Golf is always an interesting analogy to business performance
in so many ways. First is the golf swing, one of the most crucial pieces of a
golfer’s game, just as product is so crucial to a business. A second critical differentiator
in the sport is how a golfer approaches their game, the same as how a business
provides service to a customer. These
two factors alone can differentiate a pro from an amateur.
Swing and approach have a large impact on the overall game
and the eventual score a golfer produces over multiple rounds. Through their
game, season after season, the golfer becomes known as a scratch, par or bogey
golfer; and sometimes like me, a “hack”. This analogy applies the same to a
business, through its product and services customers respond and the business
will perform relative to the industry. Here cash flow is the score one can use
to determine if the business is performing well. We use better similar to a
bogey golfer, good to compare to a par golfer; and best to reference a scratch
golfer. When seeking to acquire a
business, it is important to understand not only the cash flow, but the cash
flow relative to the industry – is this business performing good, better of best
in class?
The next question to ask is what is your acquisition
strategy? Are you looking to purchase a scratch business (best) and continue its
play at above par performance? Are you looking to acquire a bogey business and
invest in the resources necessary to improve the swing and approach to turn its
game into a contender? Or are you looking to buy a par business that has
slightly less challenges where you can bring ideas and resources to step up its
game to the next level? Each of these businesses will need a different pro
willing to work on the specific challenges of the game.
Whatever challenge you acquire, constantly working on the
six steps of swing and the 24 components of perfect technique, will put your game
on track to becoming a scratch business.
