Slow market development leads to great uncertainty for business executives. One thing that is sure is the need to find growth on your companys profit record. During the period 2013-2015, the subject was a top line for growth. Our economy had been slow for so long that we all were eager to get back to growth and some critical sectors began to grow at an encouraging rate. Pentecost demand was a source of optimism. Housing, one of the major engines for total economic growth, came back to growth of 15-20 percent. The automotive industry had also recovered and companies began to double the growth in the top line after several years of stagnation. Enjoying rising tide is a good start, but growth only when the economy gives you it is not a recipe for long-term success. You are a genius on the rise and most blame on external forces on the decline. Being well positioned for the financial lifts and lullers is critical, but surpassing the market is where your company stands out.
Growth on a flat market? Yes. In fact, there are opportunities in the environment that make it very possible. The fact that competitors can limit their investments can actually open opportunities, but you have to be in a different setting than the competitors. One of the example companies we will discuss had experienced a decline in sales for three consecutive years and achieved a 37 percent overall decline. The time was such that the financial news covered what actually occurred, sharing loss at the core of the business.
Investors would have been satisfied with growth of 4 percent in line with economic factors, but the best companies share others. Very few are winning right now and it comes down to investment or lack of what was done to prepare companies to win today. The seeds are planted 18-24 months earlier. If you do not participate today you probably did not make the right investments 1-2 years ago. While we can not jump in a DeLorean and go back in time, we can start now for 18-24 months from now on. Some leaders feel shielded by the lack of growth. It limits the amount that can be redirected to initiate growth plans and many companies reduce growth investments as we speak. Will they get a share in 18-24 months or will their competitors come? If they all behave in the same way, the current relationship will likely continue in their category. But, if you make any well-placed investments? What happens when a company from the competition begins to gain market share? Two things, the first one or more of the set then loses the split. Secondly, they have speed. Momentum that takes a lot of energy to catch up with those who decide to compete for that market share. Being in a holding pattern, waiting for the next budget cycle, etc. means that you are positioned to be in danger as one of the market participants of a growth-oriented competitor.
Is growth possible in a slow market?
I was appointed CEO of a company that had fallen by 37 percent in three years. The change in strategic direction led to a 75 percent growth over the next three years. While leadership change was a critical component, it was more about making a change in strategic direction than just making a change in the organizations leaders. How did a taxed business with 180 million in sales spend 60 million on business from the biggest competitor in its industry with several billion dollar scales? They really did not beat their rival. In fact, this gain was achieved without acquiring without adding facilities and by just adding a staff of 3 incremental persons. Our initial revenue began only 12 months after the concept developed and reached 60 million in 3 years. To the industry scales industry, the loss of 60 million was about 2 percent of sales. On the surface it sounds irrelevant, but what happens if the economy only gives 3-4 percent growth and you lose 2 percent, that means youre underperforming expectations. Think of the flip side of the 180m company that achieved growth of 33 percent? They are truly creators of value for their investors.
Optimism for purchased demand has begun to decline in 2016. Companies Im talking to are now in a transitional state and confused in many cases. There is a clear shift towards indecision and cost reduction. The obvious truth is that there should never be a choice between growth and cost. Here comes and in. We must drive high returns and better business efficiency consistently. Too often, we limit our businesses by believing that it is one or another. Suggests that one or the other is more important, taking half of your team off the field.