|
...
Business Growth 2
Think Big to
Grow Big
Part 4: Strategies for
Companies in
Decline
By Paul R.
Lloyd
In this series,
we are looking at the way real growth results from a strategy
executed well. This article concludes the series with a look at the
strategies for the owners of a company in the sunset of its life
cycle.
Declining
Company Model
If your company is
shrinking and you see no prospect of a turnaround anytime soon, here
are some strategy options:
1. Confirm
the Diagnosis with a Second Opinion.
Bring in an expert to evaluate your company at the strategic level.
As the owner, you may be too close to your business to see its full
potential. If the expert confirms your diagnosis, it’s time to
either move
on or change direction.
2. Change
Direction. This is easier for a service company without a large
investment in plant and equipment or a warehouse full of unsold
goods. It's difficult to enter new markets if your equipment is
outmoded or inappropriate to the new model. Inventory has no value
other than as scrap if you have no buyers. Whatever your declining
situation, consider what other products or services you could be
offering to restore your company to a growth mode. Change can come
in the form of a new offering, leaner operations, and more effective
marketing, depending on the reasons for your decline. Some companies
have revitalized themselves by significantly reducing the cost of
operations and re-investing the savings into sales and marketing. If
your team has concluded that the company cannot be salvaged through
turn-around strategies, then move into the Harvest and Divest mode.
3. Harvest &
Divest.
Do not invest precious resources if business failure is inevitable. Instead,
liquidate inventory at the highest price
you can still command. Sell off any business units, plant and
equipment that still command a good price.
Sell the remaining company or liquidate its assets.
4. Move On.
Use the funds you recoup from Harvest and Divest to fund your next
venture. If you are a high risk taker, you may want to invest in a
new venture with upside potential. Otherwise, consider purchasing a
company that has completed the risky rise to maturity and take
charge of keeping that company highly profitable through effective,
professional management.
Join Paul
Lloyd for a business casual conversation about your company's future at a coffee shop near
you. Call 630-393-6516 or send an
email.
Where do you
want to go next?
Read Part 1 of this series
Read Part 2 of this series
Read Part 3
of this series
Visit
Archive
Return to Top of
Page
|
