“Dear Gerard,

I think that in your business you do everything to keep the company up-to-date and dynamic. Listening to customers and trying to respond to new needs and innovate wherever possible. It is essential to understand and to be aware of what stage of development a company and the industry as a whole is in. In our analyzes of companies we distinguish four stages of development:

1. The growth stage: a company starts, invests and develops. The initial period will not generate a profit and the money gained is invested back into the company to give the company a firm buffer. Growth will then accelerate and so will profits. A good example is Apple about 5-10 years ago.

2. The so-called “fading” stage: the growth of the company decreases. There is increasing competition and profits decrease. The market becomes saturated: an example is the telecom sector, for example, Nokia.

3. The “mature” stage: there is a large highly competitive market, where margins are small. Only by keeping costs under control can small gains still be achieved: this is what a lot of companies in the Western world are facing.

4. The “terminal” stage: the demand for products falls and the competition is intense, e.g. the construction industry in the Netherlands. In this stage, the company will fail if policies are not changed. If the company recognizes the need to change structurally, a new profitable way is possible.

Of course, the macro environment is also important. Are you in an area where the population is young, dynamic and growing, or in a shrinking area with an aging population? The correct assessment of the actual situation and the growth potential is not always easy. Also, not every entrepreneur is able to manage his company successfully in each of the stages. However, the true entrepreneur recognizes and acknowledges his limitations. It is essential to have a few trusted and experienced advisors to help you identify the right direction and to develop the business further while implementing new strategies. In larger companies, a “think tank” can be important with a mix of experienced and young people who are the “feelers” of the company for new developments and needs.

Coming back to your company: given the fierce competition and declining margins in the markets where it operates, you are probably in stage 2-3: fading/mature. By innovating and constantly looking for niches, you can accelerate. The challenge is to keep this up and to encourage your people.

Regards,

Jan Stam”