Northwest Mountain Minority Supplier Development Council Richard Retzer

Business Cycle – The Anatomy of Growth Session Overview 5-15-80 - Where are You? Stages of Growth Attributes People, Process, Product, Planning/Strategy Make a “Growth” Decision

Three Types of Private Sector Enterprises High Impact Firms (HIF) 5% of Companies Achieved 25% or more sales growth last 2 years Doubled employment Potential High Growth Firms (PHGF) 15% of companies 1-2 moves away from breaking out Low Growth Firms (LGF) 80% of all businesses Low probability of growth Most in survival mode

Business Cycle - The Anatomy of Growth Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 5.1 Stage 6 Plan the Dream Internal Focus Business Flirtation Go Live External Focus Cash Flow Next Act Internal Focus Founders Trap Big Fast External Focus Depleted Working Capital Apex Balanced Focus Stages 5.1 & 6 Stable Internal Focus Founders Trap Stage 6 Vulnerable Internal Focus Loss of Company

Business Growth Cycle Stage I: Plan The Dream (Internal Focus) Commercialization Cycle & Founder Bias Founder’s Development of Business Idea Identify Customers with Unmet Needs & High Functional Returns Create Business Plan Develop Initial Order Quick to Market

Business Cycle - The Anatomy of Growth Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 5.1 Stage 6 Plan the Dream Internal Focus Business Flirtation Go Live External Focus Cash Flow Next Act Internal Focus Founders Trap Big Fast External Focus Depleted Working Capital Apex Balanced Focus Stages 5.1 & 6 Stable Internal Focus Founders Trap Stage 6 Vulnerable Internal Focus Loss of Company

Business Growth Cycle Stage II: Go Live (External Focus) Founder Based Selling Find Customers Willing to Take the Risk Find a “Marquee” Customer to Build Buzz Collaboratively Improve Initial Offer Create Sufficient & Predictable Cash Flow

Business Cycle - The Anatomy of Growth Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 5.1 Stage 6 Plan the Dream Internal Focus Business Flirtation Go Live External Focus Cash Flow Next Act Internal Focus Founders Trap Big Fast External Focus Depleted Working Capital Apex Balanced Focus Stages 5.1 & 6 Stable Internal Focus Founders Trap Stage 6 Vulnerable Internal Focus Loss of Company

Business Growth Cycle Stage III: Next Act (Internal Focus) Review Original Business Idea, Successes, and Failures Upgrade Business Model Refine Customer Selection Upgrade Products & Services Set Growth Targets Increase Capacity to Handle Growth Targets

Business Cycle - The Anatomy of Growth Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 5.1 Stage 6 Plan the Dream Internal Focus Business Flirtation Go Live External Focus Cash Flow Next Act Internal Focus Founders Trap Big Fast External Focus Depleted Working Capital Apex Balanced Focus Stages 5.1 & 6 Stable Internal Focus Founders Trap Stage 6 Vulnerable Internal Focus Loss of Company

Business Growth Cycle Stage IV: Big Fast (External Focus) Systems in Place Invest in Targeted Marketing Increase Sales Activities Closely Track Costs & Cash Flow Closely monitor defects & Customer Complaints Hire People Just in Time

Business Cycle - The Anatomy of Growth Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 5.1 Stage 6 Plan the Dream Internal Focus Business Flirtation Go Live External Focus Cash Flow Next Act Internal Focus Founders Trap Big Fast External Focus Depleted Working Capital Apex Balanced Focus Stages 5.1 & 6 Stable Internal Focus Founders Trap Stage 6 Vulnerable Internal Focus Loss of Company

Business Growth Cycle Stage V: Dominance (Balanced Focus) Optimum Growth Position Balance Between Control & Flexibility Balance Between Leadership & Management Infrastructure trusted by all Employees Change is Supported

Business Cycle - The Anatomy of Growth Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 5.1 Stage 6 Plan the Dream Internal Focus Business Flirtation Go Live External Focus Cash Flow Next Act Internal Focus Founders Trap Big Fast External Focus Depleted Working Capital Apex Balanced Focus Stages 5.1 & 6 Stable Internal Focus Founders Trap Stage 6 Vulnerable Internal Focus Loss of Company

Business Growth Cycle Stage V.i: Stable (Internal Focus) Review Stage IV Results Standardize Systems, Processes, Policies Eliminate Non-Value Added Costs Maximize Profits

Business Cycle - The Anatomy of Growth Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 5.1 Stage 6 Plan the Dream Internal Focus Business Flirtation Go Live External Focus Cash Flow Next Act Internal Focus Founders Trap Big Fast External Focus Depleted Working Capital Apex Balanced Focus Stages 5.1 & 6 Stable Internal Focus Founders Trap Stage 6 Vulnerable Internal Focus Loss of Company

Business Growth Cycle Stage VI: Bureaucracy (Internal Focus) Concern for Internal Issues Crowds out External Issues Organization becomes Siloed & Focuses on Turf Entrepreneurship & Risk Taking Minimized Activity more Important than Results Live on Past Success

Phases & Stages of Growth Performance Plan the Dream – Pre-startup Go Live – Sell, Sell, Sell! Next Act – What Now? Profits IV. Big Fast – Growth to Capacity V. Optimize – Sell, Renew, or Decay Renewal VII. Reinvent VI

Business Growth Cycle Reinvention (Balanced Focus) Owner Focus – Teamwork, Tech, New Product Development Reinvest 30% of Profit into Growth Benchmark Against Industry Leaders & Fast Growth Companies with Similar Business Models Innovation is a Team Sport Bring Customers In – Collaborative Product & Service Development Never Build on Speculation

Business Growth Cycle Reinvention (Balanced Focus) Future Strategy – Confront the Unknown Difference Makers – Exploit Temporary Advantages Leadership Role – Core Business versus New Business Litmus Test – Share your Logic Innovation Demystified – Pilot Programs

Three Distinct Growth Paths 12 Years from first Reinvention 6 Years from first Reinvention 4 Years from first Reinvention

Characteristics of High Impact Firms (HIF) Identify Growth Markets with Unmet Needs Unique Brand – Stand for Something Micro – Segmentation & Specialization Narrowly focused on Target Client Specialized Services (Just in Time) Business Development – A Core Process Marketing 10% - 15% of Revenue Emphasize Growth through Research of New Products & Services

Techniques of the 5% Success Factor #1 Success Factor #2 Go to Where the Puck Will Be Success Factor #2 Be Unique, Because Average is Death Success Factor #3 Sales is the New Bank Success Factor #4 Stop Leaving Money on the Table

Where to Start Create a Baseline of Current Operations Identify Obstacles to Remove & Opportunities to Accelerate Create Short List of Funded Initiatives to Survive & Grow Build Business Dashboards & Individual Scorecards Manage what you Measure

Individual Contributor Best Practice Description Attribute Mean Stage Overall Executive Manager Individual Contributor Stakeholder Contribution (4.88) Creating a clear and compelling picture of the company's future that enables everyone: employees, suppliers, and shareholders to contribute Distinguishing Mission Statement 4.6 4.5 4.33 4.71 1 Embraces Vision & Values 4.8 3.33 5.57 3 Clarity of Purpose 4.3 4 Long Term Perspective 4.14 Respected Leaders 5.6 5.5 5.67 2