The secret to achieving accelerated growth with sustained profitabilitysm is to reverse the phrase. First, a business must be profitable. And it must be able to sustain that profitability. Then, various growth strategies can be explored and accelerated pacing considered last.

Each of us probably know several family businesses that have embraced exciting growth strategies and stepped on the accelerator before they had accomplished consistent profitability...only to end up facing bankruptcy or reorganization. You don't want to be like the Boston Market Restaurant chain in the late 1990s. They had what seemed to be a good basic idea. But they expanded too rapidly (before they had resilient profitability) and ended up over $ 50 million in debt. Replicating a fragile model through geographic expansion, franchising, roll ups, etc. usually compounds the underlying problems. It is analogous to trying to save a failing marriage by having children.

Know What Drives Your Profitability

It's important to ask yourself what drives the profitability of your family business. So many business leaders make the understandable error of concluding that the answer to this question is obvious. "We're a family owned business. It's our relationships and service." However, if that was all there was to it, companies would all be the same. There would be no reason to select one over another. And they would all generate the same level of profit. And we know that just isn't true.

Imagine that you are the President of Company A, which is a regional company. When you look deeper, you discover that your real profits are driven by your marketing and customer service. Like other companies, some of your profitability can be traced to your sales people, some to the efficiency of your production department, and some to the shipping department.

But do you know why your profits are driven by your marketing and customer service? Is it the personalities of specific people? Is there something about the customers your business attracts? Is it your company's approach? You wouldn't want to take this type of competitive advantage for granted because it can be very fragile.

Now imagine that one of your competitors, Company B, is winning more and more business on price and a second competitor, Company C, wins some of the large accounts you wanted due to their name recognition and extensive industry experience.

Continuing the hypothetical example, you conclude that you don't really know what the most important elements are behind the success of your marketing and customer service. So you ask an outside research firm to conduct a customer survey or you convene a customer advisory council. And you learn that a few of your managers are the key to customer loyalty. But you'll have to go further than that. Do you really know what those managers do that is so different?

Know How to Sustain Your Profitability

Unfortunately, the profitability of many family businesses is fragile, because it is impacted by everything other businesses are effected by PLUS succession, communication, and competition within the business. To sustain your profitability, you may need to solidify your approaches to recruitment, training, compensation, and retention of account managers and associates.

You'll be ready to grow if the important elements of your marketing and customer service are not too dependent on a few people and their approach can be taught, measured, and replicated.

On the other hand, Company B may achieve resilience by simplifying procedures, controlling costs, and selling similar products to several customers. To build in resilience, Company C may choose to specialize in a few industries.

The reality of family owned businesses is that all three companies will need to take multiple steps to build resilience for their profitability. All three companies will want to strengthen their recruitment, training, compensation, retention, cost controls, and industry-specific knowledge. But, it becomes a matter of emphasis. When you are busy trying to make 20 improvements all at the same time, everything seems important so nothing is important. In the midst of all of your improvement efforts, do you know which steps absolutely positively must be accomplished because they help you sustain your profits?

Growth Strategies

Once you are confident that your profitability is resilient, it's time to consider growth strategies like:

* improved marketing	* specialization	* strategic alliances	* improved quality
* diversification	* acquisition	* improved service	* franchising
* merger	* new products	* licensing	* inc. control over channels of distrib.
* new markets	* joint ventures	* geog. expansion	* roll up

Ironically, all three family owned businesses in our hypothetical example might be interested when a fourth competitor decides to sell. You might want to hire the key people if they operate the same way your company does or if the employees seem bright and receptive to change. And Companies B and C could potentially be interested in taking over different accounts from that same business.

Your strategic alliances might be with other vendors who serve the types of companies you seek as customers. Company B may prefer strategic alliances with other companies within their industry that provide specialized services. And Company C may elect to further align themselves within target industries through cooperative advertising or sponsorships.

Your geographic expansion may be driven by the recruitment of key people within new markets. Company B may expand by replicating the model of the first location over and over again. Company C will probably prefer to utilize large regional offices serving smaller sales offices.

As you can see, the best growth strategy for one service firm is not necessarily the best for another.

Accelerating

Once you:

• know what drives your profitability,
• have instituted systems that make your company resilient and help you sustain that profitability,
• have selected growth strategies that match, It's time to consider picking up the pace.

Sometimes, it is important to move quickly. If you move too slowly you become vulnerable to the interference of well financed competition. If availability of money is all that stops you from accelerating, remember that growth financing is easier to obtain if you have a profitable model that can be replicated. Having sustained profitability will be particularly important if/when you are inclined to using growth strategies that have acceleration built in (e.g. roll ups).

Known as “The Growth Strategist”, Aldonna R. Ambler, CMC, CSP helps technology-driven companies, professional service firms, and construction-related/distribution firms achieve accelerated growth with sustained profitability^sm through a combination of speaking, consulting, executive coaching, authorship, and growth financing.  Her clients seek a minimum of 50% growth/year, with the majority achieving between 100 and 200%.  She has executed an ESOP, grown multiple international businesses, won just about every major award an entrepreneur can win, provided expert testimony on economic growth at over 30 legislative hearings, conferred with 3 different Presidents in the Oval Office, and published 2 books and over 85 articles.  Aldonna is the national (USA) “Woman Business Owner of the Year” for 2000 and was recently awarded the Office Depot  “2001 Businesswoman of the Year”.  Aldonna Ambler can be reached at 1-888-Aldonna (253-6662) or at www.Aldonna.com.