How Do You Coordinate Sales and Marketing Plans? Four Points

Situation: A small company uses a sales plan, but not a marketing plan. The CEO wants to know about marketing plans, and how they are different from sales plans. Most importantly, if a company has both, how do you coordinate sales and marketing plans?

Advice from the CEOs:

  • Sales and Marketing Plans are two aspects of the annual planning and revenue forecasting process. The difference between the two is focus – strategy versus implementation.
  • The Marketing Plan is strategic. It defines and quantifies the market that the company addresses, and also what markets the company does not address. It identifies the key attributes of the company’s market and products or services, and sets the broad direction as well as the high level objectives for the planning period – usually one year. It also covers both current products and product additions or extensions. The focus of the Marketing Plan is one-to-many.
  • In contrast, the Sales Plan is focuses on execution of the Marketing Plan. Ideally, the sales team takes the Marketing Plan and sets individual and team sales objectives that will meet the revenue objectives set in the Marketing Plan. The focus of the Sales Plan one-to-one – what each sales representative, and each division of the sales team (unit, district, region, country, and so forth) commits to sell during the coming year.
  • To coordinate the Marketing and Sales Plans, it is best to draft the Marketing Plan before asking the sales team to draft their Sales Plan. It helps the two teams to coordinate their projections for the coming year and allows the sales team to project sales based on changes to the product mix included in the Marketing Plan.

How Do You Inform a Client about a Problem? Five Solutions

Situation: A company provides staff for a client. Overall the client has been pleased with the staff provided, and only a couple of individuals have had to be replaced. The client was recently presented with an individual that they seem to like; however, the company has since developed reservations about this candidate. How do you inform a client about a potential problem?

Advice from the CEOs:

  • Meet with this individual face to face or via video conference. During the interview, tactfully ask questions that will either disqualify the candidate or satisfy your concerns. Only continue to present this candidate to the client if you are thoroughly satisfied that they can meet the client’s needs and will represent you well.
  • Ask the client for their impression of the individual. If they do not express any concerns, then your own concerns may be overblown.
  • The client will require the candidate to be trained by them prior to fully bringing them on-board. This will provide another opportunity for the client to say yea or nay. If the individual completes training to the client’s satisfaction, then once again your concerns may not be justified.
  • In any communications with the client, take care to voice only concerns that you can substantiate. Otherwise, you might expose yourself to suit by the candidate.
  • Independent of this situation, adjust your selection process to require face to face or video conference interviews. This will prevent the recurrence of future situations like this one.

How Do You Close the Books on Time? Four Suggestions

Situation: A company has experienced delays in closing their annual books for years. Inability to complete final inventory is the critical factor. In recent years it has taken four months or more to get final numbers for the year. How do you close the books on time?

Advice from the CEOs:

  • It is important to put a system into place well in advance of fiscal year end. A key part of this is to conduct final inventory so that it is done smoothly and accurately either immediately prior to or following the end of the fiscal year. Retail or wholesale operations normally complete final inventory within 30 days of fiscal year end.
  • If your inventory includes both large and small value items, ask whether you have to count everything. Based on past inventory it may be that small items that do not substantially impact final inventory can either be eliminated from the count or handled on an exception basis.
  • Consider a system of doing monthly or rotating monthly inventory smaller sets of items that make up perhaps 60% of sales, and quarterly inventory on an additional larger set of items that together with the first groups make up perhaps 80% of sales. By completing inventory of these items more frequently, the company will not only have a better handle on total inventory, but is also likely to be more accurate at the end of the year. At year-end inventory add those items that make up the final 20% of sales to the inventory count.
  • Again, depending upon the nature of the inventory, it may not be necessary to count items that, as groups, are valued under $500 per group. Seek expert advice from your accountant on this point.

How Do You Create a Win-Win Situation? Five Suggestions

Situation: A company collaborates with a large client to provide services to their mutual market. The company wants to offer similar services to secondary markets not currently of interest to the client. The challenge is that the client is very conservative; their current priorities are forcing long delays responding to the company’s requests, and the primary contacts within the client will not take any risks arguing the company’s case to their upper management. How can the company approach this situation to create a win-win situation with this client?

Advice from the CEOs:

  • Since the services provided combine the capabilities of the two companies, it is necessary to develop a strong case to show how the proposed extension of services will benefit the client. Without their agreement the service offering is compromised.
  • One option is to offer a no-risk revenue share or royalty arrangement to the client in exchange for their agreement to allow you to build the secondary markets.
  • A second option is to offer to sell a minority share of your company to the client in exchange for your ability to develop the secondary markets. The deal could include an option to make a larger investment in your company if your strategy plays out profitably.
  • A third option is to raise money and purchase rights to the client’s capabilities outright. It is worth exploring whether the client would be open to this.
  • Find an informal setting to ask the client’s CEO for advice on how you should proceed. Have your ducks in line to offer options if the CEO responds positively.

How Do You Manage a Reorganization? Five Ideas

Situation: A company is preparing for a reorganization. The CEO plans to hire a new manager to in time become General Manager of the company. He also wants to terminate two current employees. How do you manage a reorganization?

Advice from the CEOs:

  • Develop a 90-day integration plan for the new manager, including his/her top 3 to 5 objectives, and have the individual develop and execute the plan to achieve these objectives.
  • Use an early project to schedule working sessions with each department in the company during the new manager’s first week. This will help the new manager and current employees learn to work together and develop trust in each other.
  • In addition to providing broad objectives for the new manager’s first 90 days, clearly establish behaviors and outcomes that are unacceptable.
  • One of the employees to be terminated is a long-term employee who reports to the CEO but has not performed to expectations. The CEO should take the lead in terminating this person, and offer them a suitable severance package.
  • A junior employee who is not performing to expectations reports to a supervisor. However, the junior employee has repeatedly tried to work around his supervisor by approaching others in the company with his suggestions and complaints.

o    First, make it clear to everyone that the employee’s behavior is not acceptable and that he has to work through and with his supervisor.

o    Then let the supervisor determine whether or not to eliminate the employee, and support the supervisor’s decision. This includes offering a suitable severance package should the supervisor decide on termination.

How Do You Work with an International BD Person? Seven Ideas

Situation: A company has been approached by an international business development specialist who wants to help them expand into Asian markets. The company would need to hire local resources to support business that was generated. Most of this would be cookie cutter as opposed to creative work. How do you work with an international business development person?

Advice from the CEOs:

  • Research the country markets where the specialist can help you and focus on the more developed and promising markets first.
  • If the specialist that has approached you has a local presence in the markets in which you are interested, lean on this person for help getting you started – office space, staff support, and so on.
  • One company started a subsidiary in Canada. The CEO believes that you must have a highly trusted person to own the project. Success is all about the relationship with this individual and their knowledge of both local and American culture.
  • Another company hired very promising business development person for a large Asian market. As the relationship progressed, they found that this individual was double dipping – working for them and their competition at the same time. Apparently this is acceptable in that culture.
  • Many cultures are relationship based. Local contracts are critical. Does your specialist possess these, and are they premier companies or also-rans.
  • Talk to individuals in your industry who have experience in the region.
  • Have your eyes open and recognize that this is will not be a quick process.

How Do You Replace a Sales Manager? Four Suggestions

Situation: A company’s Sales Manager is likely to retire in the next two years, but has no strict timeline. This individual is the chief rain-maker and has been for many years. The subject of replacing this individual has been sensitive when mentioned in the past. How do you replace a Sales Manager and how do you manage the transition?

Advice from the CEOs:

  • Have a frank conversation with the current Sales Manager. For the company to thrive it is necessary to start selecting and training an individual to take his place when he retires. Have him help develop the recruitment and transition plan. Also involve your Customer Service Manager.

o    Hire a person like the current Sales Manager and allow for up to two years for the new individual to get up to speed.

o    Find someone who is currently associated with one of your key customers and who has contacts.

o    Adjust your compensation scheme to focus on growth and customer diversification with enhanced commissions for bringing in these accounts.

  • To ease the transition, start to build a different customer relations structure – one where the CEO has more engagement with key customers.
  • An alternative to replacing the Sales Manager is to create a different organizational structure. For example, hire a COO who will eventually take over business development as well. Think longer term about to how you want the management structure to grow. Build your future vision of the company into this process.
  • You can’t wait – start now!

How Do You Emerge from the Recession Stronger? Five Actions

Situation: A company is encouraged by signs of a strengthening economy. They want to encourage their staff to prepare for growth and new opportunities. The CEO is curious about what other companies are doing to prepare their staff so that they emerge from the recession stronger than they were in 2008. How do you emerge from the recession stronger than you were before it began?

Advice from the CEOs:

  • One company is organizing company meetings at each site to outline their high level plans so that all managers know the plan and vision:

o    General company direction

o    Market and opportunity

o    The plan – where they are, what they’re going to do by when

  • Another company conducts a general employee meeting every two months. At the last meeting:

o    They cancelled the 20th day off without pay – and celebrated!

o    They compared revenue growth now versus last year, focusing on the positive upside and company’s potential.

o    They explained why they are now recruiting, and reinforced their business model.

o    They had kept up marketing and sales during recession and these are now paying off.

  • Another is reinforcing the belief that they will stay lean and mean.
  • Another is Increasing update communication frequency and assuring that managers are updating their teams. This maintains the soft reasons for people to stay onboard, and to stay excited.
  • What not to do: do NOT allow cuts that were made to survive destroy the long-term workable business model.

Should You Use Project-Based Accounting? Five Thoughts

Situation: A company has been using the accrual method of accounting. As they approach the fourth quarter of the year, they are looking at project-based accounting to reduce year-end cash reserves and taxable income. How do you create and manage a project-based accounting system?

Advice from the CEOs:

  • The PeopleSoft Division of Oracle offers a project-based accounting package. There are a several issues that accompany a shift to project-based accounting: do employees work on more than one project, how do you plan to account for shared services such as administration and Human Resources, and do you plan to share revenue and costs across projects? These can entail a fundamental change in how the company is organized and behaves. If your primary motive is tax avoidance rather than organizational change, why would you pursue this level of change in the organization?
  • Looking at hundreds of companies with which the CEOs in the group have worked, nobody has seen any that utilize project-based accounting.
  • The company’s objective is to better understand the various projects that the company manages, and to have revenue travel with cost. A far simpler option from an accounting standpoint is to look for ways to pre-pay future expenses and thus reduce year-end cash reserves.
  • Another option is a hybrid between cash and accrual accounting.
  • If you have a strategic reason to pursue project-based accounting, look at firms that serve the construction and entertainment industries. These industries have similar challenges to those faced by the company.

Do You Give Equity to Board Members? Four Considerations

Situation: An early-stage company has a key advisor who is helping them to build a 3-5 year vision and plan. The company can’t afford to pay the advisor full-time but he’s interested in working one day a week or becoming a Board member. Should they give him equity as a Board member and under what conditions?

Advice from the CEOs:

  • Adding Board members increases complexity, especially when it comes to big decisions. Once an early stage company transitions from their start-up Board to a more formal Board with non-founder members, particularly when a significant number of the new members have strong corporate experience, the Board will take on a certain level of independence in corporate and compensation decisions. Be aware of this, as a larger more independent Board may make decisions that the founders would not make.
  • It is not irregular for Board Members to receive equity or options. If you want to grant options, you must undertake an initial company valuation exercise, followed by annual valuations. It is common to grant options with 4 year vesting on a monthly basis. Vested shares can be purchased at Day 0 price, with some period to exercise options following departure from company.
  • Seek an expert in Board operation and compensation. There are a number of advisors with deep experience in this area who can advise the company on standard practices for Board operation and compensation.
  • If the company decides that they are not yet ready for an expanded Board of Directors, another alternative is a Board of Advisors.