Over his 30-year career, Steve Lantz, Strategic Business Advisor at MD MEP, has helped many small- and medium-sized manufacturers achieve their growth goals, while overcoming roadblocks encountered along the way. Steve often first meets manufacturers when they are experiencing some sort of constraint in their business and works closely with leadership to identify the root causes of the obstacle, then create a roadmap to surmount it and avoid running into it again in the future.
In Steve’s experience, most manufacturers who are successful early in their businesses have two things in common – a great idea for a desired product and/or service, and strong entrepreneurial skills to get the business off the ground. But businesses can stagger getting to the next level.
In this six-part series, we’ll examine five fundamental principles that are key to ensuring your business is primed for long-term growth and success, including:
1. Strategic planning – Different from a financial plan or a business plan, a strategic plan is an aspirational roadmap that defines what you want the future of your business to be, and how you’re going to get there. Effective strategic plans examine the next 3-5 years (it’s hard to predict the market beyond that); address every segment of your business; are communicated to everyone in the company from the top down; and are re-evaluated periodically. Strategic plans also clearly define everything you are NOT going to do – a concept we’ll explain further in our next article.
2. Segmentation – A business is not a single entity; it is the sum of its parts. To be successful, leadership needs to know what each of those parts are, and how they perform. Whether the segments of your business are broken down by department, audience, product or service line, it is vital to understand where you’re making money, where you are losing money, and where you should focus your growth efforts. We’ll discuss the importance of addressing each segment in your strategic plan, and the metrics you need to make important decisions.
3. Organizational design – Once your strategic plan is in place, it’s vital to make sure your organization’s structure and skillset align with your objectives. Even if your company is growing rapidly due to big sales numbers, you may not be able to support that growth down the road if your company isn’t organized appropriately. We’ll take a look at how to be pro-active and not reactive when it comes to your organization, and ensure your business is designed to meet your goals.
4. Financial-based decisions – Entrepreneurs often have a knack for making good “gut-feel” decisions, but when it comes to the long-term success of a business, effective leaders need to be able to measure and understand the true financial impact of every choice. We’ll talk about the most important metrics to track, how to set your accounting system up to deliver this data, and why you should always treat your business like you are competing for capital.
5. Continuous assessment – If the events of the past 16 months have taught us anything, it’s that plans change. Once you have defined your segments, settled on your strategic plan, assessed your organizational design, and set yourself up to make financial-based decisions for your business, it’s time to establish a process for re-evaluating each of these principals continuously. In our final article, we’ll explain why you can never fall in love with your product or the market, and why true business leaders are always looking and thinking to the future.
In part two of our growth series, Steve will discuss what should – and what shouldn’t – go into your strategic plan, and how to implement it to best set your company up for success.
If you need help mastering any of these fundamental principles, or overcoming an obstacle preventing your business from growing to its full potential, please contact MD MEP.