Tag Archives: Premium

How Do You Improve a Company’s Profile and Diversify the Customer Base? Seven Points

Situation: The CEO of a high tech company wants to improve the profile of his company for prospective clients. He also wants to diversify the company’s customer base. How do you improve a company’s profile and diversify the customer base?

Advice from the CEOs:

  • Develop a good description that easily expresses the company’s value proposition.
    • Test this with potential customers to assure that they easily grasp what the company has to offer – and are interested in paying for!
  • If the company is early-stage, focus on funding and proof of concept as early milestones.
    • If the company has a novel idea or capability, focus on proving the value of this capability to a buying customer base of sufficient value to interest investors.
  • Study and define customers’ needs before trying to communicate what the company can do for them.
    • Similarly, define the channels that will be most effective in reaching these customers.
  • To monetize the business focus on the seekers – those who need and will benefit from the product or services that is being offered.
    • If the company offers a free or low cost service, develop a premium offer for enhanced services.
  • To market a core set of skills to different customer markets, focus on a theme of reliability.
    • Flavor this theme differently through a branding exercise to address the needs and desires of specific customer segments.
    • It is both feasible and desirable to market the same set of skills differently to different customer markets.
  • Follow the money – it leads to the heart of customer purchase decisions.
  • Growth, momentum and the ability to change are essential parts of a successful business model.

[like]

How Do You Manage Major Projects? Seven Points

Situation: A company conducts both engineering feasibility studies and development projects. These are high budget projects and must be managed diligently to prevent cost overruns. What have others done to assure that projects are planned and managed to budget? How do you manage major projects?

Advice from the CEOs:

  • What is the structure of most contracted projects?
    • Most projects are fixed price. They come from feasibility studies which are essentially “marketing” for future sales. Typical terms are 30% up front, with the other 30/30/10 upon achievement of milestones and completion of the project.
  • Get complete buy-in from the customer as part of the initial negotiation.
  • Stay ahead of expenses by billing in time to maintain positive cash flow from the projects.
  • Structure pricing so that custom work is profitable if the project mix is 50/50 custom vs. standard work.
  • Push-back if the customer wants to reduce project cost up-front.
  • Carefully document work papers – above what is required by the contract. Get buy-in for this in advance, during the initial negotiation.
  • Once the feasibility study is completed, revise the scope and deliverables of the work agreement based on findings from the study.
  • Separate the “concept” phase from the execution phase and charge a premium for the concept work.
    • Position this as a value to the customer.

[like]

What Do You Gain by Buying Out a Co-founder? Six Points

Situation: A CEO founded his company with a long-term friend. For several years, this co-founder has contributed little and has proven to be difficult with key employees. In an important sense, the co-founder has become a distraction. A challenge is that the co-founder is a significant shareholder. What do you gain by buying out a co-founder?

Advice from the CEOs:

  • First and foremost – peace of mind. While the CEO and his allies control a majority of shares there is no guarantee that this remains the case. Long-term it can cause headaches to have a large block of shares in the hands of someone who could be hostile. The challenge is gaining control of a solid majority of shares at a reasonable price.
  • How is the value of the co-founder’s shares determined?
    • In most minority interest situations, minority interest is discounted because it is of limited value to a non-company purchaser. While it may be necessary to pay a premium to gain controlling interest in the company, this will be a premium over the discounted minority interest value, not over the fair value for all shares.
  • There are two aspects to a purchase: price and terms. It is acceptable to accept the co-founder’s price, but insist on favorable terms, e.g., 10 years to pay at 5% interest.
    • Set the terms so that the company guarantees the payment, not the CEO personally.
  • At this point the co-founder is a disruptive force within the company. Act now before more damage is done.
    • As to order of business, take action with respect to the co-founder first, then negotiate the purchase of his shares after he is no longer an employee.
    • Be sure to communicate the decision effectively to the other employees. Speak to the long-term strategic value of the company, the CEO’s vision for the company, and a determination to build the company into a viable entity with a range of customers and growth opportunities for the team.
  • Important steps as you move forward:
    • Have a plan.
    • Speak to an attorney – the company should pay but this is the CEO’s attorney, not the company’s attorney. Assure that as CEO you limit personal exposure and do things appropriately.
    • Assure that the employees understand and support this action and that they clearly understand the plan going forward.
    • Offer the co-founder a more generous severance package than would ordinarily be considered prudent.
    • Fire the co-founder as soon as plans are in place and announce a Board Meeting 30 days hence to discuss the management restructuring.
  • As a final note, this is one of the most difficult things that must be done by a CEO. The co-founder has been a long-term friend. Nothing about this is easy. It is likely to get more painful before it gets better. In the long run, however, this can be better for both individuals. Work toward that objective.

[like]

How Do You Monetize a New Venture? Eleven Suggestions

Situation: An entrepreneur has created a new business offering a critical service but struggles with how to monetize it. The primary clients don’t have the resources to fund it viably. What alternative sources of funds or revenue can be found? How do you monetize a new venture?

Advice from the CEOs:

  • The venture’s brand name must carry the message – the name must describe the mission.
  • One of the core messages is reciprocity. Reinforce this theme all over the site.
  • Testimonials are critical. Testimonial videos of real users personalize the experience. These drive participant acquisition and contributions.
  • Make participants feel like they are a part of a community.
    • Consider a variety of landing pages – same database but different doors of entry.
    • Encourage even more communication within specific target communities.
  • Look at MySpace vs. Facebook to guide the model:
    • MySpace was already big when Facebook launched.
    • Facebook exploded by making itself a more closed community – all exclusive colleges and Universities.
    • Monetize via donation or advertising vs. subscription. Fees could kill the opportunity. Too many other resources are available for free.
  • The key appeal is enabling people to do something that makes them feel good.
    • Post stories from those who have succeeded as a result of the platform, as well as those who have helped on the site. This will inspire others to participate.
  • How do you recruit new participants?
    • Some CEOs joined LinkedIn because of peer pressure – after enough people asked them to join, they did.
    • Install a template to encourage people to invite new participants – allow new participants to tell their story and the need that the service fulfills for them.
  • Consider adding premium content to the site, but only for those who have made contributions – monetary or in-kind.
  • Consider Fremium to Premium. In the Fremium model include a banner ad for users, like a university Training Institute.
  • Consider creating an advice network. Post questions and ask for answers from the community. Include an option to click to become a contributing participant.
  • Online there are eyeballs vs. action – the action is what matters.

[like]

Where Should You Focus – Eyeballs or Dollars? Six Thoughts

Situation: A company sells personalized content as well as a tool kit. The long-term plan is to monetize storage of personalized content. When they speak to venture capitalists, the VCs advise them to focus on just building their user base and not to worry about revenue.  What would you do? Where should you focus – eyeballs or dollars?

Advice from the CEOs:

  • Take advice from venture capitalists with a grain of salt. Remember that their game is to fund companies that they like incrementally, taking a greater share of ownership of the company with each increment in funding. The more you lack revenue, the more you’re dependent upon them.
  • Gain traction by offering free content with up-sell opportunities for premium access.
  • The give-away strategy is a great model to build your initial user audience. Consider micropayment options for special features, content storage, and so forth.
  • Going slow and steady may not be the right model for this space. Company growth for a web-based platform is different from the typical bootstrap model.
  • It’s hard to get good advice for viral marketing opportunities from CEOs who have bootstrapped their companies. Look for other input. Seek the advice of CEOs who have been successful in the viral online marketing space and learn as much as you can about their business models.
  • Gaming is another opportunity – premium or virtual world sales.

[like]