Tag Archives: Repeat

Do You Merge, Sell or Revive a Business? Four Areas of Focus

Situation: A company is at a crossroads. They are no longer growing as they have in past years. The CEO is assessing alternatives including a merger, selling the company or restructuring. What are the essential questions to determine whether you merge, sell or revive a business?

Advice from the CEOs:

  • Do you really have the information to determine whether it makes sense to merge, sell or revive the business? The questions to ask are:
    • Is your core competency important?
    • Do you have the talent required to revive the business?
    • How much of your business is from repeat customers?
    • Is your platform still being used by a significant number of companies, and are they likely to shift their software soon?
    • If the answers are favorable, then the only remaining question is whether you have the energy and inclination to continue.
  • Having developed a profitable business model, why would you give up control or ownership?
    • Tighten up the business by focusing on the basics and turn the company around.
    • Identify where you can make money, and
    • Determine which portions of the business need to be restructured or eliminated.
    • Essential questions are:
      • Do you have a clear picture of where the profitability lies within the business?
      • Do you have a clear statement of your key competitive advantage – your “Main Thing”?
      • Can you establish a pricing strategy that pays you fairly for the value you provide?
  • Look at bench time among current employees.
    • Identify, and fully utilize the most important contributors, perhaps by giving them additional responsibilities in other areas.
    • See that all retained employees are fully utilized.
    • Eliminate those who are on the bench the most, or transform them into contractors so that you only pay for active time.
    • Utilize contractors to fill the “full service” slots that are important to your service offering but which do not contribute significantly to your bottom line.
  • Most importantly, reformat your role so that you are doing that which you truly enjoy. Your own enthusiasm and passion are the most important long-term drivers for your business, and will be the most important motivators to your staff.

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.