Tag Archives: Dollars

What is Your 10-Year Growth Plan? Four Points

Situation: A CEO is building a 10-year growth plan for her well-established company. Options include building the company on its current track, growing through purchase of another company, or merging with another company. What are the most important considerations for each option? What is your 10-year growth plan?

Advice from the CEOs:

  • Considerations to start the process:
    • When acquiring another company or merging, the value is the reputation, relationships, and good will of the other firm. This may be more expensive but can provide a head start in the new market.
    • Perform an ROI analysis of build vs. buy. Estimate what it will cost to build. Compare this to what others are asking for their firms. In both cases generate a 5-year cash flow forecast. Discount future cash flows using the company’s desired rate of return – for example the company’s PBDI&T target – as the discount rate.
    • Also compare the relative risk of each option.
  • Build Option:
    • It’s not necessary to recreate the full home office operation.
    • Start small – sales, support, or maybe just an address.
    • Do the actual work at the home office until sufficient business is generated at the new site to support a larger local operation.
  • Buy Option:
    • Look for a company with a good local reputation, who shares the acquiring company’s values, but who wants to sell.
    • This option provides staff, relationships, and a reputation in place. They will already know the local code.
    • Structure a deal for long-term value to the owner. The ideal is to pay as much as possible with future rather than current dollars, with a premium for high retention of personnel and business
  • Spend some time in a new area and get to know it before deciding. If the company already does some business in the new locale, this simplifies the decision.
    • Some locales have been found by others to require a local head of the office who is from the area – who “talks the local talk and walks the local walk.” This will be the case whether the decision is to build or to buy.

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Can Social Marketing Leverage Your Competitive Position? Six Points

Situation: A company seeks to leverage the difference between information from traditional media and the richer information available through social media. Their objective, using publicly available information, is to identify individuals’ specific plans or preferences to better target their clients’ marketing dollars. Can social marketing leverage your competitive position?

Advice from the CEOs:

  • The principal value proposition is the ability to mine publicly available information from consumers through social media and make it useful to advertisers who want to reach those customers.
  • If the company’s technology allows access to shared data which can be used by many companies this is less expensive than clients’ trying to go it alone.
  • The most important differentiation will be the timeliness of data. Many firms collect data after the fact – for example after a key purchase is made. What advertisers desire is the ability to anticipate purchases. An example is a consumer’s plan to buy a house. This information is valuable to many companies. If data is mineable, it is valuable.
  • The essential question is how the client will make more money from data being near-real time. If the client can use the company’s data to enhance their marketing database, this adds value.
  • Consider partnering with the agencies that B2B and B2C companies hire to advertise their products. Even the largest consumer B2B and B2C companies work with outside ad agencies because these companies have better access to targeted customer lists than the companies.
  • Consider a subscription model, offering access to unique, current data to many customers. The differentiating value is the currency and timeliness of the data. A subscription model generates an ongoing revenue stream.

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