If's its not scalable, its not saleable

We have to make the most of the strengths we have, the amenities that many of our competitors cannot replicate. But again, those advantages won’t mean much if we don’t do a great job with the basics of our business.

There are a couple of key beliefs that separate great businesses and their leaders from the rest. It is these beliefs that formed the basis for a “fit” business.?

After many years, I have come to learn that these beliefs are the foundation and the “due north” of great businesses:?

1. Every business is for sale – The custodian’s role is to maximize the business’ exit value. Great leaders, at one level, take the investor’s perspective and use it as a guiding principle behind their decision-making. Great businesses don’t put themselves in the position of the seller but the buyer.?“The size of the prize”– This is somewhat colloquial albeit true. Leaders of great businesses focus on the exit or growth multiples. They look closely at the multiples that derive from the business built every day towards its end goal.?Invariably, businesses that operate in a business-to-consumer environment will effectively be in a state of disequilibrium to some degree. They will inherently experience some notable inconsistency in processes, products, and people. Thus, our role is to bring as much equilibrium to this environment as possible.?

For our clients, readers, and colleagues, you would be familiar with the term “Business Fitness”, both in diagnostics and the development of growth platforms and frameworks. This approach aims to build points 1 & 2 above.?

A “fit” business is a high-performing retailer that has:?

• A clear point of difference?
• Clear goals/ business planning focus/ local marketing program
• A firm view and focus on business’ “due north”
• Sales growth across all categories?
• Positive margin growth (at or above benchmarks)?
• A focus on people development and a good training program?
• The ability to make evidence-based decisions quickly?
• A tendency to invest capital rather than divest
• High adaptability
• A?replicable and saleable?business model?
• Embedded systems/frameworks /well-documented processes?
• A growing database?
• Positive cash flow for most of the year?
• Stock turn reaching benchmarks across all categories?
• Stock profile at benchmarks/ aging of stock at below benchmarks?
• Measurably consistent and excellent customer service?
• Independent systems and frameworks – lower reliance on the owner?

These add to a scalable and therefore saleable business model.

At face value, a pure-play online business may satisfy these conditions more readily, due to the relatively low complexity in its process to market. However, the greater multiples will emanate from a fully differentiated and high-functioning “fit” omnichannel business.

Plenty is said about the importance of focus, perseverance, skill sets, expertise, commercial acumen, experience, innovation, etc. It is all very true, and to this list of success elements, I would simply add self-belief and attitude. The race is won more often by those who see the finishing line before it begins, run to their game plan with belief and stay on track.?

For more information on assessing your business and building a “fit” business plan, contact us at [email protected] or read further on our Fit for Business? Roadmap .?