Being part of the Kreischer Miller team offers the invaluable opportunity to collaborate closely with many outstanding closely held businesses. Their cultures, growth strategies, and challenges often mirror our own, reinforcing our conviction that private companies play an integral role in both our economy and our communities. However, we all operate within fiercely competitive industries, where the influence of external capital continually reshapes our landscape.
To continue to thrive in this changing landscape, leaders of private companies would be wise to learn from the best practices of businesses owned by outside investors. Below are five key strategies to consider.
Strategy #1: Embrace Innovation
With investors injecting fresh perspectives from adjacent industries, innovation becomes paramount to avoid disruption. There are many ways to innovate and some of them are fairly simple. For example, challenge your teams to think about how Google would solve one of your business problems. Alternatively, consider placing artificial constraints on some aspect of your business. For example, how would you meet a specific customer’s needs if you had half of your current workforce? Answering a question like this might help identify opportunities for process and/or technological innovations.
Strategy #2: Adopt an Investor’s Perspective
While current owners may have no interest in selling the business, understanding how buyers determine value almost always reveals opportunities to increase cash flows. Capitalizing on these opportunities and increasing cash flows provides additional resources to invest in areas that have the potential to drive tomorrow’s profits.
Strategy #3: Leverage Debt Wisely
Using debt properly allows you to channel more resources into investments that drive efficiencies, generating higher levels of profitability. Those higher levels of profitability allow even more leverage, which can again be used for investments that drive more efficiency and profitability. This flywheel effect can supercharge both growth and profitability, keeping you ahead of your competition.
Strategy #4: Strategically Invest in Your Longer-Term Vision
Outside investors are seeking larger long-term returns through technology-driven efficiencies, and these technologies are not cheap. Remaining competitive may mean sacrificing short-term profits and cash flows in order to invest in the future.
Strategy #5: Don’t Skimp on Talent
As you make strides with new technologies, you have an opportunity to upskill your employees so they can address higher value aspects of your business. Developing upskilling plans today and being transparent about those plans will minimize job security concerns and eliminate resistance to the adoption of new technologies.
Thriving in the face of change necessitates a paradigm shift in our thinking, communication, and investment strategies. By embracing these steps, you can significantly enhance the likelihood that your business will endure for generations to come. If you have any questions or would like to discuss this topic in further detail, please contact Chris Meshginpoosh, Managing Director, at Email.