Start now! Waiting for the market to improve is never a solution.
The adage, time = money, is truer today than ever. The pace of business, the changes in markets, the rate of new product and service introductions, and the number of emerging competitors are all increasing. Ask yourself these questions:
1- Are your companies out-executing their competitors and demonstrating growth at increasing margins with less working capital needs?
2- Are you experiencing improvements to incremental drop through to EBITDA as the business grows?
3- Are you turning inventories at least 10 times a year even if you are a high-mix business; 20+ times, if you’re repetitive?
4- Are your portfolio companies implementing 8020 & Lean?
5- Are your Operating Partners (OP’s) well-versed in transforming businesses through Lean?
If your answer to the first three questions is, “No,” then there’s a very good chance it is for numbers 4 and 5 as well.
Many small to medium sized portfolio companies have not been exposed to or been shown how to successfully implement 8020 or Lean. Additionally, traditional OP’s have come through finance-focused tracks and have not personally transformed a business using these tactics.
Ultimately, Profit is Fiction – Cash is Fact!
If liquidity is not improving then, Go F.A.S.T.!
