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Many companies enter a stage of growth where their business is too big to be small, and too small to be big. They’re running as fast as they can and yet the old way of running the business doesn’t seem to work anymore. Catherine Cates discusses a proven set of actionable recommendations to pinpoint where you are in No Man's Land and how to break through it. This slideshow details: - How to recognize if you are in No Man's Land - The 4 M's: categories where companies get stuck - A tool to help your company move past No Man's Land
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How to Break Through No Man’s LandThe Stage Where Growing Companies Get Stuck
Presented By:Catherine CatesPartner, Newport Board Group
What is the most painful issue that is keeping you up at night?
Take 30 seconds right now to write down that issue. We will come back to that later.
The Entrepreneur’s Dilemma
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54.8%
24.8%
4.3%
16.2%
0.0 0.2 0.4 0.6
Middle Market10-500 Employees
“Main Street” Businesses2--9 Employees
Self - Employed
Large Businesses>500 Employees
2012 Job Distribution in U.S.
Source: YourEconomy.org
Middle Market Firms Account for the Most Jobs
Where Jobs Come From
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No Man’s Land - Where Companies Fail
When your business is too big to be small and too small to be big
1-20 employees
20-100 employees
More than 100 employees
90 % of companies 10 % of Companies Only 1 % of ALL Companies
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The Case of the Freight Forwarding Industry
Pre-tax Profit % by Five Year Average Firm Size
0.0%
0.5%1.0%
1.5%
2.0%
2.5%3.0%
3.5%
4.0%
$<50
0k
$500
k-1m
il
$1mil-$
5mill
$5-1
0mil
$10m
il-20m
il
$20m
il-50m
il
$50m
il-100
mil
$100
mil p
lus
Pre-tax Profit %
No Man’s Land
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“Economy Heroes” - Get Past “No Man’s Land”Re
venu
e
Start-Ups Break Outs
“Small Giants”Failure
Long Term Success
Initial Succe
ss
Failure
“Economy Heroes”
0-20 employees 20-200 employees 200 + employees
“Lifestyle Businesses”
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Are You In No Man’s Land?
• Sales and growth have stalled and/or profitability is not growing in line with revenue.
• You feel the business is stuck and you are too involved in everything.
• You have outgrown your management team.• You’re not growing fast enough; you work harder, but
make less money.• The old way of running your business doesn’t seem to
work anymore.• You don’t have a clear succession plan or exit strategy.
You are struggling to take your company to the next level.
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The Map Through “No Man’s Land”
© 2007 Tatum, LLC All rights reserved.
• Do you know your value proposition in the Market? How is it changing?
• Is your Model scalable?• Do you have the right
Management team?• Raise your Money• Maintain Momentum!
ManagementMANAGEMENT
MOMENTUM
MODELMARKET
MONEY
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Navigating “No Man’s Land”
• Market• Realign with the market; refine the value proposition for new segments of
customers.• Get the business good at doing with customers what the entrepreneur originally
did by himself.• Management
• Professionalize management.• Preserve the culture and decision-making that has made the company successful.
• Model• Create new economic model for the company to be profitable at scale.• Break operations down into repeatable functions and processes.
• Money• Raise capital to finance growth, recognizing operating changes that the funding
will require.• Run the company with an eye on your exit strategy.
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Tools To Assess Where Your Company Is
A diagnostic tool that assesses:
Performance Alignment
Tools: Inc. Navigator™
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Compass: No Man’s Land Diagnostic
“This is a great tool which all leaders need in order to step outside of the day to day and
strategically see where they need to focus NOW.”
Jennifer Fallon, CEO Aspen Brands and Inc. 5000 Honoree
© 2012 4M Navigator, LLC All rights reserved. Confidential.
It takes less than 30 minutes
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First “M”: Marketing
1. Customer Satisfaction: Customers believe it takes less time and effort to do business with my company.
2. Gross Margin: Compared to last year, our gross margin has improved.3. Product Commoditization: The company is not under pressure to reduce
prices.4. Value Proposition: All employees can clearly articulate why customers
buy from our company.5. Profitable Clients: Sales efforts are focused on the company's fastest-
growing and most profitable customer segments.
Signs of Marketing Misalignment
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Example: Marketing Misalignment (Cont.)
6. Profitable Products: We know which products/services are the most profitable and we focus most of resources on the most profitable ones.
7. CEO Best Use: CEO delegates all non critical customer decisions.8. Customer Promises: The company is able to keep promises that it has
made to customers.9. Cost of Customer Acquisition: We know the cost to acquire a new
customer.10. Innovation: We consistently recognize and exploit changes in the market
before our competitors do.
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How Teams Score
Performance- On which questions would your team score the lowest?
Alignment- How confident are you that your management team would
score the same way you did?
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Blind Spot #1: Value Proposition
Lack of Alignment Impacts Performance
CEO Says: TEAM Says:
85% CEOs say employees can clearly state their company’s value proposition
7% of leadership teams can articulate a common value proposition
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Blind Spot #2: Team Alignment
Lack of Consensus on Priorities
CEO Says: TEAM Says:
92% of CEOs say their teams agree with and can clearly communicate their strategy
2% of leadership teams can list the same strategic priorities
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Blind Spot #3: Accountability
The Inc. Navigator Compass
CEO Says: TEAM Says:
86% of CEOs believe that everyone is held accountable for performance
20% of leadership teams agree
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Second M: Economic Model
• Originally, the entrepreneur’s grasp of the business model was intuitive - must now formalize and share it with the entire company.
• Determine how value delivery system can be as profitable at larger scale as it was before.
• Target demand volume to facilitate step-fixed infrastructure costs.• Break operations down into discrete, repeatable functions and
processes.
Ramp Up Infrastructure
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© 2007 Tatum, LLC All rights reserved.
Third M: Money (Raise Capital)
• “Bootstrapping” yourself is probably not a realistic option.• Must be able to explain the potential of the business - to persuade a
borrower to lend to you or to offer attractive return to investor.• Professional management can help the company become objective about its
business model - to make the case for investment.• Questions to ask yourself:
• What risks in the business can be eliminated if you had more capital?
• What combination of debt and equity is right for you?• Are you ready for the scrutiny that outside funding will require - and
the operating changes needed to make it work?• Do you have an ultimate exit strategy?
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Fourth M: Professional Management
• Owner/entrepreneur stretched thin and entering uncharted waters.
• Employees are often over their heads.
• Key managers are “frozen” - looking to CEO for direction.
• Entrepreneur doesn’t want to create bureaucracy and lose touch/control.
• Can’t afford to hire senior management.
Professionalize management while preserving the culture and decision-making that has made the company successful.
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Balance Entrepreneurship, Maturity
Vision,Energy
Maturity
• Retain founder’s entrepreneurial energy and focus
• Keep key employees• Avoid “creeping
bureaucracy”
• Professionalize management• Create processes and systems to
routinize the business • Finance growth• Scale the business toward possible
exit
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For Further Information
Contact Catherine:
Catherine CatesPartnerNewport Board Group LLC
www.newportboardgroup.com/partners/Catherine-Cates
www.linkedin.com/in/ccates/
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Next Webinar
November 13th, 1 pm ET
Exit Planning: It’s Never too Soon to Think About It
Follow @NewportBoard on Twitter for more details!
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