It’s hard work to build a company, and there are many trap doors along the way. But if you make it past the risks of start-up and the grind of business growth, you’ll reach a certain level of success that feels comfortable. It’s then that you will have to decide what’s next.
It’s generally agreed that there are four stages of small business growth: start-up, growth, maturity, and renewal or decline. The riskiest part of any business is during the start-up phase. Statistics are not in your favor. About 20% of small businesses fail in the first year, and 50% permanently close their doors by the fifth year. But suppose you’re one of those businesses that reaches maturity. In that case, you will have to answer some tough questions about where your organization will go next.
That is precisely what Steve Salis, Founder and CEO of Salis Holdings and Catalogue, had to do. But what he did next defied the boundaries of traditional business renewal — he created a holding company.
A holding company is a business entity that “holds” the controlling stock or ownership in multiple companies under one umbrella. Holding companies do not get involved in the day-to-day operations. Instead, they maintain a bird’s eye view of the management decisions. Salis created a holding company with a twist: he created a hedged portfolio of companies within his area of expertise.
Catalogue holds a family of brands within the food and beverage industry, each scaling concurrently. He created a hedge against the underperformance of a single brand by diversifying his brand choices.
The renewal phase is fueled by diversification. This includes adding new products, expanding regionally, nationally, or internationally, creating new services, or merging or acquiring other businesses. Under the Catalogue Brands umbrella, Salis acquired neglected heritage brands to create experiences aimed at pleasing modern consumers. His philosophy is: “Elevate the every day.”
Here are three tips to create an umbrella portfolio of companies as a hedge against losses and underperformance aimed at business growth.
1. Meet consumers where they are.
Whether you sell products or services, consumers are the backbone of your business. Salis believes consumers want quality and sophistication without complexity. Premium experiences need to be accessible and relatable — today’s businesses need to align their services and products with the desires and lifestyles of their customers.
Businesses use a customer-centric approach to create brand loyalty, where the customer is the focal point for all decisions related to products and services. The idea is to create an incredible and memorable experience for each customer that gets them talking and returning for more. A customer-centric approach delivers personalized, unique experiences, superior customer service, and cohesive consumer journeys. Statistics show that 85% of buyers are willing to pay more for products or services if they receive a positive customer experience, and 49% of buyers make impulse buys based on receiving personalized service.
2. Reimage heritage businesses.
Brand heritage weaves the company’s journey, values, philosophy, and reputation into its story. Their historical legacy builds trust and authenticity — these brands create an emotional bond between the company and the consumer.
Heritage businesses have fanatical fan bases. However, Salis found that many have become stagnant. His holding company infuses modern consumer expectations into time-honored brands. Salis learned how to pay homage to tradition while serving today’s consumers.
Today’s consumers want to feel like each experience is tailored to them. Consumers use social media to engage with brands and learn about the products and services they purchase. They expect omnichannel service — customers engage with brands on multiple social media channels, and they expect brands to “remember” conversations from one platform to another.
Heritage brands, like all brands, need to embrace cultural relevancy. Salis modernizes heritage brands while maintaining historical legacy. He believes this is an untapped market for modern entrepreneurs.
3. Build a portfolio across multiple industries.
Salis maintains that business growth and diversification require a consistent commitment to excellence and accessibility. He says, “Don’t limit yourself to one sector or business model. Instead, I center everything I do around a singular belief system that has significant replicability.”
This approach is limitless in terms of opportunities.
One of the challenges with diversifying company holdings is maintaining brand loyalty. Salis suggests making the aspirational, approachable to the customer is the key to building and sustaining brand loyalty. As such, Salis’ portfolio of companies is committed to “Premium Approachability.” Consumers receive premium products and services in top-notch environments at affordable prices — it shouldn’t cost an arm and a leg for an excellent experience.
Salis emphasizes that before creating a holding company, you need to understand your “why.”
Why are you in business? Why did you choose the business you did?
Use your why as your compass to guide your decisions in renewing your company, whether that is creating a portfolio of businesses centered on a common theme or finding more traditional ways to expand.
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