Tag Archives: Assess

How Do You Boost the Performance of a Life Sciences Company? Six Suggestions

Situation: The CEO wants to improve the performance of her life sciences company. She has questions about the business plan and roles within the company. She is also looking for better ways to connect with current and potential customers. How do you boost the performance of a life sciences company?

Advice from the CEOs:

  • Assess both your own role and the company to ensure that there is good alignment between the business plan and the roles within the company.
  • Be strategic after assessing the company’s needs and situation. Too often companies jump to tactical considerations because they are action oriented. To be effective, tactics must align with the broader company strategy.
  • Build a foundation based on value and compliment this with effective models to communicate and leverage this value base.
  • Think outside the box. Consider options to use or increase the effectiveness of social networking. This has growing dramatically in importance as a way to reach and communicate with key current and potential constituencies.
  • Perception is important. Be aware of what others think of the company and work creatively to present the company in a light that will support objectives.
  • The visual cortex represents 75% of sensory awareness. Leverage this on web sites and in marketing campaigns.

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How Do You Negotiate the Purchase of a Franchise? Seven Points

Situation: An experienced CEO is considering the purchase of a franchise. What are the key points to consider in both evaluating the opportunity and in negotiating the purchase? What advice should be sought? How do you negotiate the purchase of a franchise?

Advice from the CEOs:

  • Most franchises have a set contract in use by all of their franchisees.
    • Ask for the names of existing franchisees and ask them what works or doesn’t work both about their contract and the services provided by the franchisor.
    • Ask the franchisor whether they will agree to a side letter to cover areas of importance outside of the franchise agreement.
  • What services and are offered by the franchisor as basic infrastructure and what are offered as a percent of sales or other fee arrangements?
  • Look closely at the frequency and amount of franchise fees. What fees are set or variable? What is non-negotiable?
  • Is there a need for a professional to represent you as the buyer?
  • Closely inspect the prospectus financials – franchisors in many states are required to provide these to prospective buyers. What is the initial investment? Are there monthly or periodic minimums to be paid by the franchisee? What are typical monthly operating costs.
    • Add to these your salary replacement costs – assuming that you will have to pay yourself something over the break-even period.
    • Calculate the monthly revenue needed to break even, and to pay off the initial investment.
  • Evaluate the competitive situation facing the product/services offered by the franchise. Network with others in the market to assess both the market potential and any barriers that that will be faced as the franchise is established.
  • What other questions should be asked?
    • Why is this business interesting?
    • What is your experience and what is the experience of the franchisor?
    • How well do you understand the market that the franchise will be serving?
    • What does the franchisor bring to the table that you cannot do yourself? What are the comparable costs?
    • What is the anticipated rate of return? How is it being calculated? Can this be verified with third parties?
    • What criteria are deal makers and which are deal breakers?

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What is the Role and Value of an M&A Consultant? Four Points

Situation: The owners wish to sell a company. One option is an M&A consultant to assist with the sale. The CEO wants to know about others’ experience. What is the role and value of an M&A consultant?

Advice from the CEOs:

  • The first step is to assess the strengths and weaknesses of a consultant to determine their value.
    • The cost of an M&A consultant is inexpensive relative to the value of the business.
    • Accounting rules and M&A practices of public companies do not always apply to private companies. Valuation is affected by variations in profits year-by-year, so consultants typically use 3 to 5 year historical results for comparison against industry standards.
    • Technology companies may have a different value than service-oriented businesses, particularly if significant IP is involved. Look at the creativity of potential consultants’ solutions.
  • Consultant alternatives:
    • Business brokers, accountants, and valuation specialists can all offer valuations.
    • Investment Bankers who charge an upfront fee may be more strategically oriented. Typically, the more strategic the valuation exercise, the more dollars involved.
  • Be cautious in choosing a consultant.
    • Many business owners spend a lot of time and money with accountants and lawyers when they could save by working with a business broker paid on a commission basis.
    • Business brokers are skilled at getting business sold – however the deal is not necessarily in the best interest of the owner. Brokers are paid by commission and so may not have the best interests of the owner at heart.
  • What should you look for in a consultant?
    • Maximization of sale value with a minimal tax exposure.
    • A consultant who will help the owner figure out what they want from their business and exit – who will help to establish owners’ exit objective, a key to a successful exit.
    • A consultant who will help choose the right team of advisors.

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Should You View a Competitor’s Illegally Published Code on the Internet? Four Points

Situation: A CEO recently learned that the proprietary code for both his company’s and his principal competitor’s products have been published on an international web site. He is conflicted about whether he should look at his competitor’s code, knowing that this would potentially be illegal in the US. Lawyers have offered conflicting and vague advice. Should you view a competitor’s illegally published code on the Internet?

Advice from the CEOs:

  • Consider the status of IP protection outside the United States.
    • In some countries there do not appear to be clear legal guidelines. One of these countries is likely where this situation originated. The country in question either lacks rules governing IP or the ability to enforce rules that exist.
    • The frustrating thing is that the playing field is not level between US and non-US companies. US companies are held to a high ethical standard by US law, whereas competitors in other countries that are not held to the same standard are free to review the illegal source code and learn from it as they can.
  • How complicated and expensive would it be to change the code? If this is feasible and not prohibitively expensive this may be the best option. Updated code can be provided to users through a software update.
  • Any company has to assess their own ethics as they craft a response to this situation. Make sure that the solution is consistent with the company’s ethical standards.
  • Could this have been an act of economic terrorism and/or theft?
    • If so, it is possible that the U.S. Justice Department could step in if one can make a case for national or economic security (unfair trade) based on violation of software copyright laws.
    • An action like this would, at a minimum, discourage similar future events. It could also help reduce the likelihood that competitors would try to profit from this situation at the company’s expense.

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How Do You Assess Team Morale? Five Points

Situation: Given current uncertainty about the future of the economy, a CEO wants to assess team morale. In the past, as the company grew, she received lots of input on how people were feeling about their jobs. As the company has grown, she no longer receives this. What can she do to gather more input without alarming people in the process? How do you assess team morale?

Advice from the CEOs:

  • Find opportunities to spend time informally with your employees. Talk to them one-on-one or in small groups in the lunchroom or while getting tea. Organize, or have others organize company events where individuals can be more relaxed and open about their feelings.
  • If you have lunch in the lunchroom 3 times a week, and sit with different employees each day. Over the course of a month or a few months you can talk to the majority of them – perhaps several times.
  • Ask how they are – family, friends, relations, and their neighborhood. They may be hesitant to talk to the CEO about their jobs, but it is possible to get a sense of how they feel indirectly by asking about family and friends. Listen to what they have to say. Be sympathetic.
  • Be open to others. MBWA – Manage By Walking Around.
  • Ask supervisors to be your ears. They work with their teams on a daily basis and will have a sense of what is going on and how employees are feeling. They may have good ideas about improvements that the company can make in employee relations.

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What are the Consequences of Not Meeting Goals? Four Points

Situation: A company recently established a weekly objectives program. Weekly objectives are set on Monday, with reminders to complete objectives for the week sent by email on Thursday. However, some team members are failing to meet goals for the previous week and want to roll over previous week’s unmet objectives to the new week. Should there be consequences for failing to meet stated objectives? If so, what is the best method to phase these in? What are the consequences of not meeting goals?

Advice from the CEOs:

  • Track which objectives are being met and which are not. Measure the impact of not meeting objectives on original timelines. Assess the depth of the problem.
  • Watch the process for four weeks. At the weekly meeting following the end of the four weeks, discuss the process as a team.
    • What’s working and what is not?
    • Are realistic objectives being set?
    • If objectives are not being met, is there something that regularly interferes with objective completion?
    • Are monthly or quarterly objectives at risk as a result?
    • Reset and reestablish expectations for the following four weeks as a team. Raise the bar for compliance, as a team, as you mature the process.
  • If any team member shows signs of chronic difficulty meeting weekly objectives, meet 1-on-1 to assess the situation and reset expectations.
  • Discussion builds team support of the process and adds a layer of peer-pressure to prompt individuals to improve their consistency in meeting weekly objectives.

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What Can be Learned from Employee Departures? Five Observations

Situation: A company has recently seen the departure of several younger employees. Reasons given were better offers at other companies. These employees have been replaced by what appears to be better talent. The CEO took these departures personally and is concerned about the impact on the departments of those who departed. What can be learned from employee departures?

Advice from the CEOs:

  • In working with Millennial employees, it may be necessary to lower your expectations in terms of employee loyalty, work ethic and longevity. Millennials have a different perspective. Recognize this and build expectations around it.
  • Be frank with new employees up front. Plan their career progression out 36 to 48 months and let them know that this time will give them great training. If they are interested in the company and career progression beyond this, then the company be open to discussing options with them.
  • Use outside resources to do a 2–3-month post-op on those who left, as well as to help monitor employee attitudes on an ongoing basis.
    • The outside resource can conduct interviews by telephone, on a confidential basis. The objective will be to assess the reasons why the employees left once the emotions of the action have died down. Summary results of the interviews will not identify the past employee. This will prompt them to be frank with their feedback.
    • Similarly, use an outside resource to conduct confidential telephone interviews with random current employees on a periodic basis. Let the employees know that they will be contacted by an outside agency on a random basis, and that their responses will be confidential. The purpose is to gain information on how the company can better address employee needs in the work environment. Only aggregated and summary results will be presented to the company.
    • These actions will help to assess whether the departures were an extraordinary event or an early warning of more systemic challenges within the workforce.
  • The increased salary needs of those who left may be symptomatic of the current economic conditions.
    • Currently, the need of companies to attract talent has increased pressure to raise wages. Along with this and there is increased turnover among employees who believe that they can make more elsewhere. There is little that can be done to run a sensible business while trying to keep up with current salary demands.
    • Most companies who survive successive boom and bust cycles do not respond to wage pressure, knowing that each boom will be followed by a bust.
    • Once the next bust sets in, wage demands will go down until the next boom cycle starts.
  • Should anything to mitigate the impact of employee departure on their departments?
    • Keep ears open for any sign of an ongoing impact.
    • As above, consider an outside resource to check the temperature of the employees.
    • The best mitigation may be a strong integration of the new, energetic R&D employees into the team.

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How Do You Take Advantage of a New Technology? Two Foci

Situation: A company has had early success with a promising new technology that compliments the company’s strategic direction. Their objective is to become one of the top suppliers and servicers of this technology in their service area. How do you take advantage of a new technology?

Advice from the CEOs:

  • Leverage the company’s strengths to create an early advantage in this technology.
    • Create a low-cost delivery system to take advantage of opportunities available through this technology initially at a lower margin, then offer enhancements to build margin to company norms.
    • Investigate other markets and applications where this low-cost delivery system can generate you new opportunities.
  • It is early to assess whether the new technology will become dominant, or just the latest fad. It has been on the market for less than two years and is just taking off.
    • Take the next few months to dig into what is happening within vendors of the technology, and how they are perceived by their client companies.
    • Talk to CIOs about their perceptions of the technology based on the last few quarters of experience – quality of implementation, quality of service. Other providers add a layer to the cost – is the service worth the cost or do client companies save over time through overhead reduction?
    • Talk to other vendors from other market areas – learn from their experience selling and working with the technology.
    • How do the other vendors make money? Are costs to their corporate clients offset by savings implementing the technology? What margins are the others enjoying and does this come from the initial technology, from add-on services, or complimentary sales. What is the perception of the sustainability of this technology both within the providers and to the CIOs? What about the technology really irks corporate clients? Where is the soft underbelly of this technology? Research may assist in making future decisions on how to approach the technology and clients.

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How Do You Get the Right People on the Bus? Six Points

Situation: A small company is growing nicely and needs more people. However, the CEO is struggling to find the time to properly interview and hire additional people. In addition, he is not comfortable in this role. Hiring the right people will be critical to the future success of the company. How do you get the right people on the bus?

Advice from the CEOs:

  • Particularly if the CEO does not feel that hiring is a strength, hire an outside HR firm or consultant to screen and select candidates for interviews.
  • It is critical to decide, in advance of any search, exactly what the company needs in the individuals that are hired. A good HR consultant can help the company work through this.
  • Structure the agreement with the HR professional so that they are paid based on successful integration of the individual into the company. It may cost more on the back end for this type of agreement, however, it will save the CEO and the company valuable time and money far in excess of what the company will pay for this assurance.
  • Plan to only see the final candidates.
  • What does the company look for in an HR consultant relationship?
    • Generation of a job description and the key traits of the individual that the company seeks. This helps the HR consultant to select the right candidates for the business and situation.
    • Candidate recruitment, screening, and selection of final candidate(s) for company review.
    • The HR consultant will also prep the candidates to succeed in the company’s environment.
    • Assistance in identifying the key objectives and metrics that will be used to assess the success of the individuals hired during the first quarters or year in the company. If the HR consultant’s compensation is structured so that they are paid well for long-term success, it may cost the company more for the successful hires, however the company will only pay for success and will save considerable cash by averting failures.
  • In addition to making sure that the right people are put on the bus, work diligently to assure that they are also in the right seats, and that they change seats as necessary to complement the company’s growth.

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How Do You Shift Culture as the Company Grows? 12 Challenges & Countermeasures

Situation: A company has grown through its expertise consulting for other companies. For its next growth step the CEO and Board want to shift to a project basis. This entails several changes, from compensation to organization and focus. How do you shift culture as the company grows?

Advice from the CEOs:

  • Risks & Challenges
    • Biggest risk – dissatisfied employees who see less billable income per hour and may not see the “more hours” part of the picture.
    • The biggest personnel challenge will be those who have been with the company for many years, and who will see the most change – maybe not to their specific practices if they can bring in business, but on the project side.
    • Communication is a critical challenge, and also the best way to avoid landmines. Put a velvet glove on the presentation of the opportunity: “This is good news – we know that the low hanging fruit is now mostly gone, and that the remaining fruit is higher; to counter this we now have more options.” Carefully prepare communications to both management and consultant team members.
    • Another potential landmine – the impact on the company’s reputation if it blows up after a year. Set appropriate expectations – the company is introducing a new program rather than a wholesale rebranding.
  • Countermeasures to Mitigate the Risks
    • Maintain a structural option that preserves the old model for those who can bring in new projects and who prefer this model. For them, the new model is just an option that can help tide them over if there are gaps between the projects that they bring in.
    • Present the project option as new opportunity. Give more senior and experienced consultants priority in choosing whether to participate or not in new project work.
    • Plan and create the ability to assess the old consultancy model vs. the new project model. This will be especially important when individuals are spending part of their time in each area.
    • Create a set of metrics for each business – the consulting and project businesses – to measure whether they are on track. Identify and monitor the drivers for each business.
    • Keep the title Consultant on consultants’ business cards – Consultant, Sr. Consultant, etc. Allow them to continue to take pride in their role.
    • Move to the new model through a planned phase-in but retain the option to adjust the speed of transition between the old and new models. This will allow sensitivity to changes in the environment.
    • Don’t consider an immediate and complete rebranding – think in terms of introducing a new product under the company’s well-known brand. Plan a gradual transition of business to the new model. Introduce the new product as a new offering. As it picks up steam, gradually move brand identification and promise to the new model.
    • For the new project model, create incentives for project performance. Show team members that while the hourly rate may be less, if they perform as a team they will share the upside through project bonuses.

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