Tag Archives: Plan

How Do You Expand Your Market-Base? Six Suggestions

Situation: The CEO of a service company needs to expand its market base due to concerns that a significant service and referrals partner may decide to stop working with them. A break-up would have significant impact on salaries, effort and focus. The company’s priority is to expand client growth to minimize the impact of a break-up. How do you expand your market base?

Advice from the CEOs:

  • To expand or build a market requires a champion. Someone like the company’s founder who has the passion and contacts to build new business.
  • Second, incentives must be established to reward success bringing in new clients. These incentives must have teeth – no success, no incentive. No safety valves.
  • Third, create a plan to support the new business development – including marketing, event attendance, etc.
  • Initially, be selective and target just a few highly desirable new clients to test and refine the client attraction model before expanding to the broader potential client audience.
    • Build a set of case studies of services and results for new clients.
    • Track and prove out the profitability and workability of this model.
  • How should the effort to expand the market base be constructed?
    • Start with preparation. Research the current prospect list to assure that they are good prospects. Also look at the current company culture – do the company’s strengths align with what is needed to attract and serve new clients?
    • If the research shows that a significant number of prospects are different from current clients, think of this as a new channel. Create a different business unit to specialize in serving these clients. Hire a team to focus exclusively on the new client group, with proper incentives tied to achievement with these prospects.
  • Another company had a similar choice. They created a program to increase their market base and went after it with full focus. It took five years to accomplish vs. the two years that they had planned. Nevertheless, the results have been worth the effort and expense. If the company believes in the model, invest in it.

How Do You Transition to New Management? Four Insights

Situation: The CEO of a small technical company is in the process of handing off responsibilities to a new President who lives in another state. The CEO and President have known each other for a long time and have a strong relationship. The CEO will hand off several key responsibilities immediately, while retaining financial and HR because of the President’s location. How do you transition to new management?

Advice from the CEOs:

  • Most of the current hand-off plan concerns non-technical areas. The next logical area to delegate is Customer Support.
    • Establish a trigger process for new requests for support that keeps key parties informed and meets customer needs on a timely basis.
    • Think about bumping up Customer Support to a more proactive Customer Relations function. This is important during economic downturns when trade show attendance is low.
  • Next in line are Installation and Installation Planning, since the new President will already have Installation Support.
  • Think about Technical Support. This could be combined with Customer Support and makes sense because many customer support questions come through technical support.
  • Beef up the financial function to support future growth. Growth brings new complexities into the picture. Consider handing this off to a part time professional who can provide regular updates of the company’s financials. A professional can also look at the structure of the books and suggest changes that will provide more insight into company operations, opportunities for savings, and sources of funding to support planned growth.

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.

How Do You Manage Conflicting Demands from a Client? Three Points

Situation: A CEO is struggling to manage conflicting demands from a key foreign client. The client frequently changes targets and priorities; however, the performance contract with the client does not allow variations from plan. In addition, the CEO and client have different expectations concerning ROI. How do you manage conflicting demands from a client?

Advice from the CEOs:

  • Recruit or access expertise from an individual who knows both cultures to coach you on intercultural communications. This will help you to avoid inadvertent miscommunications where your well-intended queries are negatively interpreted by the other party.
    • Cultural interpretation is an increasingly important factor for multi-national business growth.
  • Are there elements of the client’s structure and the agreement with the client that offer significant benefit, but which are underappreciated by company staff?
    • Access to capital?
    • Access to funding or allowance on expenditures that allow the company to increase staff to meet company demands?
    • Assure that staff are aware of these benefits and how critical these can be to the company’s, and their future growth and income.
  • Meet with the client’s leadership to outline the conflicts that the company faces meeting the client’s needs and demands. Explain to them how these conflicts are compromising the company’s ability to meet their needs. Once the conflicts in priorities are clearly expressed this may help the client to understand and resolve the conflicting demands.
    • This may involve a considerable personal risk and cost to the CEO. However, if the effort is successful it will, in the long-term, benefit both companies.

How Do You Balance the Demands of Work and Family? Five Views

Situation: A CEO struggles to balance time and responsibility commitments to his business with demands of his family. This is not an uncommon struggle for executives. The question is: what strategies are effective to address the needs of both. How do you balance the demands of work and family?

Advice from the CEOs:

  • One Member: It takes a plan to find a solution.
    • Decide what you want and write a business plan to get there.
    • What relationship do you want with your soul mate? Make this part of the plan.
    • Have a conversation and test whether your and your spouse’s long-term visions are complimentary.
    • Don’t take on additional work – this is good both for family relationships and the role as CEO.
  • Another Member: My spouse and I talk about this a lot – particularly around time.
    • We have agreed on how the week is carved out – family time/work time.
    • We agree to honor each other as we are – not how we want the other to be.
    • Watch work commitments because – long-term – your spouse and children more important and more lasting than work.
  • Another Member: I’ve lived through the same issues.
    • I probably erred on side of family vs. career. The benefit is that now, I can’t get enough time to play with my kids. It’s great!
    • Attention to children is very important during the early years. While infants are not as capable of communicating as they will be later, the basic emotional and learning patterns – as well as affection patterns – are created early in life. It’s like the foundation of a building – not much to look at from the street, but it allows the whole building to stand.
  • The same mind that developed your business can solve this.
    • Stay open to solutions.
    • Make a choice.
    • This is uncomfortable, but not bad. The struggle proves that you care.
  • View your spouse as somebody who cares enough about herself so that she thinks she deserves a class act from her mate. Isn’t this what you want in a mate?

Which Is More Important – Long or Short Term? Five Points

Situation: A CEO is concerned about long term trends versus short term volatility. While the business has done well over time, short term volatility has made it difficult to project both personnel needs and cost. As the company expands geographically these issues are becoming more critical. Which is more important – long or short term?

Advice from the CEOs:

  • Does the company find that capabilities are not fully understood until they get into development? In this case, is the problem with variables of schedule, budget or capability more important?
    • Going forward, evaluate each of these variables to determine which is having the greatest effect, positive and negative, on project performance and profitability.
    • If the problem is time constraints in the project planning phase, assure that sufficient time for project iterations is allowed in both the schedule and budget. It may be that the clients are not sure of what they want until they see a model, and that several iterations are required to assure that clients’ needs are satisfied. Plan and bid for this.
  • If fixed costs impact margins during dips between active projects, assure that enough fixed cost coverage is built into project bids to cover dips.
  • For geographically remote offices is the company’s issue a question of volume or resource cost or is it a pricing issue?
    • If it’s a pricing issue to stay market competitive focus initial activity where this issue is minimized. As market presence expands, add additional capabilities in phases according to the ability to cover costs profitably.
    • If it’s a resource cost issue use the same solution, adding resources according ability to cover costs profitably.
  • Build the company’s sales and marketing structure in phases while expanding into new markets. If sales compensation is base plus commission, vary commissions paid according to resource rates negotiated. This will tie sales incentives to negotiated resource rates and will help to assure that costs are covered.
  • Dealing with short term issues effectively will improve long term planning and profitability.

How Do You Replace Aging Talent? Four Options

Situation: A CEO is concerned that all her key personnel are over 50. This includes software engineers who are experts in languages which remain at the foundation of many customers’ databases, but which are no longer formally taught. How do you replace aging talent?

Advice from the CEOs:

  • Look at which areas potentially limit the company’s growth. Is it technology and software expertise, or marketing and sales? Based on this assessment, rank the critical positions to be filled and start hiring staff who can grow into the most critical positions.
  • Take a cue from the Japanese. For years their aging workforce was predicted to limit the country’s growth. Instead, they chose to retain employees through their 70s and this has helped them to maintain both productivity and employment.
    • Many Baby Boomers are finding that they don’t have the savings to retire and are working well past the historic retirement age.
    • Other Baby Boomers retired but found themselves bored after a productive career and have returned to the labor pool.
    • These factors may delay the company’s need to replace aging talent.
  • The bigger question is what to do if a key player is lost. Focus on hiring back-ups to key personnel and allow several years for them to come up to full speed. Current employment trends suggest that numbers of experienced people are returning to the labor pool. Look for a few good people to add to the team.
  • What are the plans of the company’s key clients? Do they plan to stay with the company’s products and expertise, or to sunset these and replace them with new technology? Adjust operational objectives, as well as the exit strategy, to achieve desired growth given customers’ timeframes.

How Do You Choose Between Opportunities? Five Thoughts

Situation: A growing technology company is faced with several opportunities. The CEO is too busy to devote the time to analyze each of these. In addition, the CEO wants to develop her staff so that they can take on more responsibility and mature into a full organization. How do you choose between opportunities?

Advice from the CEOs:

  • Everything starts with a strategic plan for the company. Either the CEO or an outside consultant should coordinate a strategic planning session to develop and rank the opportunities facing the company. The ranking exercise is best done as an open departmental or company-wide exercise so that everyone is involved in the process. This helps to build consensus and commitment to the opportunities developed.
  • Once the opportunities have been identified assign one to each of the employees that you want to develop. Each of the employees will be the champion for that opportunity.
  • Ask each champion to develop a business case and plan for their opportunity. This will include a development plan and ROI analysis. Allow each champion to access all company resources as they develop their plans. Set a deadline for all champions to complete their plans.
  • Once the plans have been completed, reconvene the group that participated in the strategic planning session and have the champions pitch their plans to the group. The group will provide feedback and suggestions for each plan. At the end of the session repeat the ranking exercise based on the new information developed and presented.
  • This will provide a wonderful training opportunity for the champions as well as valuable insight into their talents and potential for future development. In addition. Because the strategic planning sessions will be conducted as a company-wide exercise, they will act as team-building exercises and excite everyone about the potential facing the company.

How Do You Transition to New Leadership? Four Perspectives

Situation: The CEO of a professional service company is reaching retirement age. The plan for years has been for a key field manager to take on this role; however, neither the CEO, the founder nor most employees feel that this individual is up to the job. What can be done to either better prepare the key manager for the new role, or to demonstrate that this is unfeasible? How do you transition to new leadership?

Advice from the CEOs:

  • For the long-term benefit of the company, it is important to create a situation that will either prepare the field manager to succeed or provide the Company with a back-up plan for ongoing leadership.
  • If the CEO and founder are concerned about this individual’s ability to succeed, then coordinate a plan with the founder and then meet with the key manager.
    • Let the key manager know that the owners plan to sell the company in 3 years.
    • This can be an internal sale – the CEO and founder sell their shares to the key manager – or the owners will look for an outside buyer to buy out all current owners.
    • See how the key manager responds.
    • If the key manager expresses an interest in buying the CEO’s and founder’s shares, then require this individual to make the same level of financial commitment that the CEO and founder have made.
  • Another CEO experienced a comparable situation with an individual who was both underperforming and a significant shareholder.
    • This CEO created a very public vision of what he expected this individual to achieve – in positive terms. The CEO also put an outside hire in a similar role to create a performance comparison. The result was a significant increase in performance by the inside individual and a successful transition to additional responsibility.
  • If the key manager is to be put on a track that leads to the CEO role there will be two challenges: assuring that this individual can acquire the skills to succeed and assuring that the individual can demonstrate successful leadership within the Company. To meet these challenges, take the following steps:
    • Make a public announcement of the plan to transfer the mantle of leadership to the key manager;
    • Raise the bar of expectations for the key manager to demonstrate his or her leadership capacity;
    • Define a full program of training to provide the key manager with the skills to lead the Company;
    • Ideally, allow the key manager to prove his or her mettle through a highly visible responsibility – like growing a key market segment – so that he or she gains the respect of the others.
    • Require the same level of financial commitment that the CEO and founder currently bear, so that everyone knows that the key manager has “skin in the game.”
    • Put the key manager on the same compensation program as the CEO and founder, as this will become his or her compensation program on becoming CEO.

Diversify or Optimize Current Opportunities? Four Options

Situation: A company that manufactures and sells components to a large corporation has a dilemma. This customer is throwing more business their way, under favorable terms. At the same time, the company wants to diversify to reduce exposure to a single large client. The challenge is that alternate opportunities are not as profitable as those from this customer. As the CEO puts it, should they use limited resources to chase copper when gold is readily available? Do you diversify or optimize current opportunities?

Advice from the CEOs:

  • It is always dangerous to have all your eggs in one basket. Dedicate resources to develop alternative business opportunities, knowing that at first the new opportunities will not be as appealing as current opportunities with this large client.
    • Think back – has business from the large customer always been this profitable? In developing new business opportunities, one often must pay dues to develop opportunities for future profits.
    • Invest in business development to find new business opportunities outside of this large customer. Do this sooner rather than later. One never knows when a large customer will change strategic direction.
  • What are the company’s options and choices?
    • Stay the current course and accept the risks of this strategy or diversify.
    • Put some resources into studying options to diversify. If there is no gold out there, then maximize the cash from the current situation and invest it in something that will provide a satisfactory long-term return. If the large customer closes the door, then just shut down.
  • How could the company diversify? Geographically? Additional products to other customers? Put together a diversification plan and test it for feasibility.
  • Make sure that company’s and owner’s priorities are clear and not in conflict with each other.
    • What is the optimal size of the company?
    • How many customers are needed to support optimal company size and how much diversification is required for this?
    • What is the owner’s exit strategy and timeline?
    • If the objective is to stay small and exit in one or two years, why chase diversification? Think about what would be appealing to a potential acquirer. Perhaps it is just access to this large customer.