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MONEY

Growth With No Capital? No Problem

Small businesses can overcome limited resources by following three basic steps.

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One of our clients, a small start-up software company, has found itself in a peculiar situation, having recently been acquired by a large, multibillion-dollar corporation. They thought their troubles for securing investment (both resources and dollars) were over ... but they were wrong.

The holding company created aggressive growth targets for our client, but has not come forth with additional resources to support that growth. Despite this lack of a true internal champion, there are a number of things our smaller client can do to accelerate growth. Here are three proven approaches.

1. Create Focus

Focus the resources and investment dollars you do have on the highest-priority and most likely avenue to capture sales. We realized that our client was trying to be everything to everyone. And without additional investment coming in, there needed to be a strategic focus.

By working with the sales team to perform customer, vertical, and competitor assessments, we gained an understanding of where our client was winning and why. Armed with this information, we were able to create tailored strategies to align with the highest-priority verticals, geographies, and customer site types.

2. Create Quick Wins

The easiest way to build credibility and put an end to the naysayers is to demonstrate success. Now that our client had a focus, we were able to work together to become more strategic in building customer relationships.We only spent time pursuing our most attractive sales channels. We also became more selective in taking on new work. Complex, non-strategic deals were not going to generate the near-term revenue streams our client needed to grow (and to meet financial targets set at the holding company level).

3. Maximize Resources

In order to ensure the small team was working to its maximum ability, we identified a number of "strategic levers" to pull when investment was scarce:

  • Price: Better align price with customer purchasing ability. We evaluated a number of scenarios (outright purchase, leasing model, SaaS) that better aligned with customer budgets and purchasing ability.
  • Product: Better align solutions with customer needs. We identified additional target markets that would desire a simplified and/or bundled solution offering to meet their needs. "Dumbing down" the solution made it easier for the customer to purchase and the sales team to sell.
  • Organizational structure and operating model: Better align resources with attractive opportunities and sales channels. By exploring a number of different sales channels (partners, direct-to-end-users, etc.), we were able to determine which were the most profitable, and therefore, which ones to align with.

While limited resources can be frustrating, it shouldn't prevent a company from achieving the growth targets it desires. By staying focused, using the resources you do have, and pulling the right strategic levers, you can overcome the shortage of investment dollars.

Please send us your thoughts at karlandbill@avondalestrategicpartners.com

Associate Lindsay Comstock contributed to this article.

IMAGE: flickr/stuartpilbrow
Last updated: Dec 31, 2012

KARL STARK AND BILL STEWART are managing directors and co-founders of Avondale, a strategic advisory firm focused on growing companies. Avondale, based in Chicago, is a high-growth company itself and is a two-time Inc. 500 honoree.
@karlstark




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