#242: Is There Such a Thing as Growing Your Company Too Fast?

Today’s show is all about growth rate: the rate you should target, how to identify that rate, what you can do to manage your growth and how much you can expect that growth to cost you. Listen in as Kevin Trout, former founder and owner of Grandview Medical Resources, Inc. — a fast-growing and award-winning specialty medical equipment distributor to hospitals and healthcare providers — explains how he landed on his optimal growth rate of 20% and gives specific examples of the tactical marketing they implemented to scale the company and compete with the industry giants. Kevin started out with a maxed-out credit card and sold the business years later when they were doing millions of dollars of revenue, multiple product lines and over 60 employees.

What You Will Learn In Today's Podcast Interview

The way Kevin’s focus led to doubling revenue within six months
How Kevin went from maxing out his credit cards to a $1 million line of credit and 23% growth rate
What the maximum sustainable growth rate is for distribution companies and how Kevin challenged it
The importance of understanding where your financing comes from because you’ll just keep eating your float otherwise and grow right into bankruptcy
Why Kevin started with the end in mind when deciding the growth rate
Your P&L statement shouldn’t be a surprise to you
Why Kevin set out to capture the patients most underserved by hospitals and how this impacted his bottom line
How to achieve excellent profits through rentals
How vertical integration works, why more companies need to be focusing on that, and how incentive plans typically encourage horizontal integration and are missing big segments of the markets they already serve
The value in complementing vs competing and winning clients through good service rather than aggressive sales
What “flanking the enemy” means in marketing and how to pull it off with style
The false dichotomy of offense and defense and how it hurts your strategy
How knowing he was building to sell let him
The benefits of maximizing profits, paying down debt and investing in technology before you sell your company
Why, despite an intentionally designed and successfully executed sale, Kevin wishes he’d known more about the impact of culture, EOS, how to build value and exit planning
How building a business is like driving a manual transmission — you need to know when to push in the clutch

Are You Growing The Value of Your Business

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About the Guest:

Kevin Trout is the former founder and owner of Grandview Medical Resources, Inc., a fast-growing and award-winning specialty medical equipment distributor to hospitals and healthcare providers. Kevin is now a Vistage Chair, where he leads four private peer-advisory boards and coaches, mentors and advises CEOs and business owners on strategic growth, leadership skills, and developing and retaining their top talent. He is also a past president and long-time board member of the Independent Medical Distributors Association of North America, so he truly knows his industry. Kevin holds a degree in Pre-Law/Criminology with a minor in Business from Indiana University of Pennsylvania, as well as a degree from the University of Pittsburgh’s Katz Graduate School of Business — Institute for Entrepreneurial Excellence.

Quotes:

09:14 - “We were selling a little bit of everything, not enough of anything.” – Kevin Trout

12:28 - “I risked it all with the credit cards.” – Kevin Trout

17:48 - “It was really about knowing where I wanted to go and coming up with a plan on how to get there.” – Kevin Trout

23:23 - “Horizontal integration is adding more customers to your customer base. Vertical integrations is selling more products to the customers you already have.” – Kevin Trout

26:24 - “We just had to do a better job than them to get the business.” – Kevin Trout

26:41 - “I’m not here to compete; I’ll complement. I’ll take over where they leave off, and if you really like working with us, you may give us their business at some point in the future.” – Kevin Trout

34:59 - “I think you have to be intentional--very intentional--about all the things we talked about. Have I seen that in other companies? No.” – Kevin Trout

36:10 - “They’re always talking about lowest price wins, but that’s not really true; it’s about the value that you deliver for the dollar you charge. Only 7% of buyers buy based on lowest price—93% buy based on value.” – Kevin Trout

40:07 - “It’s not like it’s my baby. I started it with the intent to sell it somewhere down the road.” – Kevin Trout

41:35 - “We went from $124 million in revenue to $24 million four years later.” – Kevin Trout

44:33 - “Technology is less expensive than employees.” – Kevin Trout

54:36 - “If I were to go back and talk to myself at the time I started the company, it would be something along the lines of understand how to control your growth and build value, and know where you want to end up in 5 to 15 years.” – Kevin Trout

58:23 - “You’ve got to delegate to elevate.” – Kevin Trout