Three Effective Strategies to Fuel Growth

by Rick Dennen, President & CEO

As a business owner since 2003, I understand the desire to always be growing your business. And, while it’s satisfying to know your business has become financially larger and stronger under your leadership, there are also practical benefits. A growing business is generally a more profitable business, and when the time eventually comes to sell, a larger, healthier company will command a higher price.

While there are many factors that fed into Oak Street Funding’s growth, I believe three particularly powerful strategies fueled that growth and continue to do so today. Applying these strategies to your own business, whether you’re a start-up or an established company, may help you reach the next level.

Culture counts

Consciously building a strong management team and company culture can lead to growth. I know some business owners dismiss culture as something that is touchy-feely, with little or no value, but I believe culture is a key component for growth. A successful business is made up of people working together to achieve common goals. This cannot happen unless everyone understands why and how they work together and everyone is on the same page regarding the overarching goals of the company. An engaged and motivated workforce provides outstanding customer service which can attract new customers and bolster client retention.

A key part of Oak Street Funding’s culture is encouraging our employees to give back to the communities we serve. We support this philosophy by giving employees paid time off to volunteer and allowing our employees to decide what causes we’ll support. So it’s no surprise we attract people with caring, supportive personalities who work well with our clients and each other and that Oak Street Funding has been named a Best Place to Work in Indiana for eight consecutive years. Culture is critical.

Manage like you’re selling tomorrow

A second and equally important strategy is to run your business every day as if it will be sold tomorrow. I have first-hand experience with Oak Street Funding being sold three times with the shortest time frame being 30 days. Each time we sold it was like starting a new company—new capital, new board, new objectives, new strategy—three times in 12 years. And while each sale had different circumstances, each resulted in positive outcomes for our company, shareholders and employees.

If you strategically manage your business as though you’re planning to sell it at any moment, it will inform what actions you take. As a result, you will focus on making the most of its value. Not its emotional value to you as a founder or owner, but the true value in the sense of what a prospective buyer would pay for it. When you start valuing your business by what potential buyers think about it, you begin to focus on the factors that mean more to them. How would a buyer view your offices, management team, processes, technology, margins, profitability, efficiency, and client base? You may be proud of what you’ve accomplished, but will that pride translate into a maximum selling price?

Looking at your business from this strategic vantage point will help you to determine what to improve in order to make your business more marketable. And, when you invest time and money to evaluate and improve the way your business operates, revenue results usually follow. Plus you’ll be more enthusiastic, and your energy will motivate your team. I walk into work every day with this strategy in mind. It informs my leadership process and guides the decisions I make.

Wisely leverage debt

If you would like to expand or transform your business you will likely need to invest some additional capital. This could mean borrowing —which means taking on debt. If you are conservative by nature and your attitude toward borrowing may spill over into your business life— making you debt averse. Aversion to debt can result in not taking out a loan—even when it is economically advantageous. Are you comfortable with risk or do you make an effort to avoid risk as much as possible? Your degree of risk aversion can play into the decision to take on debt to grow.

There is unquestionably some wisdom in avoiding debt, particularly for individuals. However, when it comes to business borrowing, “debt” is not the most accurate term. A better choice is “leverage” because it describes the role borrowing can play in your business. Essentially, when your business borrows, you are leveraging other people’s money to achieve a purpose that will increase the value of your business.

When the idea of borrowing is unappealing, businesses may often look to another option for extra capital— equity financing. Equity financing consists of giving up part of the ownership in the business by assuming new partners or selling shares to new investors. Are you prepared for new decision makers at the table setting strategy for your company?

As with most things in life there are pros and cons to both utilizing leverage and equity financing. If you do decide to borrow, find a lender who truly understands your business and the industry. Anyone can lend you money, but you will be better served with a lender that is deeply familiar with your industry, looks to build long term relationships and can structure financing that will best support your objectives.

As business leaders and owners we have incredibly full plates but taking the time to incorporate these strategies into your business planning can lead to growth and its many benefits.

“A successful business is made up of people working together to achieve common goals.”

Rick Dennen is the Founder and CEO of Oak Street Funding a specialty lending company. Rick founded Oak Street Funding in 2003 with one vertical—insurance businesses—and has grown the company into a national business with nearly one hundred employees, eight business verticals, and a portfolio exceeding $1B.