PRISM 17 Breakout on Accelerating Strategic Growth
What is your firm good at? What new business lines or markets would you like to be in?
These were the hard questions raised at last week’s PRISM17 conference by strategic expert Al Spiers, Founder and CEO of 2020 Environmental Group in a lively breakout session with environmental due diligence consultants from across the U.S. This track, titled Accelerating Strategic Growth in the Environmental Industry, was particularly timely given the growing number of headlines about an upcoming downturn in the market.
Spiers came armed with words of reassurance—and five tips for developing an effective strategic growth plan:
- “Dial into where the market drivers are moving—and what’s growing or not.” Organic growth must be a firm’s top priority, starting with where the opportunities are the strongest. On a geographic basis, growth prospects in the broader environmental industry are the strongest in Southern California, the Southeast region, Northern California and the Pacific Northwest. By market segment, Spiers believes the common denominator of growth firms with be those with a strong presence in the “Big 4” sectors: real estate/land, water, energy and infrastructure.
- “Pay less attention to what’s happening in Washington, DC and more on what the economy is doing.” The elephant in the room this year was the Trump Administration and what upcoming policy shifts could mean for opportunities in site redevelopment and commercial real estate lending. In response to those concerns, Spiers advised the audience to instead pay attention to economic barometers for a read on where the market is really heading. “The good news there is that in the real estate sector, property values in most metros remain high, driving local development, urban infill and brownfields work.”
- “If you’re looking to grow 10% or more, you need to look at organic and M&A opportunities.” For firms with ambitious double-digit growth goals, mergers/acquisitions open up avenues for immediate access to new markets and geographies—and new client relationships that would have taken years to develop. Spiers observed that many middle market firms (i.e., $75-$150M in revenues) have already been acquired, creating a void in the middle. Smaller firms are now not only the targets, but they are also becoming active acquirers in their quest to be the next generation of middle market leaders. In the small firm tier (i.e., under 100 employees), 70 percent of small environmental business owners are baby boomers looking to retire. That means as many as 500 small firms could be up for sale by 2020. A few words of caution:
- If you’re looking to grow by acquisition, “have a Strategic M&A Plan that clearly identifies what you want to do, where and why.”
- If you’re looking to sell your firm, “prepare proactively in advance and have a realistic understanding of your company’s value before going out to market.”
Think you’re too busy to develop a strategic growth plan? Take a look at this trend line that Spiers shared. It carries a strong message:
“I’ve been through a few different cycles in my career and I can tell you this: Do not let yourself get surprised. An economic downturn will come. They always do. So get your house in order now.”
As you sit down to build a strategic growth plan, talk to your team and ask the tough questions:
- What new businesses or markets would we like to be in?
- What business lines are growing and profitable?
- What are we NOT good at?
- What businesses or markets should we get out of to free up cash for expansion into new areas?
- Does our company have an “entrepreneurial spirit” or a “lifestyle culture”?
- Is our management and organizational structure equipped to handle the growth? Is our organizational structure a bottleneck to growth?
- What are we doing to build “brand name visibility” in our marketplace?
And if you still need help, ask Al Spiers!
About Al Spiers
Al Spiers is Founder and CEO of 2020 Environmental Group, a San Francisco based management and M&A advisory firm focused purely on the environmental industry. Al brings a new vision to the business of the environment that includes working with Founder/Owners, CEOs and Boards, as well as private equity investors on strategies for growth into new markets, financial performance, ownership transition, and sell- and buy-side M&A transactions. Since forming the company in 2010, Al and his 2020 partners have advised more than 75 environmental and engineering consulting firms across the U.S. UK, Canada and China, and led 25 sell-side and buy-side M&A transactions. Prior to 2020, Al held executive positions with some of the largest environmental C&E firms in the world including URS, Dames & Moore, and Entrix. Al attended Stanford Graduate School of Business, and holds an M.S. in Environmental Engineering from Stanford University. Al can be reached at email@example.com.