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Two Bottlenecks To Business Growth: Owners And Management http://ift.tt/2sw2gEw I begin this post with a short story about an owner who found himself in a typical situation. (I’ve changed his name and circumstances to protect his privacy.) The actions he took to extract himself from this situation and achieve his exit goals are a blueprint for building business value. As soon as Oliver Dielsen walked into my office, I sensed his frustration. He had scheduled a meeting to talk with me about exiting the precision metal fabrication company he had started 25 years ago when he was 33. Dielsen Steel had grown from 2 employees to 25 and increased its revenues to $4 million. Oliver brought home $250,000 in pre-tax income as well. However, over the past four years, growth, revenue and cash flow had stagnated. Oliver and Pedro, his right-hand man and principal manager, had tried everything to increase revenues and the customer base. Oliver wanted to exit in seven years and maintain his $250,000/year lifestyle, but his advisors showed him that Dielsen Steel had to triple in value to yield enough cash to satisfy Oliver’s financial security goal. Financial security wasn’t Oliver’s only exit goal. Equally important was his ambition to create a “world-class company” (an exacting standard in the best of conditions). Out of the thousands of companies in Dielsen Steel’s market niche, Oliver considered four of them to be world-class. He wanted Dielsen Steel to become the fifth before he sold it. Like many owners, Oliver was a smart, hard-charging entrepreneur. He and Pedro had been working together for years at top speed, but Dielsen Steel was coasting while Oliver worked as hard as ever. Now, Oliver realized that he had seven years to close a huge value gap but didn’t have a clue how to do it. Seven years after our meeting, Oliver sold Dielsen Steel to a world-class company for $39 million ($36 million for the company and $3 million for the building and property). How did he do it? As we’ll see, Oliver’s success was the result of good fortune and a commitment to change. Oliver was a smart owner. He knew his craft and market well, and his customers were loyal to him. But he had tried every strategy he knew to grow revenue and earnings, and nothing worked. “What should I do?” he’d ask me. “What can I do?” Business via Forbes - Entrepreneurs http://ift.tt/dTEDZf June 22, 2017 at 05:35PM
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