Growth requires a delicate balance, and Moore Stephens Apple’s
David Gaino understands that process, both as chairman of a CPA
firm that advises clients on growth and as the leader of a growing
company.
Through internal growth and mergers, the 95-employee Akron
firm has increased revenue from $8 million in 2004 to $10 million
in 2006. It merged with a Westlake firm in 1998 and a Mayfield
Village firm in 2004, giving the company immediate opportunities
on both the west and east sides of the Cleveland market.
Smart Business spoke with Gaino about how he invests in his
firm’s growth.
Q: How do you grow a company?
Plan for growth and make sure that plan aligns with the company’s overall strategic plan. That will lead to a clear identification of
the differentiators.
It often takes some real soul-searching because you tend to
think, ‘We have good people and good products,’ but so does the
competition. Searching for that differentiator will lead you to narrow your focus and make probably the most important decision —
what you’re not going to do.
Q: How do you make that decision?
For most entrepreneurs, there’s excitement under every rock. The
hardest decision for any business leader is to say, ‘We’re not going to
do all these different things. Even though it will mean a slightly slower growth track, we’re going to stay focused on these fewer number
products and services.’
The best way to instill that discipline is to establish a board of
advisers that the business owner can check in with several times a
year. You might staff that panel with an industry peer in a non-competing business — a CPA, an attorney, perhaps a retired executive who’s been there and done that. Then, you’ve got people
looking over your shoulder to say, ‘Are you sure you have the
resources to go into that next venture? Why don’t we just slow
down a bit and perfect these things that we’re doing?’
It’s difficult sometimes for the internal management team to say,
‘Slow down’ to the owner because it can look like they’re being
lazy, when that’s not the intention. The outside advisers can ask the
tough questions.
Q: How do you make sure your growth plan aligns with the strategic plan?
A critical area is systems. Businesses often will say, ‘We need X
number of people and these kinds of products,’ but they may not
have attended to the systems it takes for those people to function.
As you go through different growth stages, you outgrow your systems, and you’ve got to get that next size. That takes an investment.
If you’ve targeted a growth rate, you’ve got to check in with the
strategic plan to be sure that the systems, people and processes
are growing along to support it. Otherwise, that growth will be
detrimental to the company.
You might gain new business and lose current customers because
the systems are not allowing you to be as organized and efficient at
servicing the now-expanded business.
Q: Is it difficult to make that investment?
Some systems-oriented people do it naturally. For others, especially those with an entrepreneurial mind, it might be considered
hard because working on your business takes time away from selling and being with customers — and that’s not a natural inclination
for an entrepreneur.
If an entrepreneur with that kind of personality doesn’t have a strong operations person
and they reach for that next level, the weakness will be exposed. The best thing they can do is hire a person
with the operations mentality. That person can build the organization while the entrepreneur is doing the vision and leadership part.
To reach the next level, you need to invest in people, and that’s
just an outright expense. It may be difficult to postpone some true
sales growth and reallocate those capital dollars, but you need to
build a strong foundation so you’re ready to move on to the sales
growth and support it comfortably.
Q: How important is culture during a merger?
There’s nothing more important. The first challenge is to know
yourself, and that takes a fair amount of work. We have gone
through a process of documenting our shared values. It was 100
percent employee-driven and rolled out about three years ago.
Because we’ve documented those shared values, it makes it
much easier when we’re sitting down with a prospective merger
candidate to say, ‘Here’s who we are.’ We give them the opportunity to assess whether or not that fits with their shared values. It
also gives us a checklist of things to look for because, ultimately,
we have to be sure that if a merger were to go forward, the values are going to match.
We’ve pursued two merger candidates in the last two years, and
in both cases, declined to go further solely because of a perceived
mismatch of the values. There is no other criterion as important as
values.
HOW TO REACH: Moore Stephens Apple, (330) 867-7350 or www.msapple.com