Issue 7 of 9: Growth Strategy

Construction Ownership Transition Issue 7 of 9: In general, with all other key factors including cash flow, profitability, and customer satisfaction being equal, a contractor that is growing will be able to better handle an ownership transition.

D. Brown Management Profile Picture
Share
Succession: Ownership Transition Issues - Number 7 Growth Strategy. Impact. Nothing will have a more dramatic impact on a contractor than bringing on a more quality revenue on a recurring basis.

Without executing a profitable and sustainable growth strategy, the value is significantly lower for all parties. 

Consider this the same as investing in a piece of real estate.

  • Minimal growth is the equivalent of buying the home you are living in with a 10-15 year mortgage.  The mortgage will eat up most of your disposable income for that period of time, and in the end you will own the house along with any market appreciation it had. Not a bad deal but not a major creation of wealth, though it was a good forced savings plan for the new owners.   
  • Strategic growth is the equivalent of buying a 20-unit apartment complex in a good neighborhood that will cash-flow a mortgage as-is with existing occupancy rates and rents. However, part of the deal includes an adjacent lot where you can develop another 50 units over the next ten years in three phases.  

The second structure is more complicated with more risks and financing required. It will also create more value for both past and future ownership groups, as well as more opportunities for employees.  

What is your strategic growth plan and how does that factor into succession? This is where an experienced but unbiased third party can be extremely valuable to bring into the discussion.


Succession
Continue building value in your business, yourself and your key team members with a good succession strategy....

Succession
Continue building value in your business, yourself and your key team members with a good succession strategy....

Contractor Exit Strategy 3 of 6: Strategic Sale to an Outside Buyer
Contractor Exit Strategy 3 of 6: Strategic Sale to an Outside Buyer. This is what every contractor wants, however, only a small percentage of deals truly fit into this category.
Incentive Compensation for Contractors - Audience Questions: Edge Cases?
There will always be people in the organization working at the edges of your performance bell curve and that must be addressed with your incentive compensation program.
Accelerating Retirement & Succession
Today, succession planning is more important for contractors than any time in recent history.