Growing from $25MM to $100MM

As I review the landscape for acquisitions at varying size ranges, I find organizations around $15MM to $25MM are interesting because they have achieved an impressive revenue level, have a good management team that knows the business, have scale, but have sometimes "topped" out and need some new ways of thinking to take to the next level. If you want to take a business from $25MM to $100MM, you need to think differently. Here are a few tips from Forbes Online.

http://www.forbes.com/entrepreneurs/2007/05/02/caliper-intuit-microsoft-ent-manage-cx_mc_0503growthtips.html?feed=rss_entrepreneurs

1. Embrace the identity crisis. Chances are you've already experimented with multiple product lines, price points and the like. But getting to $100 million means really having to think broadly about what businesses you're in--and be willing to cut loose underperforming lines and reinvest in stronger ones. "That's a big switch from early-stage companies, where it was about laser, single-minded focus," says Highland Capital's Maeder.

2. Ante up. Old-fashioned economies of scale (and lots of hard work) may have been enough to hoist you to double-digit revenues. To hit triple digits, chances are you're going to have to risk some serious capital--on equipment, real estate, marketing, whatever it takes. When Guernsey made the leap, he cringed at borrowing up to $8 million for extra storage space, delivery vans, tractor trailers and other distribution capabilities. "What I borrowed far exceeded my net worth," he admits. "It was scary, but we needed a new level of sophistication to serve larger customers in order to grow." Note: Scaring up that capital means having a clear vision for how you plan to put it to use; without that, don't bother asking.

3. Go public. The investment to get to $100 million in sales may be far greater than either the cash generated by your business or what your lenders are willing to put on the line. One solution: selling shares to the public. Such financing comes at a price, however, so think long and hard before you decide.

4. Get global. Few will argue that being able to compete these days requires an international strategy--and not just because of cheap labor in places like China, India and Vietnam. Emerging markets are also a wellspring of consumer demand.

5. Take a hard look at management--again. Some people are start-up managers, others are later-stage managers and still others have the ability to think globally. By the time your company has reached $25 million in sales, it may be time to reevaluate the team. (That goes for your advisory board, too.)