Years ago, I bought a small manufacturing firm.
My mentor thought it had potential, but he warned me never to “fall in love with my equipment.” At the time, I didn’t understand the importance of that.
Entrepreneurs pride themselves on innovation and the ability to find new ways to solve old problems. They brag that their smaller, entrepreneurial companies can compete by being nimble and quick. Yet many are still fighting to continue to do business like they did in the past.
It’s a scenario that doesn’t seem to fit — entrepreneurial companies stuck in the past. Are these entrepreneurs who have “fallen in love with their equipment” and can’t let go of what has become a part of them? These are companies where growth has stopped or gone backwards.
The quality of these companies’ products and services are as good as they’ve always been. The people care as much as they always did. It is still a good company, yet sales down.
The reason is easier to understand than to accept; there is a new reality. To prosper, management must accept it and change to meet the new demands. Owners and managers must view their company objectively.
Owners of companies that were considered manufacturers may be forced to change their focus to take advantage of other competencies. Companies operationally driven may have to become customer or market driven. They may have to change their roles within the supply chain to better meet customer and competitive pressures. Products that once were the core of a company’s offerings may no longer be attractive.
After spending years creating the company, most owners are comfortable with it. But, because of a chain reaction of events, uncomfortable changes need to be made. The only option is to adjust.
There have been new realities throughout history, and it has never been the strongest or biggest of the species that survives; it has been the species that can adapt and change. Joel Strom ([email protected]) is director of Joel Strom Associates LLC, the growth management practice of C&P Advisors LLC. The firm works exclusively with closely held businesses and their ownership, helping them set and achieve growth objectives while maximizing their profitability and value. Reach him at (216) 831-2663.