are, and where they pose the largest threat(s)? Which part of your business is most vulnerable to competition, and which is least vulnerable? Are some parts of the market becoming crowded with competitors?
- Economic climate. Are changes in economic conditions—interest rates, inflation, housing developments, or industry earnings—likely to affect the company? Do you or your colleagues make efforts to stay on top of things so that the company can anticipate changes in the marketplace, or are you often surprised by developments that affect your company?
The answers to these questions will provide your board of advisors or directors with the guidance they need to determine where the company is strong and where it could improve, as well as which type of growth strategy would be best to articulate to the organization’s executives. Consider the questions carefully and respond as if the company’s future growth depends on answering them thoughtfully—because it does. These steps will help you and your company to define growth objectives, allowing you to keep those objectives in proper perspective and monitor the success of each strategy.
Stayed tuned for more great business tips from Andrew J. Sherman in our excerpt series. And join us on Twitter for a #PEXCardChat with Andrew Sherman, Thursday, August 7th at 2:00 pm EST.