Tag Archives: New

How Do You Deal with Cut-throat Competition? Seven Thoughts

Situation:  A company serves a market with a lot of new small entrants. Clients purchase from these other companies as well as the CEO’s company. They are continuing to call and network with their client base to retain clients and build new customers. What else should they be doing? How do you deal with cut-throat competition?

Advice from the CEOs:

  • Make a list of those clients who are no longer purchasing from you or referring new clients. Go talk to them. Ask why they are no longer purchasing from you or referring new clients. This may open new options. You may find something new or unexpected that you can offer.
  • Work with an outside service to follow up with on clients lost and won. The key question for them to ask clients is why. Learn from the responses what is most important about the clients’ purchase and referral decisions.
  • Consider a new service. A health/happiness outcome would be a nice value-add: a quarterly report back to referral sources on how happy the clients that they referred are. The last question on the survey should be – Would you work with our firm again? Why or why not?
  • Consider using an outside source to gather the data for these surveys. To get more valuable responses, don’t just ask about your company, but also several of your top competitors; this will produce a richer set of responses.
  • There are two ways to compete: either you are low cost or have established a unique value proposition. Whatever this is, sustainability of your critical point of differentiation is essential.
  • Health care legislation is now in flux. Whatever the outcome, it will have an impact on your market. Become an expert resource on the implications of various outcomes.
  • Look at social media resources – feed valuable information to your audience via blog.

How Do You Build a Young Company? Four Perspectives

Situation: An early stage company is positioning itself for growth. The CEO believes that they need to adopt a new model to grow. She is focused on a new channel – an affiliate model using the web. How do you build a young company?

Advice from the CEOs:

  • Introducing a new product to a new market is very difficult, especially for an early stage business that is still establishing itself. Shifting from direct sales to ancillary services presents a new challenge and a new demographic. In addition, in your market there are low barriers to entry so it may be too early to diversify. You are more likely to be successful marketing to your core.
  • Evaluate and decide whether there is growth in your core business. If so, stick with your core plan. If not, then you either must change or decide that your core market is not what you thought it would be.
  • You offer a valuable, important service. The issue is branding and a clear vision of what you want to be. Start by identifying your revenue stream. Then assess ways that you can move from one-time sales to an annuity revenue stream without major adjustments to your model.
  • Is it feasible to build a revenue share model for ancillary services with your core business partners? Here are the steps:
    • Develop a model.
    • Talk to both your business partners and customers – test the concept. See how they respond.
    • There are two things to look for: does it turn out that that the model is easy to sell and implement, with little effort or distraction from our core business, or does it compliment your core business. If either or both is the case, you may want to pursue it.

What Incentives Do You Offer Your #2? Six Thoughts

Situation: A CEO’s “Number 2” is returning from maternity leave. He sees a role for her helping him grow the business and wants to give her an incentive for taking on that role. What is an appropriate incentive? What incentives do you offer your #2?

Advice from the CEOs:

  • Remember, first, that your #2 is a person with a new baby. Remember what it was like when you and your wife had your first child. How did your priorities change? How did your wife’s priorities change?
  • Never make her choose between child and job – you will lose. Offer her lots of flexibility. For example, allow her flexibility in hours to accommodate the needs of her child. This will mean a lot to her.
  • Find out what is important to her – what does she see as her role and goals. Be sensitive to the possibility that the birth of her first baby may have changed her priorities.
  • Here’s the message: “You’re valuable and I want you on my team. I appreciate your responsibilities with a newborn. How can we make this work for both of us?” Build a role around this – not an incentive program.
  • Many Silicon Valley and other urban families need two incomes. Work out something that works for her.
  • Have a Plan B in case it turns out that her priorities no longer align with yours.

How Do You Optimize a Financing Pitch? Seven Suggestions

Situation: A company is drafting a pitch for their next round of funding. They want to reach both current and a new set of investors and highlight the improvements that they’ve made since their last round of funding. How do you optimize a financing pitch?

Advice from the CEOs:

  • Work on a quick demo of the site. This is critical for a software company. The site must clearly and quickly show what differentiates you.
  • When you sit down with potential investors, start your pitch with a catchy statement, e.g., “We’ve all heard about ‘pay it forwards’. I want to talk to you about ‘Job-It Forward’.”
  • Start the presentation with an overview and a simple illustrative explanation so that the audience instantly gets what you are doing. For example, “we’re about generating social capital and here’s an example of how we do this.”
  • Be careful not to drown your audience in detail. Limit yourself to 3 bullets per page. Use graphics rather than words as much as possible. Most people can only absorb a limited amount of verbal information, but they remember pictures.
  • If you’ve already started talking to potential investors, what are your results? What feedback have you received to date? Analyze this and adjust your presentation and pitch accordingly.
  • Can you show a potential funder ROI? For example, if you give us $X, we will generate $Y in terms of return. You want to demonstrate IMPACT! Those who will support you want to see the advantage of investing in you vs. other options available to them.
  • Include a slide showing sources and uses of money spent to date. Show how you will use the money that you wish to raise.

How Do You Create Values, Mission and Vision? Four Ideas

Situation: An early stage company wants to create core values, vision, mission, and a BHAG (Big Hairy Audacious Goal) to guide the company and inspire employees for the next five years. What are the most important aspects of this process? How have other companies done it? How do you create core values, mission and vision?

Advice from the CEOs:

  • As the founding CEO of an early stage company, define yourself first. What are your skill sets and talents? Start from the beginning: why did you start your company? What motivates you and what do you want to build or accomplish? What are you passionate about? What really turns you on? You are the individual who, in an early stage company, must inspire your employees. What inspires you and what has attracted your employees to the opportunity presented by your company?
  • Create your business plan around your dream. If creating something exciting and new or making money is important, how can you make creating something exciting or making money living your dream? If the most important factor is something else, how can you achieve this living your dream?
  • The US Government is desperate for export opportunities involving high tech products which will employ Americans. The opportunities are in new innovations, not commodities. For example, solar panels are high tech but they have become commodities at least in their current configurations. Look for something that is unique and new – for example software that helps to increase the efficiency and security of the grid.
  • Entrepreneurship is not about having a steady income. It’s about creating something new. If what you develop works, you will make money. However, if you want a steady income – go get a job.

How Do You Make Time for Priorities? Eleven Recommendations

Situation: A CEO is building a new company. She has a small, highly qualified team, and much of the work is hands-on. In addition, there is fund raising to support the venture. The CEO also makes time for exercise and keeping in shape. With all of this on her plate she is getting overwhelmed. How do you focus on priorities in an early stage company? How do you make time for priorities?

Advice from the CEOs:

  • Maintain your exercise and health – this makes everything else easier.
  • Decide on your strategic platform. This creates a larger conceptual framework and helps to clarify priorities.
  • Identify the gating items. Focus effort here and spend scarce resources strategically to push your goal.
  • Within your gating items, identify the factors that make you scalable. Focus most of your effort here.
  • Create a weekly focus.
  • Lay out your to-do list in a Covey quadrant – most and least important vs. urgent and not urgent. Review this weekly to eliminate or delegate less important priorities.
  • Operational issues are usually symptoms – identify the causes and fix them.
  • Daily, list what you’ve done. Look back every 1-2 weeks and assess how you spent your time. Eliminate time wasters.
  • Don’t let you passion be undermined by the drudgery.
  • As an early stage company, you have to react – understand and appreciate that some aspects of early stage company life will not be very strategic.
  • Fix things rather than adding people and complexity. This compliments Fisher’s Stages of Growth recommendations for a company of under 11 people.

How Do You Establish Accountability for Results? Four Ideas

Situation: A CEO has difficulty gaining realistic projections from sales – projections for which they will be accountable. For example, the VP of Sales promises X but delivers Y – a result substantially below X. What methods have you have used to get realistic assessments and commitments from sales executives? How do you establish accountability for results?

Advice from the CEOs:

  • Shift the issue from their accountability to your own accountability to the company.
    • In order to ship to the projected sales targets, we will need to scale up production to X level, hire Y personnel, and invest in Z inventory. If we miss the target by 20% here’s the impact on our financial performance for the next period. Are we comfortable, as a company, with this exposure, or should we adjust our plan to reduce the exposure.
    • This makes it easier for the sales executive, for the good of the company, to reduce the projection if they are not confident that they will make it.
  • Do you need to examine your commission structure as well as bonuses for sales executives? Consider scaling commissions to make sure that the sales team hits their targets. Make them hungry by offering lower commissions for lower targets, but increasing total commissions for meeting and exceeding targets.
    • Have the sales team project their sales. If the projected level meets company objectives and they meet them they make X%. However, if they fall short they make successively smaller fractions of X% depending upon how much they fall short.
  • Currently, the ratio between new and repeat sales is 20% / 80%.
    • To focus the sales team on new sales, reduce commissions on repeat sales, and increase commissions on new or increased sales and/or accounts.
  • Good sales people are competitive and often respond to pride. Give them in incentive – hit the sales target and get trip to Las Vegas with your spouse or guest.

How Does a Professional Services Firm Get Known? Seven Ideas

Situation: A professional services firm has opened a new office in Silicon Valley. Their immediate priority is building clientele in their new market. They have an excellent reputation in their other markets, but are as yet unknown in in either Silicon Valley or Northern California. What can they do to create buzz and local awareness? How does a professional services firm get known?

Advice from the CEOs:

  • Hire a part time PR person who is familiar with the local community. For example, this may be an experienced Mommy Tracker – a woman who puts priority on being a mother, but who is also interested in working part-time with a flexible schedule. The role will be to schedule speaking engagements with local organizations, groups or companies.
  • Think about publishing a book, whether yourself or with a professional writer. Tweak it to include a section on start-ups and do a book speaking tour in Silicon Valley.
  • Consider sponsorship of prominent local organizations. In Silicon Valley this could include incubators or entrepreneur groups. These are companies who could benefit from professional services.
  • Offer seminars to target clients, or those that invest in target clients – for example venture capitalists or angel investment groups.
  • Write articles for Red Herring (redherring.com)
  • Get to know the WI Harper Group (wiharper.com) – connected with Walden International. This is a San Francisco venture capital group with limited partners from China, and with a focus on US/Asia technology transfer.
  • Highlight past success in helping clients to gain funding.
  • The suggestions outlined here can be applied to opening a new office in any new location.

When Does It Make Sense to Buy a Company? Three Guidelines

Situation: A Company has a key customer that wants to upgrade the Company’s status as an approved supplier. This comes with a catch – the customer demands that the Company reduce the amount of its total revenue represented by its business with the customer. The customer doesn’t want the Company to be overly dependent upon them or their business. One option that the Company may explore is purchasing another business. When does it make sense to buy a company?

Advice from the CEOs:

  • The Company may be working under a false premise.
    • If the Company is truly a critical supplier, the customer is not likely to go away just because they don’t like a single ratio on how the Company runs its business.
    • The risk that the Company takes on buying another business is that this distracts the Company and ends up jeopardizing current business both from thus customer and others.
    • It makes more sense to explore acquiring another company if the Company’s broader goal is to become more diversified, or if new business commitments are forthcoming from this or other current customers.
  • What about this strategy makes sense?
    • Provided that the purchase of another company makes strategic sense, it may be feasible to finance the purchase of that company through a leveraged buy-out.
    • Be sure to build an earn-out with incentives contingent upon the seller staying on and helping to maximize long-term value of business.
  • As an alternative to buying another business, it may be possible to build a new lower cost/price version of the Company’s current product or service and build a new customer base for the lower cost version. This is how automobile companies use the same or similar frames, engines and many of the same components to create different cars for different markets.

How Do You Evaluate Career Choices? Three Considerations

Situation: An SMB CEO has sold his business and seeks a new opportunity. Options range from a mid-level position in a large company to various options in existing or start-up smaller companies. How do you evaluate your career choices?

Advice from the CEOs:

  • The most important factors are to determine what you want to do and what will make you, and your family, happy. Start with a Pro/Con analysis of each type of opportunity compared with your short and long-term desires. Which among the following choices are more important?

o    Financial stability and some level of job security vs. higher risk and potential reward with lower security.

o    Desire to be a player or to be the person in charge vs. being happy with a staff position.

o    Ability to create your own path or willingness to adapt to the priorities of others.

  • Given these choices, here is what you may find:

o    In a large or established company the most likely opportunity will be a staff position. The trade-off is stability for authority, but be aware that large company organizational politics may be severe.

o    In a small existing company it is possible to be a player in a key position. The trade-off is lower stability and viability for more authority.

o    In a new company there is the chance to be the CEO, bringing business experience to a group with technology expertise. The trade-off is high risk, long hours and low stability for a high level of authority.

  • Other factors to consider are how critical your personal situation is and the depth of your resources. If you have time and flexibility, take the time to find a situation that best meets your needs.