On April 10, 2018, as part of their ongoing Alumni Speaker Series, the David Eccles School of Business hosted alumni Josh Young, Young Electric Sign Company (YESCO) Franchising President, and Boyd Kezerian, CFO for Walker Edison. Titled “The Next Strategic Move”, this event also featured Eccles School Chair & Presidential Professor of Strategy, Todd Zenger and moderator Brook Karrington of Financial Forensics.
This lively discussion focused on growth strategies and lessons learned from these two contrasting companies, YESCO, a century-old family owned lighting and sign service business, and Walker Edison, a young, rapidly growing eCommerce business focused on solutions for online retailers. Panelists shared three key takeaways that will help any business making a major strategy decision:
Define your path to value
Defining your company’s “path to value” is about discovering your unique capabilities to fill a need in the market. YESCO’s long history gives them the advantage of focusing on long-term strategies with longer ROI. Research allowed them to identify an underserved need in the industry – the repair and maintenance of signage and lighting post-installation in local communities. This led to the successful implementation of a national franchising model. Walker Edison recognized the advantage that owning the full supply chain gave them, along with the challenge of making strategic decisions quickly in such a fast paced industry. They wanted these decisions to be based on data as opposed to assumptions. Developing an internal Business Intelligence (BI) system provided up-to-date, accurate data, allowing quick adjustment in KPI’s and improved forecasting. Although it was a large investment in capital and manpower, they have seen strong ROI and accelerated growth.
Balance risk with opportunity
Knowing your company’s Sustainable Growth Rate (SGR), the maximum rate of growth that you can sustain without having to finance growth with additional equity or debt, is important. When raising capital, always balance what you get for any debt you take on, have a plan for repayment, and use that information when developing risk mitigation plans. Mr. Kezerian pointed out that although owning the full supply chain is an advantage for Walker Edison, it also comes with increased risk. Using examples such as recent tariffs on China and port strikes, he spoke of using SGR and the data from their BI to address some of these risks with the diversification of supply lines, giving them more flexibility, stability, increased profit margins, and more value for their online retailers.
Learn to say no
Both speakers emphasized finding the balance between current metrics and models with the awareness of ever-changing markets. And although difficult, especially when dealing with investors or customers, you must be able to say no when ideas are inconsistent with your company’s abilities or long-term goals. Mr. Young spoke of the importance YESCO puts on listening to their local franchisees and sharing feedback across the different geographies. When planning for growth, they filter ideas through an investment committee. Made up of diverse members, it allows them to keep their eye on the future while staying true to their mission.
This session is available for viewing here. The Alumni Speaker Series will soon become the Eccles Alumni Forums, and will hold its next event in June 2019. For more information, contact Tracy McKellar at Tracy.McKellar@Eccles.Utah.edu.