Situation: A CEO has been approached about new opportunity. The company has been through some hard times, and the opportunity offers access to quick cash which would remedy the company’s debt exposure. A downside is that the deal would erode the company’s brand exposure because it would operate under another brand. How do you evaluate a new opportunity?
Advice from the CEOs:
- Carefully evaluate how this opportunity will impact current operations.
- What percent of time and effort will the opportunity require? Will it compromise the company’s current operations?
- The appeal is access to quick cash. However, if the bottom line isn’t sufficient to meet the company’s needs, walk away.
- Given that the project would be under another brand, why not spend the time and resources growing the company’s brand?
- Is there anything that could make the opportunity more appealing?
- See if the other company is open to offering a piece of the business after a period of commitment.
- Management control. Assure that the company’s principals would have the autonomy to make it work.
- The ability to keep the company’s name visible and prominently cited in all joint projects.
- Look at this opportunity the same way that the company evaluates other opportunities.
- Opportunity to build brand presence.
- Assure that the proposed project meets the company’s current rates of return, or if not at least the current dollar return per project.
- Is this a way to get into larger projects more quickly with reduced risk? If so, negotiate this into the deal.
- Bottom line:
- The company is emerging from hard times nicely.
- The company is building a strong brand and reputation in its target geography.
- Stay the course and trust in the company’s abilities.
- Take on projects from this new opportunity only if they help build the company’s brand and reputation with less risk than is currently carried.
- There is no reason to entertain this opportunity if it reduces the company’s brand equity and/or carries the same or more risk than the company’s current project mix.
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