As a corporate finance specialist, including many stints as a liquidator and turnaround specialist, I have had the luxury of hearing a large number of successful businessmen and women speak about how they succeeded in changing market conditions. One such speaker…and I hope I am crediting it correctly, was Graeme Hart who spoke of his SUCDRI strategy.
The key focus of this strategy is to maximise profitability by increasing revenue and reducing expenses, while also limiting capital expenditures including investments in inventory. At first glance, a strategy of Sales Up, Costs Down, and Reduce Investment seems common sense professionally but this one has stood out over the years to me.
As the author of thousands of company valuations where founders are surprised to discover their (sometimes) decades of hard work is worth less than they expected, the primary goal of SUCDRI is to drive higher maintainable earnings, which are a key driver of company valuations. This is because investors and analysts typically place a higher value on companies with strong earnings growth and predictability, rather than simply relying on the strength of a company's balance sheet.
In order to implement the SUCDRI strategy, businesses need to focus on several key areas. First, they need to develop a plan for increasing sales. This might involve expanding into new markets, launching new products or services, or investing in marketing and advertising campaigns. By increasing revenue, companies can improve their bottom line and create a more sustainable business model.
At the same time, businesses need to focus on reducing costs wherever possible. This might involve negotiating better prices with suppliers, implementing more efficient production methods, or reducing staffing levels. By reducing expenses, companies can improve their profit margins and increase their earnings potential.
Finally, businesses need to limit their investments in capital expenditures, such as new equipment or facilities. This can help to conserve cash and improve liquidity, which can be especially important during times of economic uncertainty.
Overall, the SUCDRI strategy is a powerful tool for driving higher maintainable earnings and improving company valuations. By focusing on sales growth, cost reduction, and investment restraint, businesses can create a more sustainable business model that is better positioned for long-term success.
If you want to have a chat about what opportunities there are in changing market conditions, talk to one of the professionals at Fusion Business Consultants or our partners at Emprise.