In a recent interview, Ken Yager, President, and founder of Newpoint Advisors offered his observations on growth mismanagement in lower-middle-market companies, from his perspective as a turnaround advisor.
Yager has 30 years of experience in the turnaround space and has helped more than 100 struggling businesses find their feet again. Six years ago, he founded Newpoint to offer companies a structured, disciplined process for moving through and beyond challenging situations.
“With nine offices around the country and 26 employees, we’re now walking the walk as well as talking the talk—using what we’ve learned from helping our clients to manage our growth,” says Ken. “We understand first-hand the challenges that they face.”
What Are Some Common Signs That Trouble Is Brewing?
“The companies that call us are good at what they do subject-matter wise, but are having other challenges running their business.” Ken cites some of the signs that motivate these companies to call for help:
- A banker or working capital finance partner, like Gibraltar, has expressed concern about the company’s growth pattern and financial stability
- Recurrent problematic cash flow issues including situations in which customers or vendors change their payment terms or behavior
- The loss of a major customer
- Market forces create unforeseen performance hurdles or pressures
Newpoint goes in to fix problems that are underway. Ken shared some ideas that can help companies keep out of trouble, too.
What Are Your Top 5 Growth-Management Recommendations For Leadership?
- Don’t try to grow in a declining market; there’s too much risk.
“It doesn’t make sense to sabotage yourself right from the beginning. Choose a favorable market and gain some tailwind.”
2. Pay attention to changes in government regulations and global market risk.
3. Take care of your partners – lenders, vendors, employees, etc. Working at good relationships ensures the critical support of these stakeholders.
“Remember Peter Drucker’s Rule – ‘Culture eats strategy for breakfast.’ You need the right people going in the right direction to take you the way you want to go.”
4. Understand your strategy thoroughly. Know it well enough to know when it’s not working and how to pivot to get back on the road again.
5. Stay on the right side of the law. Don’t take shortcuts. Legal trouble can destroy a small company.
What’s Your Top Advice for Sales and Marketing?
“Never sell A and deliver B.”
Make sure your communication is clear and that sales and marketing align with deliverables. Delivering on promises is more than a matter of integrity; it’s critical to avoiding legal problems.
What’s Your Top Advice for Operations?
“Plan for scale.”
Can you replicate processes and items for thousands of occurrences? One of the most important factors in a business’ growth is its scaling strategy. The proper planning for infrastructure, equipment, and systems will help to support your strategy.
What’s Your Top Advice for Management?
“Accounting is more than just for reporting taxes.”
You need to be developing the right metrics and dashboards to understand how your business is performing, not just on an annual basis or even monthly basis, but on a weekly and daily basis, too. The right numbers can give you early warning of risks and challenges to your company’s health.
If you are seeing warning signs in your business and need cash flow flexibility to move through a transitional period, asset-based lending from an alternative lender may be a good solution. Explore your options with Gibraltar’s experienced team members. We partner with clients to understand their unique business and capital needs—building a level of understanding that allows us to personalize lending in a way that other lenders can’t.