Business Agility: Thriving in Changing Markets
January 25, 2024 •Oak Street Funding
The term “business agility” gets a lot of press, but what is it? Merriam-Webster defines the word “agile” as “having a quick resourceful and adaptable character.”
An agile business adapts to changes in the business environment quickly because its leaders have prepared for such scenarios and applied creative, out-of-the-box thinking to keep moving forward. In a recent webinar and podcast, our team talked about ways of building business agility: embracing change, using data, and developing a high-performance culture.
How much about doing business is the same as it was 10 years ago, or even five? Not much. From what people wear to work, to where they work, to the technology they use, the rate of change has been dizzying. A person looking for business acquisition financing today would find many options not available just a few years ago.
The uncertainties in interest rates and where the economy will shake out (soft landing, recession, does anyone really know?) have put negative pressure on merger and acquisition deals. A savvy investor or business owner prepares ahead of opportunities, so when the time is right they can act. This means they have financial requirements requested by a lender in place to apply for business acquisition funding to move quickly.
Embracing changes in the market means having a plan of action for whichever way the market moves. Three different reports may provide three different pictures. Agility is about being prepared for all those scenarios and reacting to whichever of them becomes reality.
Technology is a powerful driver of change. Keeping up with technology is vital. Someone preparing for the sale of a CPA practice, for example, would be wise to have the latest technology in use or have a good reason for not implementing it. Someone selling an insurance agency would want to demonstrate to potential buyers that their agency is using or ready for AI, fully cloud-based infrastructure, and state-of-the-art data security.
Even if a business owner chooses not to adopt certain technologies, they need to make that decision from a well-informed position. Associates, clients, and potential buyers will know about those tools, and they will expect to have intelligent conversations about why they’re being used or not.
While the phrase in medicine is, “Physician, heal thyself,” the business corollary could be “Owner, know thyself.” Data is the best way to know your business and to visualize how it might perform in various situations in the future. Someone seeking an RIA acquisition loan would need to have an accurate projection of revenue, expenses, and cash flow and how they compare to industry benchmarks.
It’s so easy for business owners to get so caught up in day-to-day operations that they lose sight of the big picture. As Paul Lally, Principal at Wipfli, says in our podcast, some owners may be spending too much time on the dance floor and not enough time in the balcony looking over the whole ballroom. Coupling that broad view with an in-depth knowledge of one’s business through data analysis provides a business owner with the confidence to recognize a good opportunity when it presents itself and to know if the business is strong enough to take the risk.
Developing a high-performance culture
Building a high-performance culture contributes to agility. Having sustained growth is good, but it’s not the same as having high performance. A company can be growing because of strong market forces without performing at its best. An agile company is one that is consistently focused on performing at its highest level, regardless of how the market is doing.
With a high-performance culture, a business can maintain itself in its prime – the peak business stage just before maturity – longer than its competitors. Sports greats, such as Tom Brady and LeBron James, exceed the norms of their profession by listening to their bodies, changing their nutrition, and adapting their game plans as their bodies change with time. Businesses can do the same in order to extend their prime years.
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Attracting and Retaining talent
Attracting and retaining top talent is vital to high performance. The work behaviors and priorities of up-and-coming talent are changing, and that can be difficult for entrenched business owners to accept. Being agile, however, requires that a business adapt to change. How can business owners and associates work together to build a culture that recognizes the latter’s greater focus on quality of life while still contributing to the success of the former? What systems can they put in place together that will allow worksite flexibility while still giving new associates the hands-on client experiences needed to develop their business acumen and leadership skills? This kind of creative thinking is what an agile business leader needs to apply to be competitive in today’s business arena and labor market.
For anyone in the M&A market, from an owner looking for agency acquisition financing to expand to a partner seeking a partner buyout loan or a succession loan, business agility is important. It provides the business owner with the ability to respond quickly to market opportunities. That ability is based on a solid foundation of good data, a high-performance work culture, and a mindset that embraces change.
Disclaimer: Please note, Oak Street Funding does not provide legal or tax advice. This blog is for informational purposes only. It is not a statement of fact or recommendation, does not constitute an offer for a loan, professional or legal or tax advice or legal opinion and should not be used as a substitute for obtaining valuation services or professional, legal or tax advice.