At some point this year we expect The Riverside Company will surpass 1,000 investments in its 35-year history. While that’s a momentous occasion for the firm, it also provides the basis of a lot of insight into what we believe makes small- and mid-sized companies successful.
The investment milestone for Riverside comes at an interesting time. Somehow the breakneck pace of change of the internet era has accelerated. The long era of historically low interest rates appears to be over for the foreseeable future. And many of the long-promised benefits of artificial intelligence (AI) are actually coming to fruition. What’s a business owner to do?
In looking at some of the companies Riverside has invested in, I’ve found some common themes to foster success.
- Customer-centric. Companies that constantly communicate with their customers and prospects, listen to their requests and anticipate needs create demand and build happy relationships. Focusing on delighting customers seems obvious, but it’s an individual skill and requires the whole company culture to back it up. When it really works, a company will find that its product or service is not just “sticky,” it’s indispensable.
- Adaptable. The world is changing, and your company will either be left behind or ride that wave of change. Innovation has always paid off, but today it’s essential. Dedicate time, money and resources to improving products, processes and people at all times to ensure you’re able to anticipate and meet customer needs. A big part of this is building a culture that embraces change, starting with leaders who are willing and able to rethink and rework strategies at all times.
- Embracing change. Don’t be afraid to radically rethink and rework your company if you see the right opportunity. And don’t wait for the change to come to you. Amazon started as an online bookshop. By following market trends and customer habits, that company transformed into what it is today. That’s a dramatic example, but every company can and should look for way to capitalize on change in ways great and small.
- Tracking progress. All great companies have key performance indicators (KPIs) that measure efficacy across the organization. Be sure to build some that gauge how the company is faring with respect to new products, processes and even ideas. Reward and recognize innovation. Invest in the systems that allow you to measure everything and then use this data for continuous improvement.
- Aligning interests. The fuel that really drives all of the above aspects is having a properly incentivized team that’s working in unison to bring a strategy to life. There are dozens of ways for smaller businesses to incentivize employees but be sure that individual excellence is properly rewarded. As knowledge and talent increasingly separate great companies from the pack, retaining the right people is vital. Sharing success is not only ethically rewarding, it’s a recipe for greater success. I’ve long believed in baking bigger pies rather than fighting over how the pie is sliced. Whether you use bonuses, an ESOP plan, options or some other mechanism, make sure your best talent has skin in the game when it comes to reaching the next level.
Companies rise and fall all the time. The rising companies invariably find ways to benefit from the ever-changing landscape. Uncertainty is inevitable, so find ways to turn it into opportunity to build your company for the next generation and beyond.
Stewart Kohl is Co-CEO of The Riverside Company
