In 2003, the most common term used to describe the state of the economy was the “jobless recovery.” The year began with concerns about the war in Iraq. The Dow Jones Industrial Average fell below 8,000 in February. Mortgage rates plunged to 30-year lows, and homeowners rushed to refinance. George Bush cut taxes hoping consumers would start spending. It was against this backdrop that Joshua Dick took over his father’s company.
Urnex was generating less than $1 million in annual sales across seven product lines. Dick retrenched and jettisoned six of the seven product lines to focus his limited resources on the one product that Dick thought had the potential to scale: cleaning supplies for commercial coffee makers. In other words, a niche of a niche. Dick poured all of his limited resources into becoming the best in the world at one thing and ultimately grew Urnex to more than $5 million of EBITDA, which is when he decided to sell for a double-digit multiple.
Dick, who is also the author of the book “Grow Like A Lobster” uses the analogy of a lobster’s life cycle as a way to describe a business’s evolution. It’s hard shell protects a lobster, but once it grows to a specific size, it must shed its shell and develop a new, larger protective layer. During this “molting” process, it lays itself vulnerable on the ocean floor while a new hard protective layer forms. Many owners feel unprotected right now, which is why — just like the lobster — now is the time to retool and build a more durable business.
What product/service lines or projects are giving your business lift versus drag?
Contact Kirk W. McLaren, CEO, MBA, CPA, IFM, and Georgetown University lecturer at kirk@foresightcfo.com to learn how the eight drivers help you grow with clarity.