Business ownership: The dynamics of a mature business

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

People

In maturity, innovation can be the difference between a struggling company and a company that thrives.

Best practice

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.


Process

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.

Best practice

To create standard outcomes, establish uniformity to production of products, services and internal functions.


Technology

When trying to innovate and keep margins up in a more commodity focused business, data and technology can be the keys to success.

Best practice

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.

Tax tips

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.

Explore all five stages of the business owner lifecycle

  1. STARTUP
  2. LAUNCH
  3. GROWTH
  4. MATURITY
  5. TRANSITION

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This article was written by RSM US LLP and originally appeared on Feb 08, 2023.
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