Growing Pains

Keep Your Eye on the Prize and Your Customer By Being An External Executive

Your company has gone through a series of successful growth phases. You saw an opportunity in the market. You developed products to satisfy these customer needs and worked hard to position your company and its products. You know the joy of seeing your food products listed in more stores, your SKU’s added to the shelves of more retailers. You struggled through late nights and early mornings to build products, to get your administration organized, and to develop the capacity to keep up with your growth. Your whole focus is centred around a need you see outside your company, and fulfilling that: you are an external executive. That is where your focus is, and why you are successful.

And then you decide to expand, and it becomes complicated. Really complicated. There are so many new issues that crop up:

• Personnel situations can take up a whole day, when you had really had other priorities to manage.
• New equipment needs to be purchased, to satisfy your growth needs, but that requires new financing, which takes time to arrange and you do not have the time.
• The regulations in the food industry are increasing and you spend more and more time working with suppliers and customers to manage paperwork that adds nothing to your bottom line.

Entrepreneurs will testify that growth is very non-linear. It is never as clean and predictable as the graphs in business plans. It becomes messy, it breaks down, it flattens out and becomes more like a series of building blocks that you as the CEO struggle to keep organized. You want to build your company for the next level, but spend your time struggling with the level you are at.

And this is where the danger arrives; where many entrepreneurs spend more of their time managing their companies and slowly but surely, and with no alarm bells going off to warn them, turn from a very externally focused executive into a mostly internally focused executive. External executives are striving to serve their customer’s needs, but internal executives are focused on internal fulfilment, organizational charts and structures, on financial management, operational matters and a myriad of other issues that just seem to keep you away from looking outside your company.

And this is where many companies miss out on their ability to take that next step, to position themselves within a market that needs their products. They became internally focused, spending time on productivity, on KPI’s and budgets and metrics and other operational matters.

Am I saying that the operational matters are not important. Not at all, they are critical to keep your company safe. But what I am saying is that it is important for the leaders, the CEO’s, the founders of food companies, to maintain their focus on being external executives. On spending their time and focus on new products, new markets, and developing new opportunities. Ultimately this will lead to a slightly different focus:

• Every new opportunity does not necessarily mean you must be the one manufacturing the product.
• The leaders of the company are able to maintain a much stronger emphasis on serving the customer and their evolving needs, and not on how to ship to your customers.
• New opportunities may be served in new ways, more co-packing and co-branding, or possibly different types of marketing.
• You may hire people to fulfil roles you spend more and more time in, but that are withholding you from being highly focused on your external customers.
• You may plan for growth with more options on the table than usual, such as not feeling obligated to do everything in your company yourself.

The wave of consolidation, the disappearance of middle-men such as retailers (e.g. Sears and Target), and the impact of technology are all forces that pull at the focus of the external executive. So these external executives will have to work harder than ever to keep their eyes on the ultimate prize, namely end-customer awareness and loyalty. Let the internal executive side of your daily life find new ways to get products to customers. The survival of many companies will be hinging on their ability to keep their eyes on these ultimate customers, and to fulfil their needs in new ways that may look completely different than now.

So next time, when faced with the growing pains of higher sales volumes, with more administration and the need for more capital in your budget, consider this: Only the end-customer of your product pays the bills. Make sure that you are on the receiving side of their purchase patterns, regardless of how the steps between suppliers, manufacturers, processors, distributors evolve. None of those are in your control.

But keeping your eye on the customer: there you have a choice, and I encourage you to execute it. Continue to have a relentless, unwavering focus on your customer, and their customer, and their customer. Your company’s future will thank you for it.

Eben Louw, CPA, CA, is a Partner in MNP’s Abbotsford office and the B.C. Leader, Food and Beverage Processing. He can be reached at 604.853.9471 or [email protected].