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.
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