Where Are You Going 2?
It’s the middle of the season for public companies to report their 2017 results and project their fortunes for 2018 and beyond. Some have already started to have serious meetings with analysts to help get the value of their stock to improve. I regularly talk with clients about improving profitable growth and increasing the value of their company to a potential buyer. Value is a subjective thing that gets turned into hard dollars (no blockchain yet). Value for a mature public company can be very different than the value ascribed to a startup. This last week I tweeted on the results of Spotify and Pandora. Spotify is rumored to be heading for an IPO. They have increasing sales but have yet to produce a profit. In fact, their profits are negative and declining. Yet, they just might get many millions of dollars from investors expecting (hoping) for a turnaround in its fortunes.
A couple of the companies I work with believe their investors value how well they perform relative to other companies or to the industry. For them, it is important that they are the leader of the pack in sales, profits, and other measures. Some of them work in highly cyclical markets where the cycles last as much as a decade, pretty much the same as the time between recessions. One of the measures is often how well they do in market share whether the industry is going up or going down. Market share gained in a down market is often difficult to lose when the market returns.
This got me to thinking about how I might represent all this in a simple chart. Industry sales are either increasing or decreasing. Market share is either increasing or decreasing. Profits get to be a bit tougher to categorize. Profits can be positive or negative. They can also be increasing or decreasing. That gets me 16 categories of companies. A pretty wieldy number to deal with. Not so simple, but here’s a look at what it might mean.
|Industry Sales||Sales Market Share||Profits||You Are or Have|
|Increasing||Increasing||Positive and Increasing||Leader of the Pack|
|Increasing||Increasing||Positive and Decreasing||Cost/Scaling Problems|
|Increasing||Increasing||Negative and Increasing||Getting Ready for IPO|
|Increasing||Increasing||Negative and Decreasing||Headed for a Turn Around|
|Increasing||Decreasing||Positive and Increasing||Focused on Cost Control|
|Increasing||Decreasing||Positive and Decreasing||Time for a Turn Around|
|Increasing||Decreasing||Negative and Increasing||Cost Control Helping, Need More Sales|
|Increasing||Decreasing||Negative and Decreasing||Headed Out of Business|
|Decreasing||Increasing||Positive and Increasing||Doing Well in DownTurn|
|Decreasing||Increasing||Positive and Decreasing||Weathering the DownTurn|
|Decreasing||Increasing||Negative and Increasing||Can You Buy Others to Improve Costs|
|Decreasing||Increasing||Negative and Decreasing||How Long Can You Last|
|Decreasing||Decreasing||Positive and Increasing||Squeezing Out Every Last Drop|
|Decreasing||Decreasing||Positive and Decreasing||Get Ready to Jump Off Cliff|
|Decreasing||Decreasing||Negative and Increasing||Getting Blood Out of Turnip|
|Decreasing||Decreasing||Negative and Decreasing||Close Up Shop|