Business ownership: The dynamics of a mature business
ARTICLE | February 08, 2023
Authored by RSM US LLP
The dynamics of a mature business
The relative stability of the maturity phase may be a welcome development. But it can be accompanied by declining sales and thinner profit margins. The urgent tasks for your business are to differentiate itself and innovate with an eye toward restarting the growth engine.
Questions and answers:
Q: How will I sustain my business and avoid a downward spiral?
Most successful mature companies determine what they are truly good at and strive to better differentiate themselves in the market while not losing sight of costs and risk. Your path will often depend upon your product and the strengths of the enterprise.
Q: How can technology help?
Technology solutions (e.g., BI and data analytics, automation, AI, CRM) help with cost savings and margin focus. They can also help your company’s transformation journey. Better customer understanding allows you to focus your efforts and capitalize on what customers value.
Q: Do I have a detailed exit strategy?
You’ve grown something substantial and continue to lead the organization. Your focus will be different than with a purely growth-focused company, and your succession plan with specific grooming and transition protocols will be very important at this company stage.
Best practices for owners of growth stage businesses
People, process, and technology
In maturity, innovation can be the difference between a struggling company and a company that thrives.
Engaging the entire team in an idea can help drive innovation. If this is a big cultural change for your organization, then it might make sense to engage with an advisor who is accustomed to making these changes on a grand scale. After all, change is hard.
Growth and margins are no longer able to mask the consequences of bad processes. You are likely relying upon many others to accomplish a standard goal.
To create standard outcomes, establish uniformity to production of products, services and internal functions.
When trying to innovate and keep margins up in a more commodity focused business, data and technology can be the keys to success.
Have systems in place to understand waste and concentrate mitigation efforts, which can lead to huge gains. Also, understanding customer buying habits allows you to know more quickly if changes are effective or if you need to keep tweaking.
Heed the tax implications of strategy shifts
Strategic shifts in the business often lead to changes in tax structure and planning. Talk with your tax advisor about new opportunities that may exist based upon the strategic choices you are making.
How do entrepreneurs address the various lifecycle stages of business ownership?
Owning a business takes a certain confidence and grit. All owners are different, but all face similar challenges. Our business ownership lifecycle ebook shares insights gleaned from helping business owners face these challenges head on.
This article was written by RSM US LLP and originally appeared on 2023-02-08.
2022 RSM US LLP. All rights reserved.
RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each is separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
MHP is a proud member of the RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.
Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise and technical resources.
For more information on how MHP can assist you, please call (307) 634-2151 in Cheyenne, WY or (970) 287-1041 in Fort Collins, CO.