Each year, the Philadelphia Business Journal publishes a list of the fastest growing privately held area firms. The Wharton School, one of the “Philadelphia 100” owners, conducts occasional studies of those companies that have been named to the list. When looking back at past winners, less than one third go on to experience sustained growth. Another third plateau at a certain point and remain fairly stable. More than a third experience decline or end up going out of business. More than a third! Similarly, in the Washington, DC government contracts market in which Sabre often competes, it is very typical to see companies attain $30-$40M in annual sales and then decline as they struggle to operate outside the set-aside realm.
Obviously, there are many factors that determine the fate of any given company, but there are some common themes. Often, a company’s early success is the result of a mercurial leader with a great idea combined with low overhead and a recognition of an unmet or underserved market need. Initial sales skyrocket and resources are brought in to make more sales. Sometimes, steps are taken to secure intellectual property or “secret sauce.” However, in our wonderful world of capitalism, competitors will note the successes of an upstart and devise ways to bring their own “solutions” to meet these unmet consumer needs. Competitors will bring their innovations to create new value propositions by making their solutions cheaper, faster and/or better. Many times, the original growth company will not react to these changes in the competitive landscape and simply add more sales staff in the hopes of maintaining market share. More often than not, these are the companies that will not continue to grow. They held fast to the “it’s not broke, don’t fix it” trap that was introduced in the last blog post.
The changes needed to fuel growth go beyond merely building infrastructure that will increase a company’s capacity. More critical is the need to develop a business development methodology. Blindly writing more proposals or hiring more sales associates will not get the job done. Have a plan that includes a rigorous market research component and an equally rigorous capture planning process. This will help identify your niche in the market and the types of resources needed.
Remember – accolades for early growth should not be seen as the culmination of years of hard work. Yes, stop and smell the roses and let key team members know how much they’re appreciated, but remember, it’s just the beginning of an exciting journey.
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