Tag Archives: Principal

How Do You Maximize Company Value & Strategic Positioning? Five Points

Situation: A CEO has a young company in a very favorable strategic position. The Founders have bootstrapped the company and it is currently on the “blade” of the growth hockey stick. How can the Founders maximize the value of the company as they grow it? How do you maximize company value and strategic positioning?

Advice from the CEOs:

  • What are company’s principal challenges and goals?
    • Over time, as the market begins to mature, there will be more competition and margins will drop.
    • Before this happens organize the company for maximum value, and build additional products and/or services that will maximize company value.
  • Hire managers to manage on-going business while devoting top management time to strategic market expansion and building new products and/or accompanying services.
  • Perform a strategic analysis focused on the long-term plan and building equity value. Plan a future that will optimize the company’s strategic position while increasing cash flow and equity value.
  • Anticipate, plan and organize for the he most likely coming changes to the market.
  • Consider starting a second company to compliment the value and products of the current company. For example, if he company is best at a key technology, start a second company to provide accompanying services that will enhance the value of the technology. Having done this, future options open up to either combine the two companies or to let them grow on complimentary paths.

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How Do You Minimize Hiring while Launching a New Market? Five Points

Situation: A company is planning to expand operations into a new geography. The CEO wants to avoid hiring a new sales person out of the main office as they make this move because he wants the expansion to fund itself. How do you minimize hiring while launching a new market?

Advice from the CEOs:

  • Start by profiling the ideal customer for the new geography.
    • The definition should include business sector, company size, current capabilities in terms of the service provided by the company, and openness to working with outside service providers.
  • Consider a satellite office or franchise option. The two key employees to staff the office will be an engineer and a principal manager for the office. The principal manager will be the sales person.
  • Target initial clients that meet the profile of the existing business but in the new geography.
  • Use what has been learned over the years in the principal location to build an effective culture in the new location. Select key people for the new location that would fit well into the current location.
  • How can the principal manager network in the new location to attract clients?
    • Clubs
    • Organizations
    • White Papers
    • Advertising and Mass Mailing
    • Author a book or be featured in a chapter of someone else’s book
    • Generate partnerships or affiliations for business development

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Do You Need a Formal Marketing Function? Four Points

Situation: A small company serves a specialized, targeted group of customers. The founder/CEO seeks advice from the group on whether it is time for the company to create and staff a formal marketing function or can this be outsourced. Do you need a formal marketing function?

Advice from the CEOs:

  • The company services a specialized and targeted group of customers. However, they target the high end of this market, so the target market is smaller.
    • A highly targeted promotional and marketing strategy will work best.
  • There are two principal functions within marketing: providing direction to guide product development efforts and creating awareness of the company’s products through promotions and advertisements.
    • To serve a narrow market, the information and insight gathered from trade shows, technical meetings, the company’s sales and design engineers may be sufficient to drive product development efforts.
    • It may not be necessary to do more than this unless the company is planning for substantial growth and wishes to diversify the product offering in a short period of time.
  • To handle promotions and advertising there are two options: hire an individual to do this or utilize the resources of an outside agency.
    • The marketing plan should be refreshed and updated on a regular basis – at least annually.
    • A good task for the company’s marketing committee is to become aware of local resources that could help.
    • Identify marketing themes to guide advertising in specialty magazines, supported by trade shows, technical conferences, and on-site training session for key customers.
    • Create and maintain a calendar of marketing activities and assure that that messaging is consistent across promotional events.
  • If the strategic plan calls for substantially increasing the revenue base or broadening the product offering, consider a merger with a competitor that already has the ability and resources to meet these needs.
    • Just the planning exercise for a merger will help the company to evaluate the issues involved in market expansion.

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How Do You Fire a Founder? Three Suggestions

Situation: A founder of a company also heads business development. This person had no prior experience in business development, and no other skills to offer the business. Over the last two years he has generated only a fraction of his salary in new or additional business. The CEO has concluded that it is time to hire a business development professional; however, the Board is reluctant to act. What are the steps that you would take to let a founder go?

Advice from the CEOs:

  • Because the individual in question is an owner, the situation is delicate. Staff relationships are involved as well as morale. Therefore, it is essential that you create a convincing case for replacing the individual and show that this is the best for the business. Don’t rush the process. However, once you’ve built a solid case for what needs to be done, act expeditiously.
  • Start by evaluating and documenting what the individual is doing to develop new business.
    • Count customer connects per day. Set a baseline expectation and measure against this.
    • Look at the pipeline. Historically what does your new business funnel look like – contacts, presentations, evaluations, closes. How does this individual’s pipeline stack up?
    • What are his business advancement and close ratios? How do these compare with industry standards?
  • For the individual: Demonstrate that his performance is penalizing his own return as an owner. Create a spreadsheet that shows:
    • The current situation, and his return as a shareholder from current results, versus
    • Hiring two effective business development people, and how this could change his return.
    • Show the individual a graceful way out – one that works for him.
  • For the Board: if the current direction is negative, create a model that shows your current direction and the break even implications. Present this analysis to the Board to show that the company needs a change.

Key Words: Business Development, Founder, Principal, Experience, Performance, Replace, Document, Pipeline, Return, Model, Trend

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