For businesses on the fast track, it’s a common challenge: How to fuel growth the right way, at the right time.
Often, entrepreneurs who have run the business near and dear to their hearts for years may be too close to the situation to identify real growth strategies. This is where an experienced consultant can help.
In my own situation, I was leading a business that was growing by leaps and bounds – zero to $60 million in sales in just eight years. There were vast amounts of accounts receivable and inventory growth. My banker kept warning me, “You’re growing too fast.”
But, this was the real beginning of the computer explosion, and our projections were $100 million in less than 3 years. We needed to grow or die.
What we needed was equity.
Unlike many other companies that were growing around me, I continued to put profits back into the business. My goal was to keep the business growing and de-leverage the balance sheet.
Yet, despite the savings, I had little personal capital to invest. I considered high net-worth partners, but I had just gotten rid of one and was not open to a new one. The banks would only lend 85 cents on the dollar for receivables and 50 cents on the dollar on inventory. There had to be other options.
Then, a consultant contacted me, and I took the call and listened. This consultant seemed to have a good sense of our challenges, and he promptly asked, “Had I ever thought about going public?” I objected. We were not ready. We were too small. He said simply, “No you’re not.”
He walked me through some of the requirements, and it began to look like an option. I learned there are small boutique investment firms that do small deals.
Still it was difficult to see the potential. But knowing that the industry, customers, competition, and employees drive everything, I had to determine: What was my appetite for growth?
The lesson I learned was to be willing to listen to experts. Business leaders often think they can figure things out on their own and save the money. But they can’t always do it right.
As an entrepreneur, it’s wise to stick to your own core competencies, and let someone who’s not in the weeds provide options for your vision. The fees you pay to a consultant are peanuts compared to the results.
With the insights of the consultant who called me, two years later we went public through a small firm in Detroit, Michigan. We continued to grow so fast, we had two more public offerings over the next three years, raising more capital. After three offerings and three acquisitions, we hit $1 billion in sales in the next eight years.
Looking back, I really don’t know what would have happened if I didn’t take that call early on and listen.
After all, you can’t know everything.
Starting and running a business is personal. It’s a passion, and it can be difficult to seek and accept the input of others. But it pays to be open to the many options out there that you may not have realized. A good consultant who understands the blood, sweat, and tears you’ve put into your business can help you identify those opportunities and establish a pathway for long-term growth. The trick is to take the call.
David B. Pomeroy focuses on business development at Big Change Advisors, a unique M&A consulting firm in Los Angeles that helps businesses achieve big goals while making a big impact on society. To request a free consultation, contact us.
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