Over my 35 year career, I learned there is one challenge firm owners face that is most prevalent, that negatively impacts their wealth and the stability of the firm. The challenge is created by being too caught up in the day to day business. Thus, there is little thought given to exit strategies– until it is too late. Here are 3 true stories that may spark you to take action while there is time.
Story 1. A group of investors, hoping to cash in on environmental disasters, purchased a regional environmental testing laboratory. Management was left in place and the investors planned to skim off the profits for a few years, then flip the company to a new owner. The trouble is, while environmental disasters that occurred did provide revenue, the recession took away the gains. Sagging revenue and profits became an irritant and the investors hired one “white knight” after the other to try and boost sales. Years later, and several failed efforts to be acquired, the group made one last effort and retained FosterGrowth.biz.
Story 2. Doug Reed, P.E. of FosterGrowth spent decades in the engineering/architecture business, some of which was working with owners without clear exit strategies. Without a consensus, one employer floundered for over a decade. The owners endured high turnover, sales staff with pitiful sales, and failed “bolt-on” revenue gambles to purchase engineering firms that became a time and money pit. Stock value grew at a paltry 3% per year for more than a decade.
Story 3. Doug also experienced the brighter approach, a firm that recognized that a low risk way to achieve growth was to hire staff whose goals aligned with the owner’s goals, then provide them with expert training and coaching, and freeing them to attain their highest potential. Acquisitions and new offices were only opened when a staff member volunteered to write a business plan and to move their family to live in the new location. A decade later, every new office and acquisition is thriving and the company is ten times the size of when they began expanding.
Epilogue: For the environmental laboratory, FosterGrowth’s first step was an evaluation of the staff’s revenue generating ability. The action plan involved a team effort, involving general managers, finance staff, client managers and sales staff, to align them with the company goals by showing them how they could also further their career in sync with improving the company’s financials.
Weekly workshops and coaching sessions helped staff to gain confidence in their ability to forge strong customer relationships and to walk away from unprofitable clients who did not appreciate the firm’s values. Strategic goals, written pricing strategies, and advertising and marketing campaigns were established.
Sales staff learned how to qualify prospects over the phone so they no longer spent time driving the region in search of an audience. Then, they spent more time on quality leads resulting in a higher hit-rate.
After two years, revenue was up substantially and profit was at an all-time high. With a clear and written plan for growth, improved financials and empowered staff, the company attracted a buyer and the investors finally exited with cash-in-hand. And to this day, the new owners enjoy an engaged and enthusiastic staff.
Let it Live!: These personal and professional stories of mine describe how life is or can be when an exit strategy is identified that empowers staff through education, coaching, and self-direction. Whether the owners are outside investors or internal employees, staff that embraces a direction that is clear and who are taught and coached to overcome barriers, will be successful. And, owners will realize a good gain on their investment.