Tag Archives: Boost

How Do You Redefine the Top Executive’s Role in the Business? Four Points

Situation: The President of a family-owned business that has been in operation for over 30 years wishes to change her role by increasing delegation of responsibility and accountability within the business in preparation for her eventual retirement. Other family members in the business are happy with their current responsibilities and are resistant to taking on more responsibility. What advice does the group have for this member?
Advice from the CEOs:
• Given that you are preparing for retirement, it is important to let others know about your plans and your desire to increasingly hand off your responsibilities to others. Ideally, one or more of the others will express a desire to take on more leadership, particularly if it includes a boost in pay.
• It is important to clarify responsibilities and prioritize which ones you wish to hand off. Once this is done build and execute a hand-off plan.
• Transition current managers who are misplaced in their position to other roles. Work with them to identify alternate roles where their talents can better benefit the company. They may be aware of their current discomfort and welcome the opportunity to take on a different role more suited to their abilities.
• Focus on removing barriers to delegation that may be in place. For example, bring others into the discussion and review the projects that they are overseeing. Identify the challenges underlying those projects and ask for their suggestions on how to address these. Don’t provide the answers. Ask questions and push them to develop appropriate solutions.

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How Do You Unlock Your True Profitability with Sound Cash-Flow Trade-offs? Six Points

Situation: A CEO has her company on a positive growth track. The company has a solid customer base. Their products and accompanying services are increasingly well-accepted. She is ready to take the company to the next level of growth and profitability. How do you unlock your true profitability with sound cash-flow tradeoffs?

Advice from the CEOs:

  • Profit is different from cash flow. Make this distinction clear and act to boost cash flow.
  • Tracking Cash & Forecasting:
    • Watch the company’s bank balance. Frequently track cash inflows and outflows by period.
    • Carefully assess and project the pattern of customer buying habits and payment performance to develop sound revenue assumptions.
    • Compare the company’s margin dollars and billings with norms for peer group businesses.
  • Issues to consider in forecasting:
    • Hiring means commitment of future cash outlays. Consider contingent work force options.
    • Project and plan for future large payments (equipment, technology, marketing, loans, etc.)
    • Differentiate between investing in ongoing business capacity as opposed to incremental add-ons.
    • Look at cyclical trends and issues. Understand your customers’ purchase habits and patterns.
    • Develop likely “what if” scenarios (good and bad) and develop plans to reduce the impact of surprises.
    • Analyze the company’s business model and determine exactly how cash flows through the company’s operations.
  • Analyze important upcoming decisions: hiring equals investment; outsourcing equals expense. Evaluate needed support for each.
    • Differentiate investment versus outsourcing decisions. Smooth cash flow through selective outsourcing – especially when dealing with sudden or cyclical peaks. Avoid the risk of committing long-term resources by staffing up to address short-term peaks.
  • Focus on the opportunity cost of money. Add this focus to both planning and assessment.
    • Operate with a mix of other peoples’ money and ownership funds. The latter are more expensive than bank interest because the trade-off is what you could earn through alternate investments.
  • Fine-tune the company’s planning tools. Analyze budget and cash implications of alternate plans through detailed budget projections and follow-up by tracking cash expenditures.
    • Use Cash Flow Statements to analyze and project trends in investments, operations and financing and how each of these affects cash balances.

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How Do You Maximize Relationships on a Limited Budget? Three Approaches

Situation: A CEO is looking for cost-effective ways to boost her company’s marketing. They currently focus on trade shows where they can set up as many as 15 meetings per day. Their cycle for creating new relationships is typically 3-6 months. What can they do to increase client acquisition? How do you maximize relationships on a limited budget?

Advice from the CEOs:

  • Create a public relations campaign around your star designers.
    • An example is a successful campaign created by a well-known creative director with the theme “Ads I Wish I Had Done.” Given the prevalence of social media, programs like this can attract large audiences, particularly if there is wit and humor involved.
    • Consider analogous promotion for the company along the lines of: “Our designer’s favorite products.”  In a promotion like this company designers would “review” good industrial or commercial designs that other designers have done.
    • This is a thought leadership approach designed to compensate for the fact that the company designs for some heavy hitter brand names but is not allowed to reveal that information.
  • Given limitations in using referrals due to agreement with certain clients, how can these be avoided?
    • While the company is limited by agreements in place with certain clients, these agreements do not forbid subtle mention of these clients in 1:1 meetings.
    • Just take care that strict client confidentiality agreements are not voided. Instead of using specific company names, refer to them by industry or commercial sector.
  • Create and conduct your own design conference.
    • Start locally to test the waters and develop a successful program and format.
    • Once an effective format is developed, gradually expand the geographic reach to attract more attention and additional new clients.

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How Do You Optimize the Business Model? Four Suggestions

Situation: A company works on a project basis, and the CEO is concerned that the return per project is too low. She is looking for ways to boost the return per project without substantially increasing project risk. How do you optimize the business model?

Advice from the CEOs:

  • What are the risks and potential upsides surrounding the projects?
    • The principal risk is long-term liability, connected with residual liability following project completion.
    • This risk can be mitigated by purchasing a wrap policy; however, this can cut into the profit generated by the project.
    • It is possible to build scale more quickly with larger projects. The percentage return may be lower, but the dollars can be higher.
  • What are the principal components of the company’s time risk?
    • Higher cost of money and greater exposure to fluctuations in prices and interest rates over the project period.
    • This risk can be mitigated using financial derivatives particularly over longer-term projects.
  • How broad is the company’s geographical scope?
    • Currently customers are within a 30-mile radius of the company’s office primarily because company personnel are frequently at the client’s site.
    • This area will broaden as the company’s reputation becomes known.
    • Consider the creation of branch offices to extend the breadth of the company’s service area.
  • What are the key variables that the company faces completing projects?
    • Payment is not received under current contracts until a project is completed.
    • This can be mitigated by creating milestones with payments due at the completion of each milestone.
    • It may be worthwhile sacrificing a level of project profit in return for more frequent payments to boost the company’s cash flow.

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How Do You Get and Keep the Right People on the Bus? Four Solutions

Situation: A company is experiencing an employee turnover rate of 12%, vs. a company target of 6-7%. This has occurred due to a change in the company’s business environment during the recent downturn as they sought to optimize business practices. Long term employees no longer felt like the office was the “same place.” How do you get and keep the right people on the bus?

Advice from the CEOs:

  • Turnover has been a problem principally in the home office – the largest office – but has not been a problem across the rest of the country.
    • Has the company looked at what works in the other regions, vs. what has not been working in home office?
    • Could the problem be related to size and structure of the home office operation? The home office has 55 people whereas the other regions are composed of smaller working groups of 12-15 employees. Does it make sense to look at smaller working sub-groups within the home office, or some different structure that more closely mirrors the regions with low turnover?
  • What can be done to boost morale in the home office?
    • Try creating smaller working teams to mirror the smaller team atmosphere of the other regions.
    • Create a “small office” atmosphere. Build walls to visually separate subgroups – creating their own “space” to foster subgroup affiliation and bonding.
    • Increase the autonomy of the subgroups – and enhance the career path possibilities within the subgroups.
    • Focus on successes, what the “Teams” are achieving, and the contributions that they make to customers and the company. Express Team successes in terms of the impact that they’ve had on customers.
    • Look at the Olympic Team model – individual performers who support each other ferociously to accomplish Team performance goals.
  • Create a visual mural on a large wall representing – perhaps with some humor added – the vision of growth for the company and the opportunities that will accompany this growth.
  • Ask the home office team for input on how to build strong functioning teams or challenge them to define and build the teams.

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