The Basics of STAGE VI GROWTH - WILLIAM EASTMAN

William Eastman - “Living The Life...On My Terms”

Introduction
My first show and our 12th Show since last week's World Summit, our hard launch of the radio station.

I want to thank you for our entire team, for tuning in and joining us to celebrate the start of our 3rd Season. 

The station’s theme for Season 3: Many Countries, One Language - BUSINESS.

WHY?

5% of the world population employs 57%. Let’s turn that into numbers - 375 million entrepreneurs employee 1.9 billion people. We have the most significant community in the world, the facts don’t lie.
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Objectives - The WHY
​​As a Business Owner I need to understand what happened financially during our successful attempt to grow the business to its full potential (Stage IV).

Now that the decision has been made and implemented to sell or not sell the business (today’s show focuses on owners that don’t intend to sell), the issue is what investments do we need to Reinvent.

The second decision, and the challenge - how to make it happen. This differs from anything encountered to date because the future is being placed into the hands of a mixed (internal & external) project team to innovate and produce the future. Sounds like Mr. Toad's Wild Ride.

The Big Decisions:

1. The decision to reinvent, Why did we NOT sell when a top dollar offer was possible?. Obviously there was a compelling end game envisioned during the decision process.
2. What are our Retained Earnings available for internal growth investment? How much of this can we self-finance, and how much should we?
3. The amount of credit available. I don't know where you are, but it is time to gain leverage from your success and stop financing everything from your pocket.
4. Sources of additional capital for growth. This choice is for larger purchases that are beyond normal financing and consider manufacturer financing or leasing. The best option is not to finance the first reinvention.

What You Need to Know - The WHAT
Deciding on What to Reinvent.
Giving your analysis in Stage V on Stage IV's success with maximizing Capacity, Margin, and reducing Fixed Costs;

• What resulted from the Root Cause Analysis: the 5 M's - Methods, Manpower, Materials, Machines, and Management;
• Which initiatives to engage in, which to pay for internal, which to seek outside funding.
• Shift the Analysis to Market Share, Market Penetration, margin per Product & Service Line, margin per Customer - anything being left on the table?

What You Need to Do - The HOW
​Phase I: Capacity vs. Sales

1. Capacity (ability to produce more) or Sales (ability to sell more) - which has the greatest variance between what was possible and delivered in Stage V.
2. The rule of 25% - how much imbalance can you allow in the short term? Expand capacity by 25% over current sales and upgrade speed of capacity growth to match the selling cycle.
3. Based on #1 & #2, prioritize your list of what must happen for Capacity Improvements.

Phase 2: The Offer

1. Does our current Product and Service Lines need an upgrade to remain competitive?
2. Does our current Product and Service Lines need an upgrade to gain more market share?
3. Does our current Product and Service Lines not match what the customer would buy today or soon?
4. Does our current Product and Service Lines cannot compete against new offers from competitors?
5. Based on #1 - #4, prioritize your list of upgrades or new offers that must happen for greater market share and penetration.

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Phase 3: The Decision

1. Compare the lists and show relationships between Capacity & Sales with Upgrade or New Offer.
2. Repriorize the list starting with the most critical - holding market share.
3. Estimate the funding requirements for each - fully funding each item to determine budget, then determine what can be done.

​William Eastman is Station Director @IBGR and author of "Living The Life...On My Terms"

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