To survive, grow, and remain profitable, your company must develop effective Growth Models (strategies and action plans) at specific points in time incorporating each of the issues listed below,
- resource acquisition
- resource allocation
- work flow
- human relations
- technical mastery
- market strategy, and the Internet
- Social Media
- public relations
- Financial / Cash-flow Management
Regardless of your company’s stage of development (infancy or maturity) or its market niche you must incorporate the above issues in to your operating plans and culture. And remember that the performance of the company is a multiplicative result of the above functions not an arithmetic sum!
I write about two of the factors I consider central to successful growth and I used to build JPIndustries (JPI) in to A Fortune 500 Corporation at a time of economic recession, high interest rates and an exodus of manufacturing operations from the mid west: synergy and homogeneity.
You are probably saying to yourselves that synergy was a concept of the 1960’s which was not notably and successfully employed by the conglomerates which coined it, and that homogeneity reminds you more of processing milk than of conducting business.
But these words, synergy and homogeneity are Creek. And I of Greek origin. I believe that understood and applied correctly, the concepts expressed by these words have clear practical meanings and direct application to business growth.
Synergy comes from the Greek synergia, meaning “working together”. From the same root we have synergism, which means cooperative action of separate agencies such that the total effect is greater than the sum of the effects taken independently. This is the basis for the famous 2+2=5 definition of synergy promoted as the strategy of the conglomerates of the 1960’s.
I would propose to you that in the 1960’s the term synergy was poorly understood and in many cases poorly applied. That is the fault not of the concept, but of its utilization. And I would further propose that, correctly understood and applied the concept of synergy works.
Buying a company is a demanding, complex process requiring a wide range of skills and abilities. If you understand this process thoroughly, then you are far more likely to make the right purchase decision. Whether you are buying the corner ice cream parlor or a $100-million business, following certain steps will enhance your chances of successfully operating a profitable venture once the deal is closed.
Psarouthakis founded and built J.P. Industries into a Fortune 500 company by acquiring underperforming auto parts and plumbing products manufacturers, selling the company to a British conglomerate, T&N Plc. Next, he founded JPE Inc., which manufactured and distributed auto and truck parts for OEM and the aftermarket. Although Psarouthakis’s experience draws heavily on the manufacture and distribution of durable goods sectors, many aspects of the process are the same, regardless of the industry. Interviews conducted by coauthor Lorraine (Hendrickson) Uhlaner with entrepreneurs involved in acquisitions for the retailing, service, and construction sectors and other published information about the acquisitions process also influence the content of this book.
The Buying Infrastructure
It is estimated by various sources that tens of thousands of businesses change ownership every year. For an updated estimate of this high-volume activity, contact the International Business Brokers Association. To support the very high number of transactions, a rather broad and complex infrastructure exists for finding and promoting deals. Few businesses up for sale are advertised in published sources. Relying upon this infrastructure is likely to provide you with a larger number of high-quality leads to choose from and with less effort than trying to find them on your own. To be taken seriously within the business-investment community, you typically must demonstrate an understanding of the deal-making process, even if you hire consultants to assist you in the search. Continue reading