Stop chasing growth: how business stabilization can triple your value
Adobe
Not long ago, I took my family to the Alaska State Fair. After the kids were tired from the rides and sugared up, we checked out the prize-winning animals and vegetables. This wasn't a great year for veggies, but even in an off year, the winning cabbage was still the size of a dining room table and the winning carrot was as big as my 10-year-old.
But here's the thing: these oversized vegetables aren't edible. At least, you wouldn't want to eat them. The texture is woody, and the flavor? Blah. And if you don't want to eat them, you're not going to buy them. After everyone finishes admiring them, I assume they get fed to animals or composted. They never end up in the grocery store.
Here's the lesson: don't let your business become like a state fair cabbage.
Why 'running well' is more important than just growth
Many owners and executives want to grow. They're gunning for their model of growth—more customers, bigger revenues, a larger team. For those who figure out how to mesh all the growth gears, they grow. People are amazed. They get talked about. Maybe they get profiles in local publications, invites to high-profile events, and even seats on boards. They've made it. It feels nice.
Then they decide to sell their business. Lots of people show interest and want to take a look. But after that look? Crickets. Far more frequently than you might imagine, no one wants to buy them. In fact, only about 20%-30% of these businesses will ever sell. Why? Well, it's not just about size; it's about value.
Just like those oversized vegetables, businesses that grow rapidly without focusing on business stabilization—solid operations, stable management, and profitability—often find themselves looking impressive but lacking true value.
This doesn't just apply to those looking to sell. Maybe it's an owner or executive who wants to be less tied to the day-to-day. They dream of consistency and simplicity. They hope that "once we make it," everything will get easier and require less effort. But they soon discover that growth on its own doesn't necessarily create a business that's valuable to buyers or easy to manage.
The true test of a well-run business
The rule is simple: Businesses that run well are also valuable. They're easy to manage, and owners or executives rarely, if ever, need to be involved in daily operations. These businesses are resilient, handle challenges well, and are generally great places to work.
There's a quick test I like to use to determine how well a business runs: "How long can the owner(s) or senior executives go on vacation without being interrupted by work?"
The ideal? The leader whose business keeps humming along—and even grows—while they're on that spontaneous three-month yak cheese-making course in Inner Mongolia.
You don't have to go away or even make yak cheese. But the idea is that the leader could be away and the business wouldn't skip a beat. The only way that happens is if strong, stable management is in place, the company makes money without the senior leader's presence, cash flows are stable, SOPs are established, and everyone knows their roles.
If the vacationing leader feels the urge to check in, they can catch up on key metrics in 15 minutes and accurately gauge how the business is performing from 10,000 miles away. That's a well-run, stabilized business.
Why growth complicates this
I'm not knocking growth. Most of my clients are pursuing growth. Right now, two are moving from roughly $4M to $12M. Another two have scaled from $20M to over $40M. A $40M company will land at $65M this year. And so on.
I like growth—a lot. But if it's not done with a focus on business stabilization, you'll end up with a company that's the equivalent of a state fair vegetable: big, impressive-looking but… that's about it. No one wants to take it home, and it's unclear how long it will last.
Business stabilization locks in value and resilience
A stable company controls its growth and momentum. It can choose its size and then focus on optimizing how well it runs. Business stabilization simply means getting the most out of operations while reducing unnecessary effort and costs.
A good test for business stabilization is results. The results I look for are answers to these three questions:
- Are people working less?
- Has performance improved?
- Is everyone happier?
If you can answer "yes" to these questions, you're optimizing well.
These are the businesses that are valuable and resilient.
Real-life resilience: a case study
This is the work my clients do. One of my best clients doubled in size in about two years. Then they had a 'perfect storm' year—rough, challenging, the kind that often takes companies out at the knees.
But their business stabilization was strong. They turned a major error into a win and held steady through an uncontrollable disruption. The leaders felt disappointed that they weren't hitting their growth goals, but to be honest, I was more excited about how they weathered the storm. It consolidated their strengths and highlighted areas to tighten before their next leap.
And that next leap is coming quickly. They're positioned for another growth spurt next year. This year of really settling into business stabilization and structure has already paid off—and will continue to do so.
The bottom line: bigger isn't better. Better is better.
Here's my point: Bigger isn't better. Better is better. Build a better-run company and it will almost certainly grow. Focus on creating value, resilience, and a solid foundation. Don't let your business become a state fair cabbage—impressive in size but lacking in substance.
 | Christian Muntean is a seasoned expert in fostering business growth and profitability. With a Master's degree in Organizational Leadership and certifications as a Master Coach, Certified Exit Planning Advisor (CEPA), and International Mergers & Acquisitions Expert (IM&A), he guides entrepreneurial leaders through growth, succession planning, and exit strategies. He is an accomplished author of three books, including Train to Lead. Christian resides in Anchorage, Alaska, with his family. Learn More » |
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