The 5 Key Ingredients To Building A Thriving Business

During my 20 years in private equity in New York, I learned quite a few lessons about what makes a thriving business and its people tick — for better or for worse. Some are driven by dollars and cents; some are motivated by a people-first philosophy that puts human beings at the center of decision-making. Many fall somewhere in between.

When I decided to spin out of the private equity world and start a company, I quickly realized how important it was to articulate my own philosophy. Otherwise, how could I lead others in any direction with a clear purpose?

Fortunately, my entrepreneurial craze turned out to be the right move, and four years later — with patience, grit, and an amazing team — we’ve exponentially grown and now serve more than 500 of the world’s top private equity firms. I believe this is in part due to a handful of “ingredients” — all of which reinforce one another and somehow ensure that we are getting back what we put in. Follow this recipe and your business will likely be the better for it:

Ingredient No. 1: Do good with good.

This is probably about as simple as it gets. I call it the “Karma School of Business”: Do good things with and for good people, and the world tends to take care of itself. It’s not necessarily the fastest path to Rome, but in my experience, this approach yields the highest percentage chance of long-term success.

The Karma School of Business principle is at the center of my company’s work, where we connect business leaders with service providers to help create a successful environment for both parties. We actively test the service providers we invite into our network for this mindset, and I consider it one of the key reasons why we have grown so quickly.

Ingredient No. 2: Work and learn hard.

Secretary Colin Powell said it well: “There are no secrets to success. It is the result of preparation, hard work, and learning from failure.” I built my career in an industry filled with many of the smartest people in the world. I most definitely was not the smartest person in most of the rooms I shared with peers. The thing that differentiated me was that I worked exceptionally hard, asked lots of questions, and sought answers from those who had already figured out the thing I needed to know.

The lesson here: Don’t recreate the wheel. Instead, ask a lot of questions, take time to learn how things operate, and then work tenaciously to make it happen.

Ingredient No. 3: Use the word ‘no.’

In our business, it’s our job to connect private equity firms with specialized third parties (e.g., boutique advisors, independent consultants, interim executives, etc.). If a resource isn’t the perfect fit, we tell them. “No” is always the best answer.

This is often hard to do, particularly if you think someone is otherwise smart, effective, and likable. But this doesn’t always mean they are the right person for the job. The trick is learning to say “No” in a self-aware and gracious way. I take a lot of time to explain how life is too short to put yourself in a bad position. To throw another quote in the mix, according to Warren Buffet, “It takes 20 years to build a reputation and five minutes to ruin it.” Your customers will thank you for saying “No” when it’s not the right situation and will remember you when it is.

The caveat to this ingredient: Do not be anti-everything. “No” can be the easiest thing in the world to say. But if you’re not being thoughtful, you can become paralyzed in the face of otherwise confidently manageable risk. Good people know the difference between an errant “no” and one that is applied with introspection and purpose.

Ingredient No. 4: Prioritize growth.

Whether you’re committed to personal growth or the growth of the business, this ingredient is vital to the health and longevity of any thriving business. The ability to learn, be agile, and always on your toes is often the difference between success and failure.

My dad had many wise sayings when I was a kid. One relevant one that comes to mind is, “The second you start to feel like you’ve figured the world out, you’re already falling behind.” Investing time and energy into constantly advancing knowledge and skills (for yourself, your employees, and your customers) will benefit you and your business in spades.

Word to the wise: Growth-oriented organizations are far more likely to retain their best employees. Your best people will eventually leave if they feel bored or stagnant.

Ingredient No. 5: Adopt a winning mindset.

When push comes to shove, at the end of the day, ingredients one through four are foundational for success. However, you still need to have a winning mindset to create a thriving business that matters. It’s imperative that you work to win for your customers, win for your stakeholders and win for your company and yourself.

To be clear, I’m not talking about a “winner takes all” mentality, where someone else is always losing. Healthy relationships are not transactional. They should be built around core commitments that are important and lead to the success of both parties.

A winning mindset means that you’re always looking for ways to ensure that both you and your peers end up ahead.


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5 Value Creation Ideas for Private Equity Funds

The business of private equity is getting more business-like. Today, most private equity funds are largely managed like partnerships, not like the companies they own. However, many firms have realized the private equity industry has now matured into an industry and are starting to manage their own companies like their portfolio companies.

Here are some value creation ideas being implemented with our other PE fund customers that can help you get the ball rolling on maximizing the effectiveness and competitiveness of your private equity fund operations.

Get Digital Marketing Going
Amazingly, many B2B businesses still aren’t reaching their full potential because they don’t understand or appreciate the power of digital marketing. Nearly all private equity funds fall in this bucket and are not taking advantage of this low-hanging fruit because they don’t see it as particularly relevant or appropriate for their model.

However, there are only so many hands that you can shake during the course of a year. With digital, you can regularly speak to thousands of intermediaries, business owners, and other influencers at the click of a button.

To do digital well, you need to do more than an update of the creative on your website or a quarterly deal announcement email. You should be using an integrated approach leveraging not only email, but also paid search, SEO, and regular content that is interesting and relevant.

The good news is that digital can now be done well with a relatively reasonable budget. Don’t try to brute force this with internal resources. You can outsource this to professionals who can help you get it done right and allow your team to leverage their strategic strengths rather than taking precious time to sub-optimally recreate the wheel.

Never Say Small When You’re Talking About Your Money
Most private equity funds don’t think meaningfully about the spend within their own organizations after compensation, real estate, and deal-related expenses. However, you’re spending money on all sorts of other things that add up. You don’t want to let the tail wag the dog by any means, but there are some relatively easy tools you can use to drive savings and free up some cash to invest elsewhere in your organization. One such tool that both you and your portfolio companies should use is a group purchasing organization (GPO). You’ll likely find savings in travel, office supplies, and data and telephony. It may not change your world, but it’s free money that’s relatively easy to get.

Stop Getting Bogged Down With Post-Closing Tactics
PE funds typically come up with a differential strategy, use it to prevail in a process, and then get swamped out of the gates with the minutiae of the 100-day plan. Rent an independent consultant hailing from a top PE ops improvement consulting firm to drive tactics that are important but not the best use of your teams’ scarce time, such as:

  • Reporting
  • KPIs & dashboarding
  • 13-week cash flow forecasting
  • Ad-hoc onboarding analyses

And other similar tactics. Groups who use these resources also typically ask for and get baskets in their debt agreements and push these costs below the bottom line (P.S., they’re also great for preparing for sale).

Use the Robots
Your team’s opportunity costs are in the $1,000s per hour. We’re regularly asked at BluWave how many employees we have. Our answer is always “as few as possible.” Like you, each hour is precious for us and we use technology, automate, and outsource whenever possible so we can as optimally as possible focus resources on our strategic cores. PE funds should do the same by using and getting the most out of the latest CRM software, portfolio company reporting solutions, strategic planning tools and the like.

Get Leverage
Using variable resources is a necessity in this day and age in PE. Groups who use them well can accelerate growth, development, and value creation in profound ways. However, it’s hard to know who is good; as soon as you like them, they change or aren’t available, and as a single fund it’s hard to hold third party resources accountable. Shameless plug: Use BluWave. Our business is to be the expert of experts, so you can focus more on your strategic priorities.

You can’t do it alone. Value creation is, in large part, about the people and resources you leverage to help, especially for private equity funds. Take advantage of the pre-vetted network of experts available through BluWave today. Get in touch with us.

3 Ways to Increase Your Company’s Value

After nearly 20 years in private equity, I appreciate how hard it is to build and grow businesses in a constrained environment.  Nothing is easy, but most things are possible with the right people and resources.

Top private equity funds regularly ask us about ideas to help drive growth and reduce costs.  Here are a few growth, organizational development, and cost reduction strategies that can be applied to build your business and drive value creation:

Reach 1,000s of customers at a click of a button:  Digital marketing is the most underused tool in the middle market: every business should be doing at least the basics (particularly in underutilized B2B markets).  This starts with good data (you should think of this as a business asset), requires market segmented content, and systems capabilities. It’s really hard, and expensive, to internally be good across SEO, paid search, content, email, PPC ads, etc.  You should outsource this to a middle market agency who will do this better and at lower cost than you can.  Committed digital marketing programs can lift revenues by more than 20%.

Rent “A” Players:  Sometimes it’s better to rent 10% of a bunch of A’s rather than own 100% of the B or C you can afford in your budget: the future of work is now (just ask some of the best younger workforce members who won’t work full time).  There are great variable resources that you can use across the functional areas of your organization to more optimally inform strategies and execute on your plans.  Use them.  Plus, if it is a one-time project, you often can get an add-back for it, enabling you to present stronger numbers when it comes time to sell your business.

Your costs are rising, you should be fighting it more: In the current world climate, all sorts of input costs are on the rise, from metal to plastics to fuel. Most companies (including very large ones), don’t have the internal expertise or the free resources to understand and aggressively combat today’s volatility. Bring in a specialized procurement group that lives and breathes in these markets to reduce costs, diversify supply chains, and/or hedge risks. While you’re at it, go after your indirect spend. If you’re not ready for a procurement group, at the very least you should be using plug and play Group Purchasing Organizations (GPOs). Expect some push back as the savings can be embarrassing and/or preemptively tap into rainy day savings buckets. However, when you apply a valuation multiple to the savings you’ll achieve, these tools are no-brainers.

Finding the superior groups isn’t easy. BluWave seamlessly connects you with the best vetted and private equity tested practitioners that specialize in your areas of need and fit your budget. We also make it remarkably easy on you: we don’t charge you anything to use our service.

Start talking with us about your needs today. Help is a call or email away.