Starting a company is hard work, and there are many trapdoors along the way. However, once you overcome the risks of starting a business and the difficulties of growing your business, you will reach a certain level of success that you feel comfortable with. At that point, you need to decide what to do next.
It is generally accepted that there are four stages of small business growth: start-up, growth, maturity, rebirth or decline. The most risky part of a business is the start-up stage. The statistics are not in your favor. Approximately 20% of small businesses go bankrupt in their first year, and 50% go out of business permanently by their fifth year. But suppose you are one in business that has reached maturity. If so, you'll need to answer some tough questions about where your organization is going next.
That's exactly what Steve Salis, founder and CEO of Salis Holdings and Catalog, had to do. But what he did next was break through the limitations of traditional turnarounds and create a holding company.
A holding company is an entity that “holds” controlling shares or ownership of multiple companies under one umbrella. The holding company is not involved in day-to-day operations. Instead, you can take a bird's-eye view of business decisions. Saris has created a holding company with a twist. She has created hedge portfolios of companies within her area of expertise.
The Catalog includes a set of brands within the food and beverage industry, each expanding at the same time. By diversifying his brand selection, he established a hedge against single brand underperformance.
The renewal phase is facilitated by diversification. This may include adding new products, expanding regionally, nationally or internationally, creating new services, merging with or acquiring other businesses, etc. Under the Catalog Brands umbrella, Saris has acquired neglected heritage brands to create experiences aimed at delighting modern consumers. His philosophy is to “enrich every day.”
Here are three tips for creating a comprehensive portfolio of companies as a hedge against losses and underperformance for business growth.
1. Meet consumers where they are.
Whether you sell products or services, consumers are the backbone of your business. Saris believes that consumers want quality and sophistication without complexity. Premium experiences need to be accessible and relatable. Today's companies need to align their services and products with the desires and lifestyles of their customers.
Companies use a customer-centric approach to build brand loyalty, where customers are the focus of all decisions about products and services. The idea is to create a great, memorable experience for each customer that gets them talking and keeps them coming back. Our customer-centric approach delivers personalized and unique experiences, superior customer service, and consistent consumer behavior. Statistics show that 85% of buyers are willing to pay more for a product or service if they receive a positive customer experience, and 49% of buyers would receive personalized service. I make impulse purchases based on this.
2. Rebuild the image of traditional business.
A brand's heritage weaves a company's history, values, philosophy, and reputation into its story. Their historical heritage builds trust and authenticity, and these brands create an emotional bond between businesses and consumers.
The cultural heritage business has a passionate following. But Sallis has noticed that many people are stagnant. His holding company injects modern consumer expectations into historic brands. Saris has learned how to honor tradition while serving today's consumers.
Today's consumers want to feel like each experience is tailored to them. Consumers use social media to engage with brands and learn about the products and services they purchase. They expect omnichannel services, where customers engage with brands across multiple social media channels and where brands “remember” conversations from one platform to another.
Heritage brands, like all brands, need to embrace cultural relevance. Salis modernizes a traditional brand while maintaining its historical heritage. He believes this is an untapped market for modern entrepreneurs.
3. Build a portfolio that spans multiple industries.
Mr. Sallis maintains that business growth and diversification requires a consistent commitment to excellence and accessibility. he says: “Don't limit yourself to one sector or business model. Instead, I center everything I do around a single belief system with great repeatability.”
The opportunities with this approach are endless.
One of the challenges as a company's holdings become more diverse is maintaining brand loyalty. Sarris suggests that being appealing and approachable to customers is key to building and maintaining brand loyalty. That's why Salis' portfolio of companies is focused on “premium friendliness.” Consumers receive premium products and services at affordable prices in a first-class environment. A great experience doesn't have to cost an arm and a leg.
Sarris emphasizes the need to understand the “why” before forming a holding company.
Why are you in business? Why did you choose that business?
Whether you're building a portfolio of businesses around a common theme or finding more traditional ways to expand, use your “why” as a compass to guide your decisions as you revamp your company.