How can your business escape from the draw of Death Valley?
Published: September 19, 2019

There’s a place where many businesses find themselves. It’s bleak, dangerous, inhospitable. Certainly not somewhere you’d want to stay for long. We’ve called it Death Valley.

It’s a place where many SMEs find themselves as they seek to scale up, but they are not even aware or wish to admit they are in the Death Zone.

We all know the early years can be difficult in the growth of any company. You need to keep reinvesting in sales and marketing whilst also finding the cash to develop products. You need to develop infrastructure and also attract and retain the best talent. Not easy when your turnover isn’t high, and cash reserves are low. You may only get one chance to get it right before there’s a downturn. And your strategy may not be robust enough to help you when things go wrong. As Mike Tyson said, “everybody’s got a plan until they get punched in the face”.

Our initial thoughts were confirmed by government research, which claims 76% of companies fail due to incompetence and unbalanced experience. We researched deeper to find out what else was going on with businesses in Death Valley.

Strategy Implementation figures

One result stood out. It showed that nearly 80% of all businesses from start-up to over £30M are not marketing to their perfect customer with pinpoint precision. This will impact on many levels: your marketing spend will increase, which increases the cost of customer acquisition; your sales team will be less efficient and you may even gain customers you don’t want.

Having the wrong customers can lead to other problems: it’s harder for operations to deliver consistently good results; wastage in marketing spend; reduced profits as GP is affected and cost of delivery is too high; high complaint levels can absorb operational expertise and increase costs; higher customer churn; late payment and/or debt; reduced margins. Your cash flow and working capital demands will increase. Both will make reinvesting in growth and talent much harder. This, in turn, impacts the future development of your business and the overall value of your company. A perfect storm.

As Death Valley begins to bite, talented members of your team become frustrated, demotivated and staff churn increases. This increases operational costs. If not carefully managed the performance of teams and the overall culture of excellence drops. This makes it harder to recruit and the rot sets in.

Another of the failings that came to our attention is the lack of planning for the next 90 days or 12 months. 78% of owners surveyed did not have a formerly communicated plan across their business for the next quarter. Similar results were found across marketing, sales, operations, finance and talent. On top of that for companies with revenues under £7.5M pa, we found that 69% had no strategic planning in the finance department, and 81% had no talent planning. Is it any wonder that so many businesses end up in the death zone?

How do you escape Death Valley?

It’s not all doom and gloom. You can get out, and stay out, of Death Valley. At BGI we’ve discovered five key ways to help you stay out of this zone and scale up:

  1. Focus on identifying your perfect customer and market to them with precision. Without the right customer or strong customer engagement, you’ll be wasting time, energy and cash.
  2. Create and implement your strategy. Check on your progress every month to make sure you’re ready to overcome challenges. Communicate your plan across your business. Make sure your team understand and get behind your strategy. It needs to be put into practice.
  3. Ensure you have a strong company purpose, vision and values, and that these are communicated throughout your organisation. They are the DNA of your business. As a company grows it’s easy to lose focus. At times like this you need to get back to basics and ask yourself – why are we doing what we’re doing? It’s easy to stray of course and lose sight of why you’re in business.
  4. Talent and financial strategies need to be developed and implemented. They are frequently the most overlooked areas of scale up, yet they are vital to your success. Both will increase your growth and company valuation and keep you out of Death Valley.
  5. External advice and support. It’s been proven that CEOs who use mentors enjoy far greater success. It reduces decision fatigue and brings experience, clarity and accountability. It will give you the confidence to move forward.

Death Valley has for too long been the graveyard of British businesses, but at BGI we’ve proven time and again that you can escape from it and scale your business. With the right strategy focusing on the key areas of your business, regular strategy implementation, a high-calibre team, emphasis on purpose, vision and values, and the support of specialist advisers, you can begin to climb. In fact, businesses that have engaged with BGI enjoy growth rates 8.6 times higher than the UK national average.

If you’d like to discuss how your business is doing, and any areas you’d like to talk about why not give us a call. It’s free and totally confidential. To make a Discovery Call click here.