Tag Archives: Contacts

What are the Best Options to Obtain Financing? Six Thoughts

Situation: A CEO has been the principal source of financing for her company. She is looking for Round #1 financing of $800K to $1 million to take the company through the next two years, followed by an additional two rounds of financing to take the company to profitability. What are the best options to obtain financing?

Advice from the CEOs:

  • Given the company’s size, it’s too risky to put all eggs in one basket. Also, it is difficult to simultaneously pursue all options. List and rank all financing options, and limit efforts to the top 3-5 options, forgetting the rest for now. The company is more likely to be successful with a limited number of targets.
  • The big question is which avenues to pursue? Current preferences are:
    • Sell what the company can sell now – focus on collaborators and bootstrap the company as much as possible.
    • Angel funding, if the company can find the right angel.
    • Avoid venture capital unless there are no other options.
  • Given these, where does the company have live contacts? What conversations can be pursued to a successful conclusion in the next 1-2 months?
  • For the Angel option, the company’s model is easy to explain and has appeal. Which potential Angels could be approached in the next 1-2 months?
    • An option is to bring an Angel in slowly – creative input, perhaps a Board seat.
    • Once the Angel is on-board, put together a list of your funding priorities and a list of 4-5 top prospects in a Board discussion. Ask this individual’s advice and assistance contacting some of the prospects. He may ask at that meeting or later why he hasn’t been asked.
  • For the first $1million – consider an SBA loan.
      • Under new guidelines, the application fee has been reduced.
      • Approval cycle – 30 days or less.
      • The trade-off between bootstrap and Angel funding and SBA is personal risk. Look at this as a fallback option.
  • VC funding is very time consuming. Also, VCs prefer that their clients are somewhat desperate, so that they will receive a larger piece of the company for their money.

How Do You Maintain Focus on Quarterly Objectives? Three Ideas

Situation: The CEO of a service company is focused on growth, which is driven by new contracts. This, in turn is driven by new sales contacts per week. Sales staff are paid on commission. The CEO wants to assure that quarterly objectives are met to grow the company. How do you maintain focus on quarterly objectives?

Advice from the CEOs:

  • Track and publish progress against weekly, monthly, quarterly metric objectives and key drivers.
    • Post charts around the office to maintain staff focus on objectives.
    • Put up whiteboards that show individual metrics as well as daily “top 3” focus items.
  • Identify key market sectors where focus will pay off for the company.
    • It’s OK to take a generalist approach as the company develops a new market sector. This helps to learn the dynamics of that sector.
    • As sector market penetration grows, develop functional or sector specialties.
  • Identify and focus on the gaps to company success.
    • Monitor and generate incentives to increase sales activity. The more fun that is involved in this, the faster the company will close the gaps.
    • Focus marketing on developing more prospects. Brainstorm creative marketing approaches that will generate prospects. Create a competition to develop the best new ideas with incentives or prizes to celebrate the most successful ideas.
    • If additional resources are required, currently beyond the company’s budget, investigate adding commission-driven contract resources with strong incentives for identifying new prospects and landing new clients.

How Do You Create a Roadmap for a New Business? Four Suggestions

Situation: The CEO of a new company is building her business. She has a business plan but is struggling to bring in new clients. How do you create a roadmap for a new business?

Advice from the CEOs:

  • Creating a new business is a numbers game. Draft a 3-year plan that will generate $1M in billings.
    • The bottom line of the plan is bringing in new clients.
    • Create a financial template that is driven by how many clients it takes to reach the financial goal in three years. Fill out the annual numbers including where new prospects will come from and set quarterly and monthly goals and activities to generate those clients.
  • Develop a marketing “hook.” For example, in the case of business services:
    • Fixed cost business tune-up – a low-level retainer with limits on time and services offered (up to x hours work per month or quarter on y projects)
    • Fixed fee in-house service for small business – again with limits on the services offered
    • Additional services beyond the limited services will be at the company’s normal rates, possibly with a discount to those on the basic retainer service.
  • Create a list of desirable new clients – the company’s sweet spot. Next look for people who can connect the company with these clients.
  • How to get to the target client?
    • This is a funnel question. To build the funnel take three sources of clients: referrals, current business contacts, networking. How many contacts are needed from each source to generate 10 new clients per year?
    • Make presentations to groups which may produce clients or referrals.
    • Get to know the local business people who make referrals.
    • Write articles for magazines that these business people read. Be an expert.
    • To save money, use student interns from nearby colleges and universities to do some of the basic work – target client research, researching and writing articles (make then co-authors on the articles – looks great on their resumes!) This is an inexpensive win-win for both the company and the intern.

What is Your 3-Year Plan? Six Suggestions

Situation: A founding CEO wants to cut back to 1-2 days per week with someone else overseeing day-to-day operations. Her timeline to accomplish this is 3 years. Currently she splits her time between engineering and sales support, managing operations, overseeing the CFO and managing the company. How do you accomplish this transition? What is your 3-year plan?

Advice from the CEOs:

  • Advertise for and hire a General Manager/engineer who can understand the company’s applications and develop unique solutions.
  • Advertise for and hire an understudy for the sales person. This could be someone in their 40s who is experienced, and who can act both as the sales person’s back-up and develop additional accounts to diversify the business.
  • As the company continues to grow it will take more time and effort to manage all the activities. Plan the company’s organization chart and infrastructure to account for this.
    • Be careful not create an infrastructure during good times that is unsustainable during down times.
  • As the new GM gains familiarity with the company, this individual will and should start to take control. This automatically means that the founding CEO will have to agree to release some of her control. Prepare for this.
  • Consider several alternatives for the GM:
    • Super President – $400K.
    • GM with engineering talent – perhaps a consulting or engineering sales background. Hire at $150-200K and develop into the President.
    • Given the 3-year lead time this individual could be a Technical Lead or Project Engineer. The objective will be to develop a very talented person into the GM or President. This alternative opens a larger pool of talent, at lower initial cost.
  • Where are these people found?
    • Trade association contacts.
    • A high-quality engineer that another CEO won’t be hiring over the coming months. Talk to friends and industry contacts.

How Do You Introduce a Product into a New Market? Five Ideas

Situation: A technology-based company has a very successful product in a niche market. The team has been brainstorming about additional markets into which the product could be introduced. The only experience that the CEO and team members have is with the existing market. While other markets are appealing, they lack the experience and contacts to penetrate new market opportunities. How do you introduce a product into a new market?

Advice from the CEOs:

  • Hire someone, either an employee or a consultant, who intimately knows and can introduce you to the new market. If you have more than one good candidate consider hiring them both.
  • Start with clients that you already serve in your current market but who also serve the new market. This can provide quick wins and proof of concept. Overlap is important because you will have a shorter sales cycle with these clients.
  • Another company moved from on-site consulting to turn-key services. They found the purchase process to be completely different. Originally, they were unprepared for this, so the transition took longer than it might have.
    • Talk to existing customers and learn about their companies’ purchasing processes to organize your fact gathering and strategy.
  • Read case studies of other companies’ experience moving a single platform between markets.
  • Another company moved from niche photography – holiday photos – to photos for Fortune 500 companies. This was the same expertise, but the market and decision processes were different.
    • Key to the successful move was understanding the people in Fortune 500s who were making the buy decision and the structure of their decision process. The CEO of this company registered for conventions attended by client prospects. This provided a quick way to meet and learn about key people and their decision processes.

How Do You Rebuild a Company? Nine Strategies

Situation: A CEO is in the process of rebuilding the firm following a period of inactivity. Historically their marketing was word-of-mouth. How do you reestablishing a network which has been dormant for a period, find new clients and communicate an updated value proposition? How do you rebuild a company?

Advice from the CEOs:

  • Track down and visit old customers and contacts. Let them know that you are rebuilding the company and ask for their advice and help.
  • Use LinkedIn to find and reconnect with old contacts. Have breakfast or lunch with them, even those who are retired. Reestablish old connections and ask for an update on their companies and activities.
  • Focus on your knowledge base and the results that you’ve produced historically. There are more technology choices available now than there were in the past. Help old and prospective new clients to navigate the array of choices.
  • Development assessments to show your prospects where they are and where they need to focus their effort.
  • Many have built companies on their own – without professional assistance. The results often look good on the surface but lack a solid foundation. You have the perspective and expertise to bring it all together in a coherent and cohesive strategy.
  • Rejoin professional associations and networks that you may have dropped.
  • Go virtual – use virtual assistants to manage expenses while you rebuild.
  • Do webinars, and give talks on developing and executing a successful plan.
  • Create some pro-bono or low-cost programs for charities. Your target is the Board Members who may become future clients.

How Do You Join a Not-for-Profit Board? Seven Thoughts

Situation: A CEO wants to build network of highly placed contacts. One method that she is considering is joining a not-for-profit Board. What are good organizations? Is it reasonable to expect a quid pro quo? How do you join a not-for-profit Board?

Advice from the CEOs:

  • Do your homework. Find out what the most influential Boards are in your community. For example, the Silicon Valley Chamber of Commerce is very active and includes in its membership many very well connected people.
  • Influential groups and boards will vary by community. In Silicon Valley, the Silicon Valley Association of Start-up Entrepreneurs (SVASE) is a good organization to consider. This and other Angel groups know small companies that need help. Others include the Sand Hill Angels and the Asian-American Multi-Technology Association. In other communities Chambers of Commerce or similar organizations are the movers and shakers.
  • Don’t count out Rotary, Lions, and similar organizations. All these organizations are struggling to recruit new members and some have movers and shakers.
  • Rather than thinking about the meetings, volunteer to join a committee. For example, volunteer to join the Finance Committee. Once the members get to know you, you may be invited to join the Board.
  • Raise money for an organization, this will bring invitations to join the Boards of other organizations.
  • Follow your passions in selecting an organization, you will be more enthusiastic.
  • It is reasonable to expect a quid pro quo? Yes, if you make a significant contribution and demonstrate your competence.

How Do You Develop a Sales Organization? Four Points

Situation: A small company’s business is increasing and they need to build a sales organization. To date all sales have been conducted by the founder CEO and a single employee salesperson. Should they build inside or outside sales first? Are there trigger points at which one or both should be increased? How do you develop a sales organization?

Advice from the CEOs:

  • Right now you have first mover advantage in your market space. You have a unique offering and no existing competition. The immediate objective is to maximize early market share. Borrow if necessary to ramp sales. There is no trigger point.
  • Hire an outside salesperson now. You want an individual who is knowledgeable about your market and who has a large set of contacts. Make at least 50% of this individual’s compensation variable (commissions) to start and escalate the percentage of variable compensation as sales grow. Hire at current market rates.
  • Supplement your existing marketing with an investment in social media marketing and SEO (search engine optimization). Don’t try to do this yourself on the cheap – hire a pro. Invest in Pay-Per-Click to push your visibility.
  • To sell this plan to your existing salesperson and the rest of the team, it’s time for a Come to Jesus talk.
    • Make a strong business case for your program.
    • The trade-off is either invest now to rapidly build sales or become insignificant.
    • Once you’ve made your pitch and received consent, let the plan work before you ask for more.

How Do You Respond to a Competitor’s Sales Tactic? Six Ideas

Situation: A company has learned that a competitor has cloned their client development approach. This approach enabled the company to gain early market share. They have since moved up-market and have enhanced their sales tactics. How should the company respond to the competitor’s tactic?

Advice from the CEOs:

  • Reconnect with the market contacts that got you where you are. Be sure that they are aware of your track record, the value that you provide your clients, and reinforce your current market development focus. Now that you are established, position yourself as the proven producer who consistently produces results.
  • Study what the competitor is doing, who their target customer is, their close rates, and what if anything they are doing to enhance their close rates. Learn from them and copy or improve on their practices where this will yield benefit.
  • If your sales development is based on referrals, enhance the rewards to contacts who bring you new business in your prime target markets.
  • Your principal concern may not be your client base, which is likely unaware of the differences in your versus your competitor’s approaches, but in the referral structure that is your primary source of new business. Focus effort and resources to shore up your relationship with your referral base.
  • Focus on your strengths – performance and excellence in managing client relationships.
  • If the competitor is focusing on down market accounts that you no longer cultivate, then expect them to succeed in this market. Become the provider of choice to up market accounts and the natural referral choice for these accounts. If the competitor stumbles, you may pick up unexpected business.

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.