Setting strategy is first step to increasing company value

May 17, 2018 By    

Neil Houghton, managing director for Greywing Capital LLC, led a session at the NPGA Southeastern Convention & International Propane Expo about the challenges propane retailers face in adding value to their operations.

The session focused on how most large, successful businesses set strategy and drive results, with a focus on the opportunities for propane retailers. There is a common factor between a successful company and a successful retail propane operation: Strategy.

“It is really hard to have a good strategy and it is hard to execute on that strategy,” Houghton says. “Creating a bad strategy is not hard at all. So, the question is, what does a good strategy look like, what are the characteristics and how does one create it?”

Houghton says a strategy should have a short- and a long-term component. The short-term plan should address the question: In a narrow period of time, what can I do to create value with the model I have today? The long-term plan, looking out five to 10 years, should build on the momentum from that short-term plan.

“The challenge of those two is to get something in the short term that builds momentum, gets people excited, provides cash and makes sure you are doing the things you need to do for the long run,” Houghton says.

Houghton is a firm believer that setting a strategy is the most important first step a retailer can take to increase value.

“A good strategy recognizes your challenges, it finds and prioritizes your best opportunities and what your abilities are to execute on them,” Houghton says.

Opportunities in the retail propane segment vary by company, but they all lead to growing and serving customers.

“If a company is doing a good job with its customers, it means they are having a very strong relationship with their customers,” Houghton says. “It means their customers are not leaving them and the company is managing a decent and fair profit and driving organizational growth.”

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About the Author:

Joe McCarthy was an associate editor at LP Gas Magazine.

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