Tag Archives: Risks

How Do You Present Your Solution to Potential Clients? Eight Recommendations

Situation: For an engineering solutions company, one of the challenges is engaging potential customers with the idea that a domestic solution can cost-effectively meet their needs. If you can combine a manufacturing solution with the service solution this helps. How do you present your solution to potential clients?

Advice from the CEOs:

  • Know your clients. Clients have expertise of their own. However, they may lack expertise in all the disciplines necessary to create a full product. How will you fill that gap?
  • Know your strengths. Design is an iterative development process. If you increase process efficiency you can complete more process cycles in a given timeframe, advancing to final product more quickly.
  • Know your key differentiators. Target clients for whom your differentiator is a critical need. For example, do not encourage all of your clients to manufacture overseas. However, if they insist and lack experience managing overseas vendors, be prepared to handle this for them. Consistency of personnel across the life of a project is important, particularly the core team.
  • Know your competitors. How do they handle similar challenges to those that you face? 
  • Know your vendors. “Right-sizing” your contract manufacturer to your client’s product is important. Things will go wrong, and you must assure that the contract manufacturer will give you the priority to get things back on track to meet your launch date. 
  • Know the risks. Invention and innovation require a plan to mitigate the risk that new solutions represent. Develop the design along parallel paths and stage higher risk components or pieces of the design that represent critical path inventions such that they are proven prior to moving forward. If necessary take that feature out of the current design in order to develop it to a production-ready solution for the next product on the client’s roadmap. 
  • Know the situation and client expectations. Sometimes an invention or innovation is the reason for the new product.  In these cases the key is managing the client’s expectations regarding the significantly elevated risks that come with invention. Proceed with your and the clients understanding that the phase gates and even the production dates will slide according to the progress against developing that critical path invention or innovation.
  • Know your expertise. Expertise in material selection and understanding what can be done with materials in the manufacturing process is not trivial. The same is true of vendor qualification, particularly when the project involves new materials.

Thanks to Eric Bauswell of SurfaceInk for his contribution to this article

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Do You have a Disaster Recovery Plan? Four Recommendations

Situation: A CEO wants to be prepared in case of emergencies including water, fire, earthquake, and the possibility that owners or employees may have difficulty communicating or traveling to their offices for an extended period. What have others done to create an emergency response plan? Do you have a disaster recovery plan?

Advice of the CEOs:

  • One company developed a disaster recovery plan, including: a communication plan; employees taking notebook computers home in the evening; and data back-up and server restoration capabilities. The plan was relatively easy to build and is summarized in a 4-page document in the possession of each employee.
  • What have others done to address emergency preparedness? Answers included daily systems back-ups; if you use a web-based CRM, check whether they have a disaster recovery program; and assuring that there are sufficient cash reserves to manage through 30 days with no invoicing or collections.
  • Drafting a full emergency plan is essential. Start simply: look at the obvious risks in your location, for each risk that you identify, develop a backup or contingency strategy and put it in place, let the list of contingencies grow over time as you recognize additional risks, and start this exercise now!
  • Once you have a plan, drill the plan. Make sure that employees know what to do in a variety of emergencies so that they are prepared. This can build the confidence that your employees will be able to handle emergencies.

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How Do You Generate Buy-in as You Change the Business Model? Six Points

Situation: A company is changing its business model from fee for service, driven by individual contributors, to a contracted project model with teams delivering service. The driver for the new model is to deliver full solutions to meet client needs. The CEO is struggling to obtain buy-in to the new model from all stakeholders – employees, managers and shareholders. How do you generate buy-in as you change the business model?

Advice from the CEOs:

  • The objective is to obtain agreement on vision and direction as the company adapts over a 3-5 year horizon.
    • Benefits include: product vs. service sales, a growing annuity revenue base, increased stability for the company and improved career paths for all members of the team.
    • Risks include: massive change, fear accompanying any change, too rapid growth, and the changes to company culture that will accompany this
  • Acknowledge and celebrate what the company and team have done well and the success that this has generated. In addition, share the lessons learned from experience to date, as well as the new opportunities that these lessons have created and the reasons to change to take advantage of these opportunities.
  • Create an exciting vision that expresses the new opportunities. Consider an off-site “WOW” event to announce your vision.
    • Focus on what’s in it for them as stakeholders. Address how they can participate in the change.
    • Where are the opportunities? Do they include investment and ownership?
    • Focus on the next major steps and the doable objectives associated with each step.
  • The new direction will require a different type of manager – with skills and experience managing teams. This is a growth opportunity for all involved. Provide training to assist the transition.
  • Employee and manager skill sets (including the CEO’s) will need to adapt – identify what skills will be needed and how they can be found or developed.
  • The past culture has been highly entrepreneurial with little middle management. The new model may be different from the current model, but it can still be entrepreneurial in a different way.

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What Will Happen to HSA Accounts Under the Affordable Care Act?

Situation:  To maintain expense control as the Affordable Care Act is implemented, a company is looking at HSA options to replace their past insurance coverage. What do you think is the future of HSA policies and accounts as the ACA is implemented?

Advice from the CEOs:

  • HSA Accounts are expected to survive implementation of the ACA, at least for now, and may even thrive (Forbes Magazine analysis, 3/27/13).
  • The HSA Model combines a relatively inexpensive high deductible health insurance policy (minimum deductibles in 2013 at least $1,250 for individual and $2,500 for family coverage) with an HSA Account. Employer or employee contributions go into the account pre-tax. Most insurers offer a high deductible policy and many companies have adopted this option because it helps to control the growth in health care costs.
  • Annual HSA contributions are limited to the amount of the deductible, currently up to $3,250 for individual and $6,450 for family coverage, though these amounts are increased by $1,000 of the employee is 55 or older. Contributions are held in a bank account and can be withdrawn by the employee to cover most out of pocket health expenses. This is under an honor system, subject to possible audit by the IRS.
  • The key component that differentiates HSA Accounts from older health reserve accounts is that if the funds deposited annually are all not used to pay for health costs, the employee gets to keep the excess funds in the account. If the employee builds up excess funds in HSA Account, these can be transferred into an IRA. Check with your HSA bank for rules as to transfer of IRA funds back into the HSA Account if needed to cover out of pocket health care costs.
  • The down-side of the HSA Account is that if the employee encounters a significant health cost, above the amount in their HSA Account, they will have to cover this out of pocket. However, they have the option to reimburse themselves from future HSA contributions as these accrue.
  • If you are considering this for your company, it is advisable to hire a consultant to help you tailor the plan to the specific needs of your company.

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