Two Value Creation Approaches – Real Life, Real Equity
The Third Growth Option with Benno Duenkelsbuehler and Guests
English - March 25, 2021 12:00 - 32 minutes - 22.5 MBBusiness business revenue expansion growth Homepage Download Google Podcasts Overcast Castro Pocket Casts RSS feed
Here we dig into two ways to create value: growing top line (largely by overcoming supply chain challenges), and as a skin-in-the-game growth partner. David Velie is knowledgeable in both – as co-founder of Amend Consulting and as CEO of Amend Ventures.
In the first half the episode, David talks about how Amend helped a manufacturer grow revenues by 60% during Covid and prepare for 30% annual revenue growth going forward by addressing org. chart, supply-chain and labor challenges.
3:52 - … “the primary challenge to grow a business sits inside the org. chart… (4:55) it has to grow its capability at a faster pace than what you’re trying to grow the revenue line.”
8:30 – on expanding a stretched Supply Chain: “we found every possible trade association whom we could join or get their member list…we’d do Google searches…or ask network connections of other suppliers… (9:28) we treated the supply chain like going and finding new customers, knocking on doors, cold-calling, asking for referrals.”
In the second half of the episode, David talks about a skin-in-the-game approach to consulting, trading billable hours for equity.
18:39 – “most service providers find as they become successful, they want to switch from fixed fee to something more scalable, where they’re not trading hours for dollars… our AV model is part of that.”
19:49 – “there is a fixed fee component… we’ll put a portion of that aside and attach it to an outcome (EBITDA, growth, etc.). It’s important to be flexible in those areas because all businesses are a bit different.”
21:20 – on ideal clients: “$2M to $5M EBITDA manufacturing businesses… a business with substance, a strong org. chart in at least a few areas, and scalable.”
23:14 – on ideal owners/executives: “when you’re dealing with sweat equity, skin-in-the-game, who you partner with is absolutely critical… (25:00) skin-in-the-game is somebody who is going to lose sleep if things aren’t going right.”
Always growing.
Benno Duenkelsbuehler
CEO & Chief Sherpa of (re)ALIGN