Surviving to Thriving
Business owners and operators must be able to identify their company's developmental level-survive, stabilize, grow or maximize-and adjust their strategy accordingly.
For business owners and operators, participating in a 20 group can be a valuable tool in revealing a company’s strengths and weaknesses. Spader Business Management facilitates such groups in a number of industries. If you’re not familiar with the concept, a 20 Group is a group of non-competing businesses, all in the same industry, in which each member submits monthly financial data. We meet three times a year.
In every 20 Group, we often have members who are in different worlds—some companies are realizing increases while others are experiencing declines. To better understand the growth and decline of a business, we have identified four developmental levels, or “gears,” between which most businesses shift, depending on market conditions and management effectiveness: Survive, Stabilize, Grow and Maximize.
Let’s take a closer look at each of the four “gears” of business development.
In this gear, a business is often struggling to pay its bills and effectively manage and lead its people. The trend line is not good, and if things don’t change soon, the company will be out of business. The focus for these businesses should be on getting stability and a positive trend line going. There is no breathing room in this gear.
At this level, a business is out of the “survival” mode, but is usually getting varying results, in terms of financial returns, morale and productivity. A business in this gear has some breathing room and should focus on establishing a consistent, solid foundation.
At this level, a business has found repeatable success and has a good foundation, both financially as well as with its people. A business in this mode is looking for opportunities to expand in meaningful ways and becomes more externally focused on opportunities for significant growth, such as more stores, new types of business, etc.
At this level, a business is attempting to leverage its resources and position in the marketplace for maximum return. It should focus on fine tuning, realizing potential and maximizing opportunities. A business in this gear usually has very high net profits and great cash flow; and if it is well managed, it will also have good employee morale and productivity.
Immediate Take Away
All business owners and operators should identify their company’s current gear and significantly adjust their strategy accordingly. Too many times, a leader (or leadership team) will have a personal bias or preference for what has worked in the past and will focus on the wrong things for their company’s actual development level. This can waste resources, lower morale and cause the business to trend the wrong way.
Those in the “survive” or “stabilize” gear should be more internally focused. Find and create financial stability, the right culture, processes, people, etc., to get the foundation built. For businesses in the “grow” or “maximize” gear, the focus should shift more to external opportunities and issues—adding more stores, new types of businesses, etc. The goal is to leverage the foundation that has been built.
What we have learned from the data shared in 20 Groups is that sales volume does not matter when it comes to a business’ gear. Companies of all sizes and in every market are in each of the four gears. Identify your current gear and the gear you want to attain, and then create a plan to get or stay there.
Jim McCann has served as a trainer and facilitator for Spader Business Management since 2006. With more than 20 years in department and specialty store retailing, he is experienced in assortment planning, visual merchandising, inventory management, store design, site selection, buying and advertising. After successfully starting a chain of retail specialty stores in Minneapolis, McCann moved to Sioux Falls, N.D., to serve as vice president/retail for Austad’s Golf, where he was instrumental in growing the division’s sales volume and profitability. McCann launched a private consulting firm devoted to bringing the practical knowledge of buying, merchandising and advertising to the small retailer.