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the Ground Up
What are your top five tips for entrepreneurs today hoping to build a billion-dollar company from scratch?
Magazinein/January, 2012 3
I'll try to keep it to five:
1.I suggest an initial acquisition in an industry in which you have some experience, in which a modest-size company represents a position of considerable importance. Be on the lookout for concerns which aren't so blue chip that you can't afford them, but not so sick that they won't be susceptible to profit improvement.
2.Value companies the same way you would a new piece of equipment, based on how long it will take to pay back the purchase price from earnings.
3.Surround yourself with people who thrive on crises, who like to grab hold of things and do something, who have a primal impatience to get their hands around a problem and shake it around until a solution presents itself.
4.Don't get too fancy in your techniques at improving profits after you purchase a company. Use tried and true, commonsense measures, like ratio analysis and work sampling, ABC inventory control, product redesign and a focus on those areas where your company is spending most of its money.
5.Grow the company with a simultaneous strategy of acquisitions and internal growth. As you acquire companies, divide them into categories that make sense to you and complement each other. I called our strategy the "nucleus theory," which is essentially the selection, acquisition and internal development of companies within selected major industries and with complementary product lines.