The Mistake Companies Make as They Look to Grow

Published: December 5, 2016

There’s an adage in business that if you’re not growing, you’re dying. I don’t think that’s right. I don’t even think it makes sense.

For many companies, their success is based on having struck the right balance. They have the right amount of employees that allows them to be efficient without becoming overwhelmed.

They have the right amount of customers that allows them to win loyalty by serving them effectively. They’ve learned to tackle the right markets and can establish themselves as experts.

I once had a job writing copy for audio-video retailer Tweeter. Remember Tweeter?

Born out of the Boston area, Tweeter had a stellar reputation for product expertise and customer service. It reached a success sweet spot expanding throughout New England and focusing on internal training to accentuate those two critical pieces of its success — product expertise and customer service. Then it got greedy.

For a variety of reasons, including trying to please investors, Tweeter expanded to most regions of the U.S. Unfortunately, the commitment to brand that made it so successful in New England didn’t join the retailer on its cross-country trip.

There were other factors that led to the bottom falling out and the company ultimately going under, but I feel comfortable summing it up: Tweeter didn’t appreciate what it was.

Find Identity, Focus on Strengths

After a glut of mergers and acquisitions throughout 2016, many integration firms are probably contemplating what they are.

The big seems to be getting bigger with AVI-SPL being infused with capital after being acquired by powerful private equity investors and $215 million Diversified acquiring $180 million Technical Innovation.

Though it might be hard to believe, CI‘s 2016 integrator of the year Diversified says its acquisition wasn’t about getting bigger and that it actually is about understanding what it is, according to chairman and CEO Fred D’Alessandro.

“The strategy is in response to our clients, who are looking for a global partner,” he says. We have to consider the sources, of course.

Folks from large firms are not facing the same forks in the road that smaller firms face. Casaplex, a 27-employee and $6 million integration firm, seems to have struck the right balance, but CEO Derek Goldstein acknowledges that being small has its disadvantages.

With less cash flow it’s difficult to pursue big ideas and big projects, and it’s more challenging for smaller firms to get the attention of manufacturers, he says.

Goldstein describes a catch-22 for small integrators looking to grow. “A larger organization doing several contracts consistently, they’re going to have access to a lot more capital for growth than a small organization.”

In this industry small companies can continue to be successful, predicts NSCA executive director Chuck Wilson.

To survive, however, “these companies will need to be great at one or two things and stay focused on them.”

I encourage small- and medium-sized firms to focus on appreciating what they are. This is not to say that firms shouldn’t evolve to become something else and something bigger.

What I am saying is don’t create a growth strategy around an old saying that might not apply to you.

Posted in: Insights

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