NORTHWEST MOUNTAIN MINORITY SUPPLIER DEVELOPMENT COUNCIL RICHARD RETZER

NORTHWEST MOUNTAIN MINORITY SUPPLIER DEVELOPMENT COUNCIL RICHARD RETZER

Business Cycle – The Anatomy of Growth Session Overview Ø 5 -15 -80 - Where are You? ØStages of Growth ØAttributes ØPeople, Process, Product, Planning/Strategy ØMake a “Growth” Decision

Growth Path Revenue Growth 4 Growth 3 Growth 2 Growth 1 Time

Three Types of Private Sector Enterprises High Impact Firms (HIF) ü 5% of Companies üAchieved 25% or more sales growth last 2 years üDoubled employment Potential High Growth Firms (PHGF) ü 15% of companies ü 1 -2 moves away from breaking out Low Growth Firms (LGF) ü 80% of all businesses ü Low probability of growth ü Most in survival mode

Business Cycle - The Anatomy of Growth Stage 1 • • • Plan the Dream Stage 2 Stage 4 Stage 5. 1 Stage 5 Stage 6 • Go Live • Next Act • Big Fast • Apex • Stable • Vulnerable • External Focus • Internal Focus • External Focus • Balanced Focus • Internal Focus • Cash Flow • Founders Trap • Depleted Working Capital • Stages 5. 1 &6 • Founders Trap • Loss of Company • Stage 6 Internal Focus Business Flirtation Stage 3

Business Growth Cycle Stage I: Plan The Dream (Internal Focus) § Commercialization Cycle & Founder Bias § Founder’s Development of Business Idea § Identify Customers with Unmet Needs & High Functional Returns § Create Business Plan § Develop Initial Order § Quick to Market

Business Cycle - The Anatomy of Growth Stage 1 • • • Plan the Dream Stage 2 Stage 4 Stage 5. 1 Stage 5 Stage 6 • Go Live • Next Act • Big Fast • Apex • Stable • Vulnerable • External Focus • Internal Focus • External Focus • Balanced Focus • Internal Focus • Cash Flow • Founders Trap • Depleted Working Capital • Stages 5. 1 &6 • Founders Trap • Loss of Company • Stage 6 Internal Focus Business Flirtation Stage 3

Business Growth Cycle Stage II: Go Live (External Focus) § Founder Based Selling § Find Customers Willing to Take the Risk § Find a “Marquee” Customer to Build Buzz § Collaboratively Improve Initial Offer § Create Sufficient & Predictable Cash Flow

Business Cycle - The Anatomy of Growth Stage 1 • • • Plan the Dream Stage 2 Stage 4 Stage 5. 1 Stage 5 Stage 6 • Go Live • Next Act • Big Fast • Apex • Stable • Vulnerable • External Focus • Internal Focus • External Focus • Balanced Focus • Internal Focus • Cash Flow • Founders Trap • Depleted Working Capital • Stages 5. 1 &6 • Founders Trap • Loss of Company • Stage 6 Internal Focus Business Flirtation Stage 3

Business Growth Cycle Stage III: Next Act (Internal Focus) § Review Original Business Idea, Successes, and Failures § Upgrade Business Model § Refine Customer Selection § Upgrade Products & Services § Set Growth Targets § Increase Capacity to Handle Growth Targets

Business Cycle - The Anatomy of Growth Stage 1 • • • Plan the Dream Stage 2 Stage 4 Stage 5. 1 Stage 5 Stage 6 • Go Live • Next Act • Big Fast • Apex • Stable • Vulnerable • External Focus • Internal Focus • External Focus • Balanced Focus • Internal Focus • Cash Flow • Founders Trap • Depleted Working Capital • Stages 5. 1 &6 • Founders Trap • Loss of Company • Stage 6 Internal Focus Business Flirtation Stage 3

Business Growth Cycle Stage IV: Big Fast (External Focus) § Systems in Place § Invest in Targeted Marketing § Increase Sales Activities § Closely Track Costs & Cash Flow § Closely monitor defects & Customer Complaints § Hire People Just in Time

Business Cycle - The Anatomy of Growth Stage 1 • • • Plan the Dream Stage 2 Stage 4 Stage 5. 1 Stage 5 Stage 6 • Go Live • Next Act • Big Fast • Apex • Stable • Vulnerable • External Focus • Internal Focus • External Focus • Balanced Focus • Internal Focus • Cash Flow • Founders Trap • Depleted Working Capital • Stages 5. 1 &6 • Founders Trap • Loss of Company • Stage 6 Internal Focus Business Flirtation Stage 3

Business Growth Cycle Stage V: Dominance (Balanced Focus) § Optimum Growth Position § Balance Between Control & Flexibility § Balance Between Leadership & Management § Infrastructure trusted by all Employees § Change is Supported

Business Cycle - The Anatomy of Growth Stage 1 • • • Plan the Dream Stage 2 Stage 4 Stage 5. 1 Stage 5 Stage 6 • Go Live • Next Act • Big Fast • Apex • Stable • Vulnerable • External Focus • Internal Focus • External Focus • Balanced Focus • Internal Focus • Cash Flow • Founders Trap • Depleted Working Capital • Stages 5. 1 &6 • Founders Trap • Loss of Company • Stage 6 Internal Focus Business Flirtation Stage 3

Business Growth Cycle Stage V. i: Stable (Internal Focus) § Review Stage IV Results § Standardize Systems, Processes, Policies § Eliminate Non-Value Added Costs § Maximize Profits

Business Cycle - The Anatomy of Growth Stage 1 • • • Plan the Dream Stage 2 Stage 4 Stage 5. 1 Stage 5 Stage 6 • Go Live • Next Act • Big Fast • Apex • Stable • Vulnerable • External Focus • Internal Focus • External Focus • Balanced Focus • Internal Focus • Cash Flow • Founders Trap • Depleted Working Capital • Stages 5. 1 &6 • Founders Trap • Loss of Company • Stage 6 Internal Focus Business Flirtation Stage 3

Business Growth Cycle Stage VI: Bureaucracy (Internal Focus) § Concern for Internal Issues Crowds out External Issues § Organization becomes Siloed & Focuses on Turf § Entrepreneurship & Risk Taking Minimized § Activity more Important than Results § Live on Past Success

Phases & Stages of Growth Performance I. I. II. Plan the Dream – Pre-startup Go Live – Sell, Sell! Next Act – What Now? Profits IV. Big Fast – Growth to Capacity V. Optimize – Sell, Renew, or Decay Renewal VII. Reinvent VI

Business Growth Cycle Reinvention (Balanced Focus) § Owner Focus – Teamwork, Tech, New Product Development § Reinvest 30% of Profit into Growth § Benchmark Against Industry Leaders & Fast Growth Companies with Similar Business Models § Innovation is a Team Sport § Bring Customers In – Collaborative Product & Service Development § Never Build on Speculation

Business Growth Cycle Reinvention (Balanced Focus) § Future Strategy – Confront the Unknown § Difference Makers – Exploit Temporary Advantages § Leadership Role – Core Business versus New Business § Litmus Test – Share your Logic § Innovation Demystified – Pilot Programs

Growth Paths Growth Path v 12 Years from first Reinvention Growth 4 Revenue Three Distinct Growth Paths v 6 Years from first Reinvention Growth 3 v 4 Years from first Reinvention Growth 2 Growth 1 Time

Characteristics of High Impact Firms (HIF) § Identify Growth Markets with Unmet Needs § Unique Brand – Stand for Something § Micro – Segmentation & Specialization üNarrowly focused on Target Client üSpecialized Services (Just in Time) § Business Development – A Core Process üMarketing 10% - 15% of Revenue üEmphasize Growth through Research of New Products & Services

Techniques of the 5% Success Factor #1 Success Factor #3 Go to Where the Puck Will Be Sales is the New Bank Success Factor #2 Success Factor #4 Be Unique, Because Average is Death Stop Leaving Money on the Table

Where to Start üCreate a Baseline of Current Operations üIdentify Obstacles to Remove & Opportunities to Accelerate üCreate Short List of Funded Initiatives to Survive & Grow üBuild Business Dashboards & Individual Scorecards üManage what you Measure

Mean Best Practice Description Attribute Individual Stage Contributor Overall Executive Manager 4. 6 4. 5 4. 33 4. 71 1 4. 8 4. 5 3. 33 5. 57 3 4 4 5. 57 1 Long Term Perspective 4. 5 4 3. 33 4. 14 3 Respected Leaders 5. 6 5. 5 5. 67 5. 57 2 Distinguishing Mission Statement Creating a clear and compelling Embraces Vision & Values picture of the company's future Stakeholder Contribution that enables everyone: (4. 88) Clarity of Purpose employees, suppliers, and shareholders to contribute