Growth Nation (www.growthnation.com) is a full service marketing firm based in Phoenix that helps businesses create better leads, stronger brands and higher revenues for clients in a multitude of businesses from technology to healthcare. As such, it has a wealth of experience in helping businesses grow, especially in today’s increasingly competitive and complicated economy.
Growth Nation has been doing business in the Valley for many years and has developed a can do philosophy that they translate into advice for businesses from mining leads to even thinking about what happens if someone down the road wants to buy the business. In a recent blog, Growth Nation growth consultant Christian Lorentzen wrote about how important it is not only to avoid partners who might hold up the growth of your business, but also to run the company so that it will be attractive for others in the future. In other words, run the company with the mindset that if someone comes up with the right price, you would sell.
Lorentzen warns against trying to run a business just based on supporting your lifestyle and not based on growth of the business. By doing this, he notes, a business owner associates the business revenue stream with their personal budget, whether this is done consciously or subconsciously. Here is the meat of this concept: when you base your business on supporting your lifestyle, your focus is mostly on up-selling current clients and generating quick short-term sales. Now, think about what Lorentzen is saying. This type of thinking adds to cash flow but not necessarily to the long-term sustainability and health of the company.
“By focusing on the cash flow necessary to support your lifestyle, you neglect to focus on sustaining your competitive advantage,” said Christian Lorentzen. He points out that today’s business world is very fast with technological innovations coming along that can give your competitor a leg up in the market before you know what is happening. “The role of the business owner should be to continually scan the market for industry trends and new technology that can add value to your company over your competitors,” stated Lorentzen.
Back to the future sell value of the company, Lorentzen points out that while venture capitalists look at cash flow they also consider growth potential, investing in companies that show vision and how to position their company to keep pace with competitors so they outpace the competition in the future. This is where a company’s value is derived.
“Every day you should think about how to get your company to a position where it is easy to attract buyers and where you can get a high valuation,” noted Lorentzen. “You don’t have to sell that very day, but you can sleep soundly knowing that if you wanted to, you could.”