As the marketplace changes and new products come to market, it is inevitable that the products originally introduced to the market will see a decline in sales and profitability. At this point, the Company enters the decline phase of the wave. We have ridden the wave to the top, and now we are decending from the apex of the wave towards shore. At this point, we need to determine whether the Company has new products and services which can be delivered to the market through it current sales channels, whether there are competitors available to be acquired with products and services which can be sold through the Company’s sales channels, or whether the value in the Company is its reputation, customer list, manufacturing processes, etc. and this value can be better realized through the sale of the Company.
Now is the time we must decide the endgame of the Company. Two strategies can be taken at this time. One would be to invest heavily in research and development as well as acquisitions to provide new products and services that can be delivered to the market in which the Company has been successful. The other is to utilize the infrastructure, processes, customers, stakeholders, brand recognition and goodwill which have been created by the Company’s previous success as a method to create value. The approach taken at this juncture would be to sell the Company for its value.
Items to Consider:
During the Decline phase of the Company, the following questions are some of the essential issues which must be resolved in order to continue moving our business wave in the most profitable direction for your shareholders:
Product/Service Considerations – What new products would fit into our current sales force’s/channel’s product mix? Can we deliver new versions of the product we’ve been delivering? Does our product lend itself to peripherals which we can deliver to our customers? Can we expand our services to include competitors’ products? Are we making our products as simple to purchase and as accessible as possible?
Market Considerations – Our products have now saturated our available market. Can we provide additional products to the same market we already serve, through the same channels we have employed to sell our products as our Company has grown?
Operational Considerations – Our systems are almost on autopilot now. We have developed systems which provide products and services to our markets in significant quantity. Are our systems so specific that they are unable to provide other products to market? Are there products that will readily fit into our system for production and sale?
Financing Considerations – Reinvest, merge or sell? What is the cost of getting new products to market through our systems? What is the ROI? What is the value of our Company? Who are likely purchasers of the Company?
Business Plan – As we enter the decline phase of our Company’s wave, it is as important as ever to have a comprehensive business plan in place. Decisions of invest vs. sell need to be made, and our business plan needs to reflect the current and long term value our Company will provide to potential suitors should be decide to sell.
How We Can Help:
Whether your Company is contemplating reinvesting in order to reinvigorate its market dominance or whether it is contemplating a sale, or whether decisions need to be made as to which is the most appropriate route to take, CXO Vantage can help to analyze the risks and rewards of any direction to be taken, and can help to implement a strategy that is most likely to succeed for your Company. To set up a free introductory visit with CXO Vantage to discuss your current situation and how we can help guide you as you ride the business wave, call (801) 930-0842 or email us at firstname.lastname@example.org