Membership in the growth company club has its privileges.
You may have been inducted for a number of reasons. Perhaps you invented a breakthrough product while your competitors were asleep at the wheel. Or you are really adept at expanding a loyal client base. Whatever the reason, ambulance it feels good to call the shots and to have completed the startup phase of your business.
At this stage, it is only natural to wonder what you could ever gain from reading yet another book on marketing and planning. You have already learned all the hard lessons, right?
Maybe not. You may be setting yourself up for a painful bailout.
Today’s current economic turmoil can consume massive energy reserves, no matter how smart, successful, or experienced you are. Stock markets can rise and fall by hundreds of points within just one day. In 2008, “established” companies such as Washington Mutual and Bear Stearns virtually evaporated overnight. General Motors announced over 5,700 layoffs in the United States and a $2.5B quarterly loss. The future of the U.S. auto industry is in question. Their executive teams chose to ignore many warning signs.
These issues do not just affect mature industries and high rolling financial
firms. It can happen when you are celebrating market dominance and industry
accolades. When you have strong (if not dominant) market share, the best
people, and the highest potential, you feel unstoppable. You focus on what is
working and keep doing it. You struggle to benchmark yourself against
your competitors because you have surpassed them in too many areas. Yet,
if you ignore the subtle indicators that your company’s continued success is
threatened, you may never muster the energy, resources, or desire to recover
from them. Here are 12 of the most common clues that I have seen:
- Your ideal client’s profile changes significantly.
You will notice when your current clients begin behaving differently, or when
your current measures of client retention, client satisfaction, and client experiences
no longer provide meaningful feedback. Some companies, for example, conduct
customer satisfaction surveys by polling their salespeople. In these times
of fickle clients, basing your strategic decisions on second hand information
isn’t good enough.
- Your whole product changes.
The term whole product is used to enumerate all of the deliverables that a
customer needs to achieve their objectives. In this scenario, you have
expanded your relationships with partners or other suppliers, and now account
for a broader slice of the client’s budget. For example, you may have
recently acquired a training firm to help you deliver your offerings. Changes
in your whole product can significantly affect your company culture, the economic
buyers you are calling on, the ages of people who want to buy from you, your
gross profit margin, and your sales cycle.
- Clients are no longer willing to pay extra for your offerings.
This sometimes shows up as declining sales morale and longer sales cycles.
Now is the time to revisit what makes your product or service unique. If great
client service and strong client relationships are your only differentiators,
it is likely your product has become a commodity, or your positioning is stale.
With the pending threat of company decline, you must modify your growth strategy
now. Don’t wait.
- Clients are choosing an alternative solution to satisfy the
You are watching your client retention numbers decline, or Sales, General,
and Administrative (SG&A) numbers skyrocket due to a higher cost of sales.
If you are losing some of your best clients, quickly determine why the shift
is happening. Consider hiring an independent researcher to interview or survey
lost clients. Is the alternative solution easier to use, take less time, or
cost less? Does it appeal to their sense of greed, safety, or ethics?
Gather good intelligence.
- New, innovative companies are entering your market.
Case in point: the automobile manufacturers once boasted industry dominance
in the United States. Within the past few months, the “big 3” – General Motors,
Ford, and Chrysler– have become “the handicapped 3,” while Toyota and Honda
have led the charge in innovative hybrid fuel cars. The Big 3 could have adapted,
but were wiped out by Toyota’s innovation and nimbleness. Now General
Motors has reverted to questionable marketing tactics, such as trying to persuade
auto buyers to take their Chevrolet Malibu Hybrid seriously—even though it boasts
a meager improvement of two miles per gallon in city fuel consumption compared
to the standard Malibu! (I won't even broach the bailout tactics in this posting)
- You are resisting a new industry shift or technology, even
when the market is demanding it.
How much do you find yourself defending your position with your clients?
Three years ago, I experienced the perfect illustration of a company’s unwillingness
to accept an industry shift when I visited a Mercedes dealer. At the time, I
was in the market for a new vehicle. I asked the manager, "What is Mercedes-Benz's
strategy for building alternative fuel vehicles?" It was as if I had uttered
the unspeakable. The manager firmly replied that they were focusing on fossil
fuel technology for many years to come. I quickly chose to buy another brand.
Is your company wearing the same blinders?
- Your key people are married to the way they have always
been doing it.
You cannot seem to persuade them to think otherwise. If persistent
limiting beliefs define your culture, then selling your business may be a better
option than transitioning to a new business model. These limiting
beliefs are a surefire way to enter the slippery, painful slope of company decline.
- The owner has an incomplete or nonexistent succession strategy.
This becomes even more of a threat when the founder faces a health concern,
a major life change, a strong desire to pursue a new venture, or apathy.
It may be time to measure the percentage of completion of that succession plan—and
hold the founder’s feet to the fire to stay on track. An outside advisor
can help with this process and is downright essential.
- You believe that growth planning and marketing are reserved
for large, mature companies.
How many times do you tell yourself “planning and visioning are important,
but I am just too busy to do them?” Maybe you have created a culture of innovation,
and planning gets second billing. If this continues to happen, your market dominance
is in jeopardy. You are unconsciously passing on this limiting mindset to your
team and to your clients. Why would they show any emotional stake in your
company’s success? You may just be giving them one more good reason to look
elsewhere for a job.
- You are struggling to shift from “practitioner” mode to “leader/visionary”
The habits and skills that helped you attain your first few million dollars
typically inhibit your ability to generate the next ten million. Think about
the skilled experts you have met who excel at their trade, and later decide
to star their own business in that field. That could be you…
- You constantly pursue interesting distractions (a.k.a., new ideas,
personal pet projects, or outside ventures).
When you keep announcing new projects and strategies, teams lose direction.
They do not see how their jobs tie to your company’s success. They become
emotionally disengaged. The information overload can also trigger feelings of
overwhelm. Overwhelm translates into paralysis. And paralysis impacts
top line growth. By asking some key questions, such as “What is our core
business? Where do we invest? What growth strategy generates the highest return?
What is the risk involved with changing direction?,” you can get back on track.
- You become bored with your current business model.
Yes, it happens. You have achieved everything you ever dreamed of.
Things are running smoothly. The bad news is that innovation has slowed considerably.
Your business setting feels more like a family reunion than a high-energy, productive
almost 2009…which clue will you address now?