Every manager must find ways to unlock and invest in opportunistic areas within his/her business. We define “opportunistic areas” as areas where a business can generate sales growth or operating efficiencies. For a retailer, this can be as simple as purchasing a lot of inventory in anticipation of a surge in sales over the holidays. Another example is a business trying to diversify its revenue stream in light of its largest customer contributing over 50% of sales at a low margin. In any scenario, in order to seize opportunities within a business, a business manager will likely need one or a combination of these three factors: Expertise, Talent, and Capital.
Expertise comes internally (management, employees) or externally (consultants, advisors). Revisiting the example of a business with high customer concentration, it may be difficult for a manager to create a new pricing strategy and diversify its customer base, unless the manager has deep experience doing so. In these instances, seeking external expertise may be helpful and cost-effective to a business. Implementing a new growth strategy to find new customers could boost earnings and de-risk the business.
Every business manager knows that a successful business comes down to accessing Talent. Finding and retaining the right people is the cornerstone to effectively implementing any strategy. To this end, strength in leadership and human resource management are essential. Also, a manager must not lose sight of people outside of the business (e.g., customers and advisors) who are equally important.
Capital drives the engine for most strategies resulting in material growth. To make cost-effective funding decisions, small business owners must understand their business from the perspective of an investor/lender. In order to deploy capital, investors/lenders look at areas of growth and downside risk. Based on this assessment, investors/lenders evaluate the amount and pricing of capital available to a business. Given the variety of capital options and the gross disparity in capital pricing (typically 5% to 60%+), significant savings can result with taking a prudent look at your business profile.