Jay Sachetti joined Jeff O’Brien, partner at Husch Blackwell and Dyanne Ross-Hanson, president of Exit Planning Strategies talked about the market for mergers and acquisitions, exit planning opportunities for companies that don’t end up for sale and how companies can maximize their eventual sale price during an early October panel at the first Upsize on Tap event at Summit Brewing Co. in St. Paul.
When the state Legislature passed a law requiring employers to provide paid leave and safe time for employees, Justin Bieganek started hearing differing details from friends, colleagues and peers.
Jeff Menne,
Associated
Wealth Management:
763.694.2835
www.associatedbank.com
SOMETIMES IT SNEAKS up on you, other times you know it’s the truth but don’t want to face it. The business you created and grew is producing a product or providing a service that just doesn’t make sense anymore.
Think of it as horse-and-buggy syndrome. Your horse andbuggy won’t compete in an automobile world.
So what’s the answer? The solutions are varied depending on your business, your competition, and your willingness to take sweeping action quickly.
It is time to accept reality and clearly contemplate what itis you’re good at and where you excel. Then it’s time to develop a plan ofattack, working in partnership with trusted advisers.
Begin by focusing on your customers. What value did your product bring to them when your sales were strong, and what value are they looking for now from you and your competitors? ‘Faster’ and ‘cheaper’ are features of new products. But to understand your long-term options, you have to think about the benefits your product or service provides.
Ask yourself in what way has your company been great atproviding these benefits. Have you been great designers or inventors? Do youexcel at integrating your product or service with those of other companies? Orare you the best at developing and maintaining relationships with yourcustomers?
By knowing your company’s core strengths and understandingthe benefits your customers seek, you can begin to develop a strategy forchange.
One possible solution is to overhaul your business model.Sometimes a product or service simply can’t be enhanced to meet currentcustomer demands. Focus ondelivering a more successful product or service, perhaps one that is beingoffered by a competitor. Be a business that implements solutions, and providesa conduit for what customers really need.
Committing to significant capital investment may berequired. Sometimes businesses are undercapitalized and, as a result, thosebusinesses can’t take advantage of opportunities that might cost a little morenow, but will pay off later.
Cash flow, asthey say, is king. Your lender can discuss your options with you, even if yourbusiness already has considerable debt.
Another option, depending on your business, is to look for a strategic partner. An affiliation or merger may provide for more rapid growth and reduce costs. There are many companies that can help guide potential partners together.
Whatever form your business takes, the central focus must be on adding value to your product or service to retain and attract customers.Consider what small retailers competing against large national box-stores do.They may not be able to compete on price, so they offer other intangibles, such as friendly service and expert advice. In so doing, they create a niche and are able to thrive and grow.
If you are not currently faced with an obsolete product or service, it does not mean that you are immune to future problems.
Keeping abreast of current market trends is vital. It is alltoo easy to sit back and enjoy steady profits while the world changes aroundyou.
Look at America Online, or AOL, as an example of a companybeing passed by in the rush of change. AOL was an early leader in Internetservice, providing access, content and applications such as e-mail.
By trying to maintain more of a closed system for theirsubscribers, they failed to see how the Internet was changing to an openarchitecture environment. Different vendors and Web sites offered better pieces of the experience -search, music download, news – that users could assemble for themselves. Theycould have focused on a few of these value-added areas rather than trying to bea complete Internet experience.
In a similar way, many general circulation newspapercompanies hold firm to the past, when print was king and advertisers andreadership were growing each year. Yet in more recent times, consumers havechanged their news-gathering habits, and are heading online. When newspapercompanies are unable to meet the demand in an appropriate platform, they loserevenue and stability.
Businesses of today can learn valuable lessons from these kinds of experiences.
One of the best ways for companies to prevent issues upfront is to diversify the products and services they offer to customers.Businesses that only offer one product or service might find themselves financially challenged during slowdown in that market.
For example,small manufacturers that only serve the automotive market may find their shopsidle when cars are not selling. Diversifying your customer base and the markets you serve will providestability over time.
It goes without saying, change is the unchanging constant in today’s competitive business environment. Work with your financial adviser to develop a business plan that will help you successfully navigate significant changes in your business strategy.
