OUR INVESTMENTS

HOW WE BUILD WINNERS

A system overview from RJ Valentine

7 Steps to Growing a Successful Company

STEP #1: Choose the right concepts/companies.

We look for products or services that have a huge potential market (more on that in a minute). We like to enter unfilled niches – or markets with large opportunities but no clear market leader. For example, when we founded Impact Power Technologies, we knew there was a vast international market for longer-lasting portable power, with no strong competitor to the OEM batteries that power the most lucrative markets.

STEP #2: Research…research…research…

What may seem like a great concept should always be validated with extensive research into the market…the product…the service…the competition…the people. I can’t tell you how often good ideas have fallen apart once you read the research. That’s one of the reasons a well-crafted business plan can be vital. It ensures that you analyze the current situation, the size and potential of the market, the strengths and weaknesses of the competition, the fact and numbers that allow you to analyze the opportunity with real world data.

STEP #3: Analyze the market universe.

Look hard at your target market universe – not just locally, but internationally. We certainly had successes locally and regionally, with Massachusetts Business Association, Jiffy Lube New England, LCF Associates, United Businessman’s Reality and others. But in today’s global economy, a market with far-reaching geographic possibilities can be key to strong, rapid, and sustained growth. All 3 of our fastest growing businesses meet this criterion – and are taking advantage of the international opportunities.

STEP #4: Out-market the competition – in both digital and traditional media.

You know you need a professional website, SEO/SEM, content, landing pages, social media, and email marketing. But you also need the high quality printed materials you use in meetings, trade shows, and direct mail. Today’s research tells us you need to “touch” a prospect 7 times before that prospect takes notice of your message. You should use every tool available to contact your prospects, convert them to qualified leads, and nurture them through the sales cycle. Use the best marketing communications professionals you can find – and fund the marketing with enough resources to keep it fresh, new, and on-going.

STEP #5: Don’t neglect sales.

Even with the greatest product on the planet – and the most effective marketing tools – you still need people selling. This is especially true if you are selling business-to-business, offering high quality products or services that have a real effect on the client business. You need professionals who know how to sell…who are ready to make endless telephone calls, write follow-up emails and notes, and know how to get the meetings where relationships are formed and sales are closed. Additionally, you need to train them on how to sell your products/services – and provide them with leads to put wind in their sails. Sales are like war, in that you need boots on the ground to gain a strong position. And, like an army, your sales staff needs the weapons to win the battles.

STEP #6: Build the management team – and if there are holes fill them.

Make sure you have a team you trust with every key aspect of the business. If you can delegate, you can devote your own time to what you do best – whatever that may be. This brings us to Step #7.

STEP #7: Watch the money. Like a hawk.

Let’s restate that: Watch the money. Like a hawk. Every day. Don’t shell it out all at once. Set milestones: when x happens, money happens; when y happens, more money happens. You’ll get complaints that, without the money, they can’t do things fast enough. But you’d be surprised how powerful a motivator the promise of money can be when a milestone is met. That way, the investment is never squandered.

Read the rest of the brochure, including 3 case studies of our fastest growing companies.

Over the years, I’ve been lucky. But like my father said, “The harder you work, the luckier you get.” My luck? I’ve been fortunate enough to have the right idea at the right time. I said ‘YES’ to an investment when my partners said, ‘you’re crazy.’ I was able to negotiate a couple of unreal exits, leaving me with the resources to found, build and invest in more businesses. Thankfully, I’ve had about 18 really notable successes; still have about two dozen operating businesses – including a couple of new ones that could blow those earlier successes away.

People ask me frequently what my “secret” is. And it’s not a secret. It’s a process built on instinct, sure, but also on common sense, research, building the right management team – then outworking and out-marketing the competition. The process has not only helped me build my own businesses. It’s also helped to ensure that our investments in other people’s businesses will pay off. I learned early on that if I simply invest money and walk away, like many private equity groups - the company is still likely to squander - and accomplish nothing despite my investment. INSTEAD: We dive in, we learn what goes on inside a business, and we run the company. If you work closely with the companies you invest in – mentoring them with the expertise you’ve developed over decades of building market leaders – they’re a lot more likely to grow the business in ways that provide investor return.

Since the process is not a secret, I thought I’d memorialize it a little for posterity, but more to demonstrate to other equity investors what happens when you bring operational expertise to the firms in which you’re investing.

Here’s my overview of what we do to build a winner.

Richard J. (RJ) Valentine, Chairman The MBA Group