Tag Archives: Best

How Do You Maintain Focus on Your Core While Growing? Six Considerations

Situation: A company has established a strong core business and it is time to diversity. The most promising opportunity for growth is complimentary to but a different business model from the company’s core. What are best practices for maintaining focus on the core business while developing a new opportunity? How do you maintain focus on your core while growing?

Advice:

  • Most importantly, be emotionally and strategically ready to make the bet and commit to action. In doing so you must “know thyself.” Specifically, take a long look to determine whether you tend to overanalyze or are too quick to pull the trigger. Understanding your tendencies will help in the steps below. 
  • Establish the prerequisites for pulling the trigger. This means determining:  the level of operating stability for the core business that will allow you to split focus; the level of financial stability and predictability that will support both core and expansion efforts; and the level of organizational and process stability that will allow you to take on the new opportunity.
  • Understand and define the differences between the old game and the new game. What are the financials of the growth opportunity? How do they differ from your core business? Are there conflicts that must be resolved? Can you launch an innovative solution to differentiate the new offering?
  • Gather enough understanding of market need that will satisfy you with the new opportunity so as to be able to address it effectively.
  • Establish a sound execution strategy and timeframe for launching the new business. Some of your decisions will be wrong. You need the resources to tolerate a learning curve while running fast towards your goal.
  • Draft a leadership development plan for both the core and new business before you start. This plan must define the skill sets and growth needs of each business.

Thanks to Clark Avery for his contribution to this article.

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How Do You Access Key IP? 3 Steps to the Dance

Situation:  A company is moving from a specialty solution to a complete solution. They have identified a partner with intellectual property (IP) that will help them fulfill this vision. How should the CEO approach this company to access their IP? How do you access key IP?

Advice from the CEOs:

  • There are two aspects of any deal: technical feasibility that will produce both value and the emotional needs of the principals of each company. The technical aspects are the most straightforward and easiest to value. Frequently, a favorable deal hinges not on technical feasibility, but on the desires of the principals and their ability to trust one-another.
  • If you are convinced of the value, you must convince the other party that their best option is to work with you. This accomplished, you can negotiate the specifics. Sell your vision: the technologies together are much more valuable than they are alone: 1 + 1 = 5! If control of the technology is an issue, negotiate an arrangement where they are comfortable with your control. Do you and the other party have a trusted advisor in common or is there an individual who is respected by the principals of both companies? A person like this can help communicate your good intentions.
  • If your best efforts do not produce an appealing arrangement, your fallback position may be a partnership. If the partnership is backed by modest investment with options for future purchase, this can be another way for you to eventually gain control of the technology.

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What New Business Options Should You Pursue? Five Guidelines

Situation: The CEO of a company observes that the business climate has been uncertain, but she hopes that it will improve soon. This will open up new options for her company. As these start to develop how do you decide what to do and what not to do? What new business options should you pursue?
Advice from the CEOs:
• Talk to your customers. What do they value about your current product or service and what is less valuable? Build on opportunities that customers value. What options are most consistent with the company’s strength and focus?
• Consider a customer survey – either online like Survey Monkey or by telephone. If there isn’t in-house expertise to design and administer a survey, look for knowledgeable outside resources. Assure that the survey questions will drive understanding of the company’s focus and potential.
• Get an expert to review the survey and administration plan. Before launching the survey to your full customer base, test it with a select group of customers. This will tell you whether it will produce usable information. If it doesn’t, revise the survey.
• Which opportunities will build sustainable recurring revenue vs. opportunistic or one-time revenue? Recurring revenue can be lower margin if the income stream is sustainable. Balance efficiency and utilization. For example, fixed fee service contracts that renew consistently.
• Judge opportunities against your “Hedgehog” as defined by Jim Collins in his book Good to Great: What you are passionate about? What you can be best at in your marketplace? What you can measure by a single economic ratio?

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How Do You Establish Sales Accountability? Three Approaches

Situation: Several CEOs have experienced difficulty establishing accountability within their sales teams. Sone sales reps consistently come up with excuses for not generating new accounts or meeting their sales objectives. The impact of lost sales had significant effects on revenue performance. How do you establish sales accountability?
Advice from the CEOs:
• It is vital to understand who are the best customers and most profitable products and services for those customers. Establish regular sales meetings to discuss customers, products and services, to identify promising sales opportunities and to coordinate sales efforts.
• Work with both sales management and individual team members to determine desired outcomes:
 Set sales targets – work with the team to establish firm expectations on reasonable and achievable sales targets. Agree on a tracking system to measure progress toward those targets. Encourage members of the team to work together to achieve the targets.
 Customer type – who are they, what are their priorities and expectations, and how can the company best address these.
 Product(s) – work with the team to determine which products best fit each customer type and develop creative ways to position those products to increase sales.
• Establish measurable behaviors which if done will result in success. For example:
 Calls per week and results of those calls.
 Relationships with key decision makers and development of additional relationships within existing and potential customers.
 Thorough qualification before quoting, presenting, demo, and so on. The who, what and why that connects with successful sales..

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How Do You Forge an Effective Relationship with a Buyer? Five Points

Situation: A CEO’s Company was recently acquired. She is getting little, if any, guidance from the acquiring company in terms of leadership or management of her former company. What does the group recommend that she do? How do you forge an effective relationship with a buyer?
Advice from the CEOs:
• You’re Lucky: We all wish we had that problem. Many buyers interfere with the operations of the acquired company and make the transition very difficult. This leads to all sorts of problems including employee departures.
• Employee Feedback: Hold an employee meeting, gather their thoughts and concerns, forward those to senior management. This demonstrates a willingness to work with the buyer to forge the best relationship possible.
• Memo: Draft a memo with all of your thoughts, options, and recommendations, send it to the management of the acquiring company and you have satisfied your moral responsibility. No guilt.
• Consult: You may end up consulting to new management sent to you by the buyer to help them figure out how to evolve from practitioners/managers to full-time managers.
• Don’t Worry: The purchase was a good deal to you because you were able to negotiate a favorable deal for yourself and your managers. The future is more a concern for the purchaser than it is for you.

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How Do You Frame a Make Versus Buy Decision? Two Thoughts

Situation: A CEO is facing a decision whether to make or buy key technology frequently used by the company. What have others done when faced by similar decisions? What are the most important factors that impacted those decisions? How do you frame a make versus buy decision?

Advice from the CEOs:

  • In considering either option evaluate the opportunity by asking whether the technology:
    • Complements the company’s core strategic focus – the company’s “Main Thing” – what you are passionate about, what drives your key economic denominator, and what can you be best at in your market.
    • Supports the key economic denominator – the single factor that has the greatest impact on the company’s profitability and growth.
    • Complements the best use of the company’s critical resources.
    • Protects the company’s process secrets.
    • Feeds your passion as CEO.
  • In evaluating a buy decision look at the strengths of the people who come along with the opportunity.
    • Do they complement the company’s strengths or not?
    • Will they fit the company’s ecology and culture?

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How Do You Prepare and Engage in an Effective Negotiation? Five Points

Situation: The CEO of a company is engaged in an important negotiation. There is a debate within the management team regarding the best way to prepare and engage in this negotiation. How do you prepare and engage in an effective negotiation?

Advice from the CEOs:

  • In any situation where a decision between two parties is to be decided preparation is critical.
    • Start with the basics. What is the bottom line that the company wants or needs to achieve?
    • Once the bottom line is identified, determine the strategy and what will be required to achieve this.
  • The most important question is why an agreement is being sought. What is the objective and what does a win or a win-win look like? How are they different if they are?
  • When meeting with the other party, listen with understanding.
    • Start by establishing norms to govern the discussions. These may include: one person speaking at a time, being up-front about objectives and positions, and the length of the discussion.
    • Avoid the distraction of thinking about the next move – know the possible moves in advance as well as the conditions and consequences associated with them.
    • Be prepared to tell the story of where the company wants to go any why the goal is important for both parties.
  • Good decisions between parties are based on trust.
    • Be trusting until given a reason not to be.
    • Point out items or statements that challenge trust and ask for clarification.
  • A Peer-to-Peer approach is the best alternative.
    • Look for equal give and take. Keep the conversation and negotiation balanced.
    • Don’t start with your real bottom line. Ideally, work with the other party in give and take until it is achieved.
    • Be willing to walk away if the discussion won’t fulfill the company’s needs; but if this is necessary, do it courteously. Leave the door open for possible future opportunities.

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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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How Do You Plan for Geographic Expansion? Nine Points

Situation: A service company wants to expand its geographic base. It promises a 30-minute in-person response time to clients. It has established deep penetration in its existing market and sees opportunity in neighboring areas outside of its current market. How do you plan for geographic expansion?

Advice from the CEOs:

  • In many respects, the company’s situation is similar to a franchise model. It has established a successful business model. The company has also optimized its model for staff, technology, procedures, accounting and service provision. This creates the opportunity to clone the current model in a new geographic market.
  • It is important to study the competitive landscape in adjoining or more distant markets.
  • Leverage current customer references. Create a client referral incentive program among current and new customers.
  • Target initial clients within the target geography as reference clients.
  • Use direct mail to potential customers.
  • Recalibrate the company’s search engine optimization to reach the new target geography.
  • Communicate the company’s points of differentiation. Highlight customer results in the existing market to potential customers in the new market.
  • Target companies that want and need the service that the company provides. These will most likely be similar to existing clients. Experience with existing clients will serve as reference points.
  • Successfully selling function, as opposed to brand, depends on a business model that matches business volume with capacity to provide reliable service. It also assumes that market dynamics in new markets will be similar to the existing market.

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How Do You Improve Communications and Quality? Five Points

Situation: A company has a good team to support its projects. They work together well and demonstrate good work habits. However, communication between team members, and between certain team members and management is challenging, particularly when performance issues are involved. How do you improve communications and quality?

Advice from the CEOs:

  • What has been tried?
    • Once a month, The CEO plans an outside event for the team, for example a long dinner in a nice location.
    • During the latest event, the team members started opening up to one-another and to the CEO. They were much more open than they are at work.
  • Are the concerns about communication within teams, between teams, or between teams and management?
    • Several team members are relatively new. A few others are long-term and often fail to perform to standards. This group frequently has issues and it takes their foreman’s time to address these. This frustrates the foreman.
  • How should the CEO deal with this situation?
    • The foreman is a long-term employee who reports directly to the CEO. It is the responsibility of the CEO to develop a solution that serves the interests of the company.
    • For example: the company lives and breathes on customer satisfaction. Any worker with a pattern of substandard work negatively impacts both the image and value of the company.
    • Further, distracting the foreman from his primary responsibilities impacts his ability to complete other work demands.
  • Try the following solution:
    • Explain the problem and the negative impact that this has on the company.
    • Establish a policy that workers are responsible for assuring that work meets standards before completing a job.
    • Establish a list of specific standards for work and checklists to assure that the work is complete and meets standards.
    • Establish and publish a policy that if a Foreman or supervisor finds work performed below standard this will result in a warning to the worker. Continued performance of substandard work becomes grounds for termination. Misrepresentation of work quality is grounds for immediate termination.
    • Ask key managers, supervisors and foremen for input on the policy.
    • Once the policy is finalized, post it, provide all employees with a copy of the policy, and make sure that it is openly communicated to them both verbally and in writing.
  • If any worker currently presenting problems persists in this behavior, the company will have established a policy and procedure for disciplinary action and, if necessary, termination.

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