The Magic Years

The Magic Years are a period of time when you can really build value in your company. A period of time when your objective is to define and dominate your space. The normal company lifecycle consists of three phases - The Early Years, The Middle Years, Rovner ligature The Declining Years. You can change that.

Wealth is not being created

It is disappointing to me but not surprising that 90% of private company value is created by 5% of the companies. This is what statisticians call a power law distribution. It is not surprising to me because private companies are either invisible or remarkable and most are invisible. Very few are in between. Businesses are either commodities or monopolies and most are commodities. I know that sounds harsh but too many owners are sleepwalking their way to value! Evidence suggests that increasing shareholder value is a challenge.

Here are some facts, according to Mergers & Acquisitions magazine there were 5568 US exits last year with a value of $10mor more. The total number of US firms from the 2008 US Census data is around 27.3 million. Therefore if you are an owner of a small medium sized business, the probability of selling out for $10m or more is 1 in 6000.

And as Leslie Hannah, a business historian at the London School of Economics, pointed out, the lifecycle trend applies to really large companies as well. He analyzed the world's largest companies between 1912 and 1995.

The lifecycle showed itself again in his research. From his original paper: nearly three-quarters of the 100 giant firms had disappeared or were smaller in 1995 than in 1912. The average giant firm, it is true, was

larger in size in 1995 (or on its earlier disappearance) than it had been in 1912, but this average was heavily influenced by the few cases of exceptionally strong growth, less than a third of companies showed

positive growth.

There seems to be a regular pattern at play here. There seems to be an inevitable company lifecycle. You start with the Early Years followed by the Middle Years and eventually to the Declining Years to oblivion.

So is decline inevitable? Can we change this pattern?

Yes we can but it requires a different mindset. We need to replace the Middle Years with the Magic Years. The timing of the Magic Years is decided by you and your team. It's not for the fainthearted.

The Solution

It demands you insert a new phase into the company lifecycle - The Magic Years. This is a special time where you create a business that is growing fast, is fun to work in, moves to a dominant position in its niche and is very attractive to buyers. The Magic Years occurs after those Early Years and gives you a dedicated pathway to success, knowing you are building a business that is not just saleable but saleable at a premium exit value.

So how do you create these Magic Years? This requires you as the owner to think big. To think like the Big Boys! So what changes? How do you create a remarkable business? What do you do differently? You build a business with a new insight. You build a business by looking through the lens of a buyer.

You need to recalibrate value achievement around a new scorecard - a new set of 9 Big Critical Success Factors. You need to Deploy Integrated Tactics. Over the coming weeks I will explore each of these in detail bringing out practical action plans to achieve success. I will share some great playbooks, business models and tips that work in the real world to deliver a more predictable, enjoyable way to run a business.

The "Magic Years" are where the real wealth is created. Now you can't measure it every day at 4pm like a public company but if you can consistently nail these 9 Big Critical Success Factors, trust me you are driving shareholder value (defined as how much a buyer would pay for your business today) through the roof.

To create a Magic Year period in your business you need to deploy integrated tactics that answer these questions:

9 Big Problems


How does a business build an attractive positioning and translate it into a compelling marketing narrative?
How do you create a high growth sales environment with world class repeatable sales processes and a well trained sales team?
How do you build innovation into your culture and ship award winning products?
How do you attract the best talent and nurture them?
How do you build a metrics culture that is relentlessly curious?
What are the best business models and how could you improve yours?
How do you raise venture or private equity money and beat the odds?
How do you minimize risk and build robustness into your business as it grows?
What is the best process maps and tactics to complete acquisitions and integrate them seamlessly?


If you build your strategies and tactics around these agenda items you are likely to be working on the right stuff to drive business value through the roof.

Ian is CEO of The Portfolio Partnership which works with business owners to create value, to create The Magic Years in business. It is time to work on your business while simultaneously building its future. Ready? Say hello here.................

The Portfolio Partnership

Tel. 978 395 1155

Ian.Smith@portfoliopartnership.com

* Boston, MA

* Portland, OR

* London, UK http://www.portfoliopartnership.com