Some of the best advice that a CEO can get is from those who have walked in their shoes. We asked a group of CEOs who happen to be partners in Newport Board Group: “What is the best advice you could give a CEO trying to take their company from $5 million to $25 million in revenue?” In our next several blogs we present their responses.
Larry Aldrich: Create More Options for Your Customers
Larry Aldrich is a Newport partner with an unusually diverse background: a lawyer, publisher of one of the largest newspapers in Arizona, venture capitalist and innovator in the healthcare industry. Among his distinctive accomplishments: founding the Arizona Business Coalition on Health, a non-profit coalition that addresses health care system issues. In this role Larry drew on his previous experience as President and CEO of University Physicians Healthcare, the parent company for a 420-member physician group.
Larry says:
“Follow the Jim Collins framework in his book Good To Great regarding companies that he calls "hedgehogs." These are companies that hone their focus on the one thing they do best. CEOs must ask themselves: “What are you and your company uniquely good at that the world (i.e., customers) will allow you to earn a sufficient level of profit by delivering it to them?”
I guess the second part of that would be: Avoid at your peril moving into nearby businesses/ markets where your competitive advantage is not sufficiently distinctive to allow for high (even “monopoly”) pricing. An example: a restaurant owner who after enjoying some success is intrigued by the idea of branching out into real estate. It’s a recipe for getting distracted from sustaining and building on the momentum they have developed in their restaurant business.
A third idea: Consider moving from a service company (e.g., thinking of the employees on your payroll as your main resource for delivering goods and services) to a product company (using technology rather than people to deliver much of the product). Only by leveraging your people with technology and an innovative business model that constantly adjusts to changing market conditions can you create a successful company over the long term.
Finally, always strive to create more and better options for yourself. Too many companies become stuck in their ways, a victim of how they have always done things. Constantly explore other/better ways to proceed. Future success can be designed through providing both customers and your own company more and better choices.”
Peter Duff: Project Cash Needs
Peter Duff is a Newport partner who is a highly experienced, strategic CFO who has provided financial leadership for a wide range of companies from very big to pretty small.
For example, over a decade of service with Hanson & U.S. Industries, Peter partnered with the CEO of a footwear manufacturing company on a 3 year restructuring program, resulting in improvement in EBITDA from zero to $29 million. He has also established a company to build computer connectors, completing the acquisition of a complementary business and combining their operations.
Peter says:
“The leadership team and board of any company must always relate strategy and operations to the company’s cash position and its funding for growth. A company must have a CFO or someone else who takes the lead in projecting cash needs 24 months out. The constant goal must be to ensure you have preparation time for funding, relative to growth, commitments and contingencies. The frequency of the projections ensures you ‘stay up to date’ with the latest intelligence on where you are with cash and where cash is going.”
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