Intentional Growth #242: Is There Such a Thing as Growing Your Company Too Fast?
Today’s show is all about growth rate: the rate you should target, how to identify that rate, what you can do to manage your growth and how much you can expect that growth to cost you. Listen in as Kevin Trout, former founder and owner of Grandview Medical Resources, Inc. — a fast-growing and award-winning specialty medical equipment distributor to hospitals and healthcare providers — explains how he landed on his optimal growth rate of 20% and gives specific examples of the tactical marketing they implemented to scale the company and compete with the industry giants. Kevin started out with a maxed-out credit card and sold the business years later when they were doing millions of dollars of revenue, multiple product lines and over 60 employees.
What You Will Learn In Today's Podcast Interview
- The way Kevin’s focus led to doubling revenue within six months
- How Kevin went from maxing out his credit cards to a $1 million line of credit and 23% growth rate
- What the maximum sustainable growth rate is for distribution companies and how Kevin challenged it
- The importance of understanding where your financing comes from because you’ll just keep eating your float otherwise and grow right into bankruptcy
- Why Kevin started with the end in mind when deciding the growth rate
- Your P&L statement shouldn’t be a surprise to you
- Why Kevin set out to capture the patients most underserved by hospitals and how this impacted his bottom line
- How to achieve excellent profits through rentals
- How vertical integration works, why more companies need to be focusing on that, and how incentive plans typically encourage horizontal integration and are missing big segments of the markets they already serve
- The value in complementing vs competing and winning clients through good service rather than aggressive sales
- What “flanking the enemy” means in marketing and how to pull it off with style
- The false dichotomy of offense and defense and how it hurts your strategy
- How knowing he was building to sell let him
- The benefits of maximizing profits, paying down debt and investing in technology before you sell your company
- Why, despite an intentionally designed and successfully executed sale, Kevin wishes he’d known more about the impact of culture, EOS, how to build value and exit planning
- How building a business is like driving a manual transmission — you need to know when to push in the clutch
Are You Growing The Value of Your Business
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- Are your company's current initiatives intentionally designed to increase the value of the business?
- Do you know what you want from your business long term and why?
- Do you know what your company is worth?
- Do you know the differences between Management, Family Transitions, PE Firms, ESOPs and Strategic Buyers?
- Does the business have a written strategic plan on how to achieve the desired normalized EBITDA and valuation?
About the Guest:
Kevin Trout is the former founder and owner of Grandview Medical Resources, Inc., a fast-growing and award-winning specialty medical equipment distributor to hospitals and healthcare providers. Kevin is now a Vistage Chair, where he leads four private peer-advisory boards and coaches, mentors and advises CEOs and business owners on strategic growth, leadership skills, and developing and retaining their top talent. He is also a past president and long-time board member of the Independent Medical Distributors Association of North America, so he truly knows his industry. Kevin holds a degree in Pre-Law/Criminology with a minor in Business from Indiana University of Pennsylvania, as well as a degree from the University of Pittsburgh’s Katz Graduate School of Business — Institute for Entrepreneurial Excellence.
Quotes:
09:14 - “We were selling a little bit of everything, not enough of anything.” – Kevin Trout
12:28 - “I risked it all with the credit cards.” – Kevin Trout
17:48 - “It was really about knowing where I wanted to go and coming up with a plan on how to get there.” – Kevin Trout
23:23 - “Horizontal integration is adding more customers to your customer base. Vertical integrations is selling more products to the customers you already have.” – Kevin Trout
26:24 - “We just had to do a better job than them to get the business.” – Kevin Trout
26:41 - “I’m not here to compete; I’ll complement. I’ll take over where they leave off, and if you really like working with us, you may give us their business at some point in the future.” – Kevin Trout
34:59 - “I think you have to be intentional--very intentional--about all the things we talked about. Have I seen that in other companies? No.” – Kevin Trout
36:10 - “They’re always talking about lowest price wins, but that’s not really true; it’s about the value that you deliver for the dollar you charge. Only 7% of buyers buy based on lowest price—93% buy based on value.” – Kevin Trout
40:07 - “It’s not like it’s my baby. I started it with the intent to sell it somewhere down the road.” – Kevin Trout
41:35 - “We went from $124 million in revenue to $24 million four years later.” – Kevin Trout
44:33 - “Technology is less expensive than employees.” – Kevin Trout
54:36 - “If I were to go back and talk to myself at the time I started the company, it would be something along the lines of understand how to control your growth and build value, and know where you want to end up in 5 to 15 years.” – Kevin Trout
58:23 - “You’ve got to delegate to elevate.” – Kevin Trout
Links and Resources:
Kevin Trout email: kevin.trout@vistagechair.com
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