Monthly Archives: November 2010

Opening a Branch Office – Five Preparatory Analyses

Situation: The Company plans to open their first branch office. There are considering several possible locations. What are the most important considerations as they prepare?

Advice from the CEOs:

  • Perform an ROI analysis for the planned office. How is the ROI for the branch office different from your primary office? Look for potential economies of scale in your business model. This may prompt a rethinking of how you generate your products or services.
  • Simultaneously, look at your potential costs per location and the level of business required to (1) break even and (2) to match/exceed home office return in the new location. As you consider different geographical locations, compare costs and potential contribution of each against the others.
  • Decide whether you need to build full operations in your branch offices, or whether you can use a distributed services model, working from a central hub that performs some operations that need not be replicated in the branch offices.
  • Once you have completed these three analyses, perform a make/buy analysis to determine whether you get a better return from setting up your own office or purchasing a local company, if one exists.
  • Lower risk by starting with a relatively low cost operation – essentially a satellite office with minimal staff. As the new office develops initial business, they can be supported by your home office operations. They will serve as local feet on the street to evaluate the true potential and local barriers to entry within the new market.

Key Words: Branch Office, Location, ROI, Economies of Scale, Make/Buy, Barriers to Entry       

Working with an Off-Shore Business Partner – Six Recommendations

Situation:  The Company has an off-shore business partner. Primary concerns involve team performance, process documentation and anticipating sales/marketing problems before they become issues. What have you found effective to monitor these areas?

Advice from the CEOs:

  • At the executive level, keep things simple – identifying the major goals and pieces of projects that are the make-break points.
  • Simplify the high level summary and make sure that all of the supporting activity is aligned with and supports key project or company goals. Some members manage projects with weekly or bi-weekly meetings.
  • The benefit of keeping it simple in your own mind is that you can always return to this simplicity when dealing with detail level queries from the partner. It keeps you grounded and on track.
  • One company uses project timelines that clearly show each of the teams where they fit into the project and how important it is for them to complete their portion of the project on time and to spec. Keep everything simple and direct.
  • Sales tracking and management is different from development projects. Drive monitoring off forecasts, pipeline, and achievement of metrics that track with the forecasts.
  • In working with your off-shore partner, organize your presentations so that the key points of emphasis are readily visible. Have back-up slides to show detail aspects of particular projects or initiatives, and be prepared to cover the details if needed. This will help to build confidence between you and your business partner.

Key Words: International, Partner, Performance, Process Documentation, Sales, Marketing, Alignment, Project Management, Communications                

How do we Get our Doer/Sellers to Sell? Four Recommendations

Situation: The Company has a geographical sales and service organization. Much of the sales effort comes from the consulting reputation of the managing director of each geographical unit, but he directors’ core values usually favor consulting over meeting sales plans. How do we get these directors to meet sales goals?

Advice from the CEOs:

  • Experience turning around a consulting organization with no sales culture:
    • Ours was a 5-year process. It starts with a leader who sells successfully and teaches by example.
    • As we made the transition, we selected new hires for sales skills to compliment their consulting skills. This facilitated our transition to a strong sales culture.
  • You need to commit to build a sales culture.
    • Moving to an account manager team versus an engineering/professional team was a big shift. It takes time and patience.
    • Hire effective sales people to jump-start the process. Most of the successful seller/doers will be new hires.
    • Revise your reward and recognition structure around your objectives.
    • Make rainmakers your best paid people. This will bring others out of the woodwork.
  • Bias sales compensation for doer/sellers toward variable compensation. Allow successful individuals to make over $200K per year.
    • Consider a 3-year phase-in by not increasing base pay through raises. More than make up the difference in available variable pay. Directors will now have more incentive to hit their sales numbers.
  • This is a difficult change in both sales leadership and culture. You may have to make significant leadership changes.

Key Words: Sales, Compensation, Core Values, Consulting, Goals, Reward, Incentive, Transition, Hiring, Culture 

Merging or Selling the Company – How do we Retain Key Staff? Five Suggestions

Situation: The Company has a merger / sale of the company pending. While most direct staff will be retained, roughly half of the indirect staff may be at risk. The CEO’s objective is twofold: to retain key indirect talent before and during transition, and to do right by those who have made strong contributions to the company.

Advice from the CEOs:

  • One member dealt with this a few years ago. They set up a retention fund for important but potentially impacted employees in advance of the anticipated transaction. The longer the employee stayed with the company through the transition, the larger the payout for which they were eligible. In the case of no transaction, the funds were to be returned to the company.
    • An alternate version of this option is to use insurance to fund a retention package for a group of key employees. This package may or may not be required depending upon the transition.
  • For potentially impacted employees, consider a retention package that rewards them for staying long enough to train the purchaser in their areas of expertise.
  • Look at outplacement services as part of the package for employees. Let employees know that this is part of the package if they are not retained post transaction.
  • Seek outside consultant expertise to assist in the design and administration of a retention package. Also look at your own network, and seek the advice of others who are well-versed with the technical aspects of employee transition.

Key Words: Merger, Sale, Employee Retention, Insurance, Outplacement 

Where Can I Find a Good Salesperson? Five Suggestions

Situation: The Company wants to expand its sales force by adding “diamonds in the rough” – hungry individuals motivated by a high commission/low salary opportunity with high total compensation potential. How can they find these individuals?

Advice from the CEOs:

  • Hire “out of school” and use a good sales assessment tool to evaluate which candidates have the right attitude and skill set to succeed. Create a career path through a lower paid inside sales position to eventual higher paid outside sales position while the individual gets up to speed understanding your technology and as they develop sales skills. This helps to generate revenue to cover costs while developing new sales candidates.
  • Accept that you will likely experience turnover hiring candidates out of school. High commission sales forces in other industries deal with 85% turnover over 3 years to find “keepers.” This may be a significantly higher level of turn-over than you are used to in other positions.
  • Look to sales job fairs and Craig’s List for candidates.
  • Give your current sales people a bonus for referring friends or acquaintances who will stay with you for 6 or 12 months. Pay out theses bonuses over times.
  • Find a good sales recruiter to find experienced high-producers in industries with a similar product sale.
    • The appeal to these individuals is a high earnings opportunity combined with the chance to sell a sexy product.
    • Because these people will already be high earners, you may have to create a draw system so that they do not have to make too great an earnings sacrifice by switching to your Company.

Key Words: Sales, Hiring, Training, Commissions, Referrals, Bonuses