Summit Group Partners Blog

Transforming your Business for the New Normal

How companies are growing and succeeding in the current economic climate and what you can do to position yourself as the new market leader.

 

The new normal. We have heard that term so often over the years that it has become a buzz phrase. But what does it really mean? It stems from years of a roller coaster economy that has impacted every sector of the business world. The recession, financial crisis, and the housing crisis. The persistent high unemployment rate, potential double dip recession, and the debt debacle. When in U.S. history have we experienced so much uncertainty as in the last few years? That leaves many people are asking, “What’s next?”


With the continued bombardment of negative news, we lose sight of the fact that traction is being made in the recovery. GDP as a measure of growth is increasing. The Commerce Department recently reported that U.S. gross domestic product expanded at 2.5 percent in the third quarter of 2011. Consumer spending was the strongest since the fourth quarter of 2010, while business investment spending was the fastest in more than a year. According to the NY Times, it appears banks are making more loans, which is necessary for a full recovery. The SBA reported that during the fiscal year total loans reached an all-time high of $30.5 billion, increased 35 percent from 2010 and 70 percent from 2009.


Although some signs are pointing up, many business owners and executives are still feeling paralyzed waiting for the next drop in the market or GDP. The new normal, if there is one, is a place of tumultuous change. People in that place tend to stop and wait. The question is waiting for what? This recovery will be slow and long with many starts and stops. At the same time, there is significant investment money sitting on the sidelines as many investors avoid risk altogether.


I for one take a different view. I believe in all the waiting, uncertainty and wariness there are opportunities for growth and expansion. Companies have to be cautious and deliberate in their actions but must be brave. Businesses that are positioned to meet the needs in the marketplace will be the winners while others may lag behind as the recovery takes hold. What this translates to is that businesses must become nimble and flexible to respond. Good sound business practices, such as planning and managing to an expected rate of return, should not be discarded in difficult times. Instead, we just need to change the way we get there. The following are a few examples.


• Planning cycles are shortened. Instead of one- to three-year plans, executives and management teams may need to plan three to nine months out with the need to revisit the plans more frequently
• Staying abreast of market shifts, trends and needs is magnified. Marketing departments need to be more instrumental in this. Increase conversations with customers and find current pain points and how your business can solve them
• Upgrade the talent in your business. The talent pool has never been more full with top-tier employees and executives than today. If your company is lacking leadership or keeping ineffective staff, now is the time to upgrade your personnel
• Don’t hesitate to cut old products and ways of doing business to embrace new frontiers. Hanging on to the past can burden you for future opportunities
• Target big corporations’ small customers. In tough times, large companies cut back their services to smaller customers. You can fill this space that has been abandoned by others
• Explore international markets. You can open international markets either through independent rep organizations, partnerships or an acquisition. To be successful it takes a study of business and cultural differences in each target markets and internal leadership to own the process, but it can be a great way to grow your market share
• Become the outsource source. As larger companies look to reduce fixed costs, look to see if you have a core competency to become their outsourced provider
• Acquire new skills, customers and markets. There are still opportunities to make acquisitions for low entry fees and leverage the best of both companies
• Be creative to bring new products to market or open new markets for current products. When funding is scarce, look to partnerships, joint ventures and other avenues that allow your firm to bring value to another business relationship where the winners are the customers and then each business
• Know thy self. Evaluate your entire business platform to understand core competencies and to leverage them to a new business model.


I would argue that companies can utilize these practices in both good and bad times. When the economy is growing and cash is flowing, these practices keep businesses sharp, current and relevant as the next downturn comes. Companies don’t have to see the free fall that may hit most of the economy if they plan for and manage effectively during the upturns. In today’s world those who have employed one or more of the suggested strategies have been able to grow the last few years and have positioned themselves well for stability and growth.


Let’s look at some examples of these results. The U.S business process outsourcing industry generated revenues of $8.9 billion in 2010, a 26 percent growth from 2009 with no slowing in sight. These companies take processes from other companies looking to reduce fixed costs. Processes such as technology, customer service, accounting, and even outside sales are outsourced. Working with a Denver sales outsourcing business, I have seen the company experience double digit growth each of the last three years. For companies not in this space, look internally and determine if the expertise is there to develop a business model to help others reduce costs and shift processes to your new model.


Another example is a business I recently worked with in the print services industry. When the economy crashed, their main business line of printing, dropped as rapidly as the markets. As they evaluated their businesses for cuts and downsizing, they discovered a core competency in an area that was not a profit center but rather a cost center. Over the years they had become experts in warehousing and distribution. Instead of closing a number of warehouses, which was the first inclination, the company saw opportunity to expand its warehouse offerings and develop a separate business model. This proved very successful with a built-in base of current customers. According to a recent study by Kelly Services, other industries to look at for growth opportunities include:


• Consulting: Management, technology, and scientific-related areas will proliferate
• Elderly Services: As “boomers” reach senior citizenship and enjoy good health, a wide variety of services will be needed
• EDP and Internet Hosting and Publishing: As mainstream readers move from printed to electronic news and information, hosting and publishing opportunities should increase
• Home Health Care: As health insurance companies tighten their budgets and populations age, home health care opportunities expand
• Cable and Satellite Programming: As the over-the-air networks face quality competition from cable and satellite sources, they will look to upgrade the supplier base
• Outpatient Care and Diagnostic Laboratories: As medical procedures improve, in-patient hospital care necessities decline, making outpatient care an industry to watch
• Waste Treatment: As the population increases, the available land decreases, and concern for environmentally-friendly processes predominate, waste treatment enjoys expanding industry status
• Community and Personal Care Services: Social responsibility and personal care are becoming more important
• Facilities Support Services: As more companies “go green,” protecting the environment gains importance
• Education Support Services: opportunities project to increase as needs become more complex
• Passenger Transportation): Air and road transportation continues to increase. Travelers require a myriad of services, both direct and indirect, to get them to their destinations


All business should be monitoring these growth industries for unmet needs and how to fill them through the outlined strategies. To be successful in any economic climate takes visionary leadership, razor sharp focus and the ability to manage new products, services and business lines. Keeping your management team focused on developing strategies to meet these opportunities are key to pushing ahead of the competition and positioning yourself as a market leader.

About the author

Kevin Lombardo
Kevin P. Lombardo, Founder and CEO

Kevin founded Summit Group Partners to support businesses throughout the United States in their quest to accelerate a transformation and achieve sustainable change through strategies of growth, expansion and operational excellence. His passion is to help businesses and executives maximize their potential. Throughout his consulting career, Kevin has formally coached over 25 CEOs and business owners representing 10,000 employees’ globally and nearly $2 billion in revenues and helped them to unlock human potential and shareholder value. With 14 years of direct P&L leadership and over two decades of management and consulting experience in multiple industries Kevin can quickly bring the resources together to make an immediate impact on any organization. Kevin participates on various industry panels and has spoken at corporate and industry events throughout the country on the topic of accelerated sustainable change. Furthermore, he has authored numerous articles on corresponding subjects and has been interviewed by media outlets throughout the country.

Kevin directs all engagements for Summit Group Partners from inception and guides their progress throughout in order to ensure consistency and efficiency in all services delivered. He also manages client relationships and develops optimum solutions tailored for each client’s specific need. He has extensive experience assisting both healthy and distressed companies with M&A transaction leadership, revenue growth, operational improvements, restructuring debt, negotiating with creditors and unions along with locating financing.

Prior to forming Summit Group Partners, Kevin built two nationally renowned consulting practices from 2004 through 2010. Kevin has held numerous senior executive positions including CEO, President, CRO, EVP and CFO of publicly traded, privately held, Fortune 500 and private equity led businesses. Kevin has an extensive background in business leadership, strategic planning, growing revenue, profits and shareholder value of numerous businesses, executive development, entrepreneurship and turnaround management. As CEO of a $300 million dollar supplier of print services, Kevin led the transformation from a stale business model to a growth engine for the parent company, achieving revenue growth of 7% after multiple years of decline, reaching and sustaining the number one market share position and supporting the stock price increase of 300% within 15 months of taking the leadership role. He has held the position of CRO multiple times and has three times led businesses through the Chapter 11 bankruptcy process with each company successfully emerging with a confirmed plan of reorganization. He has led and executed the management of the merger, acquisition, divestiture and integration of over two dozen businesses with total transaction value in excess of $1.5 billion. Kevin received both his BS and MBA from the State University of New York at Buffalo. In addition, he holds a graduate certificate from Cornell University in Human Resource Management.

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Summit Group Blog

 

posted by Aimee Miller on Tuesday, 03 April 2012

Kevin Lombardo has been appointed as interim CEO by the Hopi Tribe Economic Development Corporation (HTEDC) in Flagstaff, AZ.

posted by Aimee Miller on Monday, 05 March 2012

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