top of page

How do I Know if my Company is at an Inflection Point?

Updated: May 14

Someone recently asked me, how does a CEO know if his/her company is at an Inflection Point? 

By definition, an Inflection Point marks a significant change or a change in an entity’s growth curve.

company growth to the inflection point

From my early days working in investment banking, to leading the finance and strategic planning functions of multi-billion-dollar divisions of public companies, to sitting on the board of a 3,200-location North American retailer going through bankruptcy, to leading strategy and M&A at a small-cap public company, to successfully prepping a tech start-up for sale, I have experienced many instances of companies at Inflection Points. 


After 30+ years of doing this, I have concluded that there are three fundamental factors that indicate a company is at an Inflection Point.  They loosely fall under the headings of - Strategy, Management, and Money.  Let us take a quick look at each.

 

Not too long ago, a CEO came to me with the desire to sell his company. 

After about a month of working with him and his team, I came to the following conclusion: if the company did not change how it was doing business, it would not sell in, but more likely it would be out of business.  It is safe to say the company was at an Inflection Point (e.g., possible bankruptcy).  Certainly, that Inflection Point was not the one the CEO thought the company was at when he engaged me (i.e., ready for sale).  The CEO’s strategy to sell the business in the next year must be set aside.   

 

I shared my assessment with the CEO. 

To be honest, he did not initially agree with my thoughts.  It was not until the company closed the quarter with a significant loss that the CEO understood and accepted which Inflection Point the company was at.  This is where money kicked in.  A significant change in a company's financial condition (i.e., “money”) will indicate an Inflection Point.

 

So, what was the Money issue: 

The company’s fixed costs were too high, and its revenue was too concentrated on a few client relationships nearing the end of their contractual lifecycle.  Several things needed to change.  In short, a significant loss (aka money) led CEO to reassess the company’s strategy and ultimately its management (the third key driver).  For the sake of time, I will not delve into details of management change, but rest assured, there were changes.


fitting the puzzle pieces

Leap forward, the company has a new and more streamlined management approach and team, a far more efficient cost structure, and a more focused overall strategic direction.  As a result, its profit margin went up nearly 50% from historical rates, and overall profits went up by nearly one million dollars.  In other words, strategy, management, and money all changed.  Fortunately for the company, the CEO was open to making these changes.

 

The CEO may still consider selling in a few years, but he is also more open and even excited about expanding the company through new service offerings, new partnerships, and even acquisitions.  So, a new strategy may be emerging, meaning changes in management and a need for more money are not too far behind.  I look forward to helping the company work through the next set of Inflection Points in its evolution.

 

If your company is at an Inflection Point and you are looking for an experienced strategic advisor to help you through it or considering selling your business, please feel free to contact me.  I look forward to assisting you.

 


 


Bob Fiorella, CEO & Founder of First CXO
CEO and Founder of First CxO. 

Bob Fiorella is a strategic problem solver, M&A advisor, and right-hand man to CEOs and business owners contemplating or dealing with a major change; whether it's restructuring a company, building a finance team, getting a loan, setting the company up for growth, successfully selling the company, etc.  He began his career as an investment banker and worked on several deals including the multibillion-dollar merger of Avery and Dennison.  Over the subsequent two decades, Bob’s career centered around the media, entertainment, packaged goods, wholesale distribution, specialty retail, technology, and software development industries where he took on roles such as SVP Finance, Chief Financial Officer, Chief Operating Officer, Chief Strategy Officer, and independent board member. Bob is the Founder and President of First CxO.  Some of his assignments include being a fractional CFO for a $30mm packaging technology company, a $5mm software development company, and a $25mm e-commerce company.  He is also an advisor to a $500mm franchising company.  Bob holds a BS in Economics from Cornell University and an MBA from UCLA’s Anderson School of Management. 


Bob’s “claim to fame” is appearing on Season 13 of America’s Got Talent as part of the Angel City Chorale. They made it to the Semi-Finals. 

Comments


bottom of page