How Do You Merge Two Firms Under One Umbrella? Five Points

Situation: A company has been approached by a customer with a proposal that the two companies combine. The customer believes that the combined companies will represent a greater market presence than either presents alone. This may make it easier for the combined entity to gain business from larger customers. How do you merge two firms under one umbrella?

Advice from the CEOs:

  • For a company to merge with a customer is a tricky process, assuming that the company has more than one customer. The merger places the company in competition with its other customers who may respond by seeking alternate providers. If this happens it will create a short term hit to revenue. This possibility has to be modeled into merger financial forecasts.
  • Different companies have different cultures. This fact is often ignored in merger discussions because culture is difficult to quantify or measure objectively. However if you ask those who have been through mergers, culture conflict between merging entities is most often the reason for their failure.
  • It may make more sense for the company to focus on ongoing sales to the customer than to entertain a combination that would result in the current owners losing control. In declining the proposal, it is important to emphasize your interest in maintaining a healthy ongoing relationship with the customer.
  • If the customer offers terms that are appealing, an alternative to a merger is a limited scope joint venture as a trial project to test the viability of collaboration.
  • Establish with your co-owners a price at which you are willing to give up control. This will help you to refuse offers that are below this price.

[like]

How Do You Prioritize Demands on Your Time? Six Points

Situation: A CEO is involved in a number of outside Boards and organizations, both because this involvement helps the company, and for personal reasons. Recent changes in family demands are now prompting reconsideration of this level of involvement. How do you prioritize demands on your time?

Advice from the CEOs:

  • List all of your priorities – both business and personal – and the amount of time that they require on a weekly or monthly basis. For non-family activities, rate each in terms of importance both to your organization, and to your heart.
  • Decide how many outside Boards or organizations you are willing to participate in and how many hours of the week or month you are willing to allocate to this.
  • Reduce your involvement in outside boards and organizations so that you get the time commitment down to what you are willing to allocate. Thereafter, to maintain control of your time. If you add a new commitment, drop an existing commitment.
  • Where you have commitments that are important to the company, but lower priority in terms of your own passion, delegate representation to good people within your company. This both maintains company presence and enhances their professional growth.
  • Where you want to terminate involvement let the organization know of your plans in advance, and negotiate a phase out schedule and timeline. They will appreciate your working with them.
  • Consider putting someone between you and your calendar to communicate with those making new requests for your time. This person can say no more easily than you can.

[like]

How Do You Keep Customers and Employees Updated? Five Points

Situation: A company wants to keep both customers and employees up to date on what is happening within the company. This includes announcements of new products, services and initiatives, changes in personnel policy and benefits, and other information important to both customers and employees. The CEO is considering a company newsletter. How do you keep customers and employees updated and what benefits do you accrue from the effort?

Advice from the CEOs:

  • Customers and employees are two different audiences and require different communications. Externally focused company newsletters are a value-add from a marketing perspective and enhance the image of the company in the eyes of clients and prospects. Internal company newsletters are valuable to reinforce vision, understanding of company policy, and inter-departmental alignment.
  • Both efforts are justified from a time and expense standpoint, and perhaps deserve even more focus.
  • Within the companies represented around the table, frequency of both internal and external newsletters varies from semi-annual to monthly publications.
  • Both print and online newsletters have value. Employees respond positively to both. Print media make it easier for them to share important updates in benefits and excitement about company developments with their families. Online media can be updated more frequently and inexpensively, and the HR department can track the number of views to measure impact.
  • Emailed external newsletters are valuable because they enable you to measure ROI from the effort by building in tracking mechanisms and correlating web page hits to business development and revenue.

[like]

How Do Business Prospects Look for 2015-16? Six Observations

Situation: A CEO is planning for 2015-16. While the economy seems to be picking up, there are clouds on the horizon. Do you believe the positive indicators? How do business prospects look for 2015-16?

Advice from the CEOs:

  • Company A: Based on our pipeline we should be recruiting heavily. However we are being conservative and are only adding personnel selectively.
  • Company B: We expect 2015 to be modestly better than the last few years. Engineering saw a turnaround this summer; however we need to see signs that this early economic cycle work spreads more broadly to the rest of the economy.
  • Company C: Some of our development work looks like a spike due to delayed projects. This may not be sustainable.
  • Company D: Weakness in Europe and the recent announcement that Japan has entered another recession give us caution about international prospects.
  • Increasing numbers of Baby-Boomers are retiring. However, some statistics suggest that 60% of retired boomers will be living on Social Security, meaning that they will struggle to make ends meet. This could create a negative shift in consumer spending.
  • The current stock market rally is based on the higher profitability of large public companies. This has come about as a result of two factors: recessionary cutbacks and easy money from the Federal Reserve. What we may be seeing is a Fed–funded bubble. There is a question of its sustainability.
  • Implications for business:
    • For companies doing business internationally – the lower dollar helps.
    • Cautious additions to employment/investment.
    • Need to deal with inflation if the recovery accelerates.
    • If and when the recovery accelerates, employee retention may become a challenge.

[like]

What Changes in Benefits Do You See for 2015? Five Points

Situation: A CEO is doing benefit planning for next year. The company is small, with just under 100 full-time employees. They are growing, and anticipate reaching over 100 FTEs in the next 12 months, unless they consider either contract or less-than-full-time employees. The CEO is curious about what other companies are planning for employee benefits. What changes in benefits do you see for 2015?

Advice from the CEOs:

  • Including employer-paid social security and Medicare matches, CEOs in the group are seeing a range of from 12.5% to 30% in benefits. This does not include 401K matches or bonuses.
  • Over the last five years, there has been a big shift in benefits, in particular a move from traditional health coverage to high deductible HSA plans.
  • ACA requirements for businesses kick in during 2015/2016. In 2015 employers with more than 100 FTEs will need to provide coverage to at least 70% of full-time employees. Starting in 2016 employers with 50 or more FTEs will need to provide coverage to 95% of their full-time workforce.
  • Much depends upon your annual cost per employee is for health coverage as well as your philosophy on employee benefits.
    • Starting in 2015, if a business is supposed to insure its full-time workers but does not, they will have to make a $2,000 per uninsured employee payment on their year-end federal income taxes.
    • The fee is $3,000 if the employee gets health insurance subsidies through the Health Insurance Marketplace.
    • Some companies who currently pay more than this in annual premiums per-employee are considering boosting employee pay and having their employees self-insure through the Marketplace, or by purchasing the same policies available in the Marketplace directly from health insurers. The policy cost is no different, assuming that the employees will not qualify for subsidies, but policies purchased directly from insurers may provide a better network of physician providers.
  • Before you make any decisions, it is best to consult an outside HR professional who is knowledgeable in both health care alternatives and the ACA.

[like]

How Do You Find and Evaluate New Markets? Four Factors

Situation: A company has determined that market shifts off-shore have neutralized their strategy for the past two years. They need to find new markets that offer growth potential. How do you find and evaluate new markets?

Advice from the CEOs:

  • This is a classic competitive strategy challenge any time a company wants to expand within or beyond its core business. Michael Porter of the Harvard Business School is a top expert on competitive strategy. You can find talks that he has given on TED Talks and elsewhere on the Internet that can help guide your efforts.
  • Do a SWOT analysis. First, figure out your vision and analyze the strengths that you possess that will fulfill that vision. At the same time analyze your weaknesses to provide a counterpoint on what should not attempt to do. Then consider both threats and opportunities. Have these analyses in place before you expend major effort responding to or developing new opportunities. There are more opportunities out there that will end up as dead ends than there are profitable opportunities.
  • Don’t discount the expertise that you have developed over the years in your specialty. This is the area of your greatest profits both now and historically. It is likely to remain so in the future.
  • If you need additional resources to meet existing or new client demand – particularly if these involve activities that are less profitable to you – explore partnerships to access this expertise instead of trying to do everything yourself.

[like]

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.

[like]

How Do You Optimize a Promotion? Four Recommendations

Situation: A company has a long-term employee who has been growing in responsibility as Customer Service Supervisor. The CEO is considering giving this employee the new title of Production Manager at the same time that the employee receives an annual wage increase. How do you optimize a promotion?

Advice from the CEOs:

  • Any promotion or increase in responsibility must be consistent with the strategic direction of the company. What are the company’s current and future needs and, based on past performance, can this individual satisfy those needs? If so, this may be a good match.
  • In addition, it is important to consider the needs and career path of the individual. Does the new position involve an increased time commitment, additional skills and training, or other important factors, and is the individual prepared for this increased commitment? Will a higher level of commitment be rewarded financially? The only way to answer these questions is to have a conversation with the individual.
  • If as the first two questions are considered there is any doubt, a longer-term transition may be appropriate. Meet with the Customer Service Supervisor and set a series of goals and objectives that will demonstrate their ability to assume the new role over a 6 month time frame. The concept here is that you must work at the level of the new job before you get it.
  • Before embarking on the above recommendations, draft a job description and list of responsibilities for the new Production Manager position, consistent with the company’s needs as it grows. This will involve input from employees who currently handle these responsibilities. Also look at the reporting structure as it currently exists and as it may change.

[like]

How Do You Coordinate Sales and Marketing Plans? Four Points

Situation: A small company uses a sales plan, but not a marketing plan. The CEO wants to know about marketing plans, and how they are different from sales plans. Most importantly, if a company has both, how do you coordinate sales and marketing plans?

Advice from the CEOs:

  • Sales and Marketing Plans are two aspects of the annual planning and revenue forecasting process. The difference between the two is focus – strategy versus implementation.
  • The Marketing Plan is strategic. It defines and quantifies the market that the company addresses, and also what markets the company does not address. It identifies the key attributes of the company’s market and products or services, and sets the broad direction as well as the high level objectives for the planning period – usually one year. It also covers both current products and product additions or extensions. The focus of the Marketing Plan is one-to-many.
  • In contrast, the Sales Plan is focuses on execution of the Marketing Plan. Ideally, the sales team takes the Marketing Plan and sets individual and team sales objectives that will meet the revenue objectives set in the Marketing Plan. The focus of the Sales Plan one-to-one – what each sales representative, and each division of the sales team (unit, district, region, country, and so forth) commits to sell during the coming year.
  • To coordinate the Marketing and Sales Plans, it is best to draft the Marketing Plan before asking the sales team to draft their Sales Plan. It helps the two teams to coordinate their projections for the coming year and allows the sales team to project sales based on changes to the product mix included in the Marketing Plan.

[like]

How Do You Inform a Client about a Problem? Five Solutions

Situation: A company provides staff for a client. Overall the client has been pleased with the staff provided, and only a couple of individuals have had to be replaced. The client was recently presented with an individual that they seem to like; however, the company has since developed reservations about this candidate. How do you inform a client about a potential problem?

Advice from the CEOs:

  • Meet with this individual face to face or via video conference. During the interview, tactfully ask questions that will either disqualify the candidate or satisfy your concerns. Only continue to present this candidate to the client if you are thoroughly satisfied that they can meet the client’s needs and will represent you well.
  • Ask the client for their impression of the individual. If they do not express any concerns, then your own concerns may be overblown.
  • The client will require the candidate to be trained by them prior to fully bringing them on-board. This will provide another opportunity for the client to say yea or nay. If the individual completes training to the client’s satisfaction, then once again your concerns may not be justified.
  • In any communications with the client, take care to voice only concerns that you can substantiate. Otherwise, you might expose yourself to suit by the candidate.
  • Independent of this situation, adjust your selection process to require face to face or video conference interviews. This will prevent the recurrence of future situations like this one.

[like]