Tag Archives: Selective

How Do You Respond to Market Uncertainty? Five Suggestions

Situation: Many industries face uncertainty due to potential changes in reimbursement and shifts in regulation. How does this impact strategy for an early stage company or the introduction of a new product? How do you respond to market uncertainty?

Advice of the CEOs:

  • First and foremost put a premium on focus, particularly in markets dominated by large incumbents. Past practice we would have blanketed the market to maximize early market share. Current practice focuses on being much more selective in terms of where to compete and putting more effort into targeting geographies.
  • This focus is accompanied by more caution and control of spending. Only hire a new sales rep, for example, if there is assurance that there is a significant customer base in the market that the new rep will serve.
  • Similarly, be more cautious in capital equipment decisions. In parallel, if an employee leaves do not automatically replace that individual unless there is market potential in the market served by that employee.
  • In terms of price planning, where in the past it was possible to count on annual price increases, plan for the potential of prices decreasing over time to reflect new pressure on reimbursement and cost containment. As another example, if there is a pending tax change on the products produced assume that this will reduce margins where in the past the additional cost might have been passed it on to the buyer. Reduced margins will also impact new product selection and investment strategy.
  • The big change in long-range planning is that many companies are focused on slow, sustainable growth – maintaining both gross and net margins and profitability. This is a major change from several years ago when the focus was on maximizing rapid market penetration for new products. Focus on being self-sufficient financially and thus avoid having to rely upon future fund-raising rounds.

Our thanks to Ken Purfey for his contribution to this article.

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How Do You Expand Your Market-Base? Six Suggestions

Situation: The CEO of a service company needs to expand its market base due to concerns that a significant service and referrals partner may decide to stop working with them. A break-up would have significant impact on salaries, effort and focus. The company’s priority is to expand client growth to minimize the impact of a break-up. How do you expand your market base?

Advice from the CEOs:

  • To expand or build a market requires a champion. Someone like the company’s founder who has the passion and contacts to build new business.
  • Second, incentives must be established to reward success bringing in new clients. These incentives must have teeth – no success, no incentive. No safety valves.
  • Third, create a plan to support the new business development – including marketing, event attendance, etc.
  • Initially, be selective and target just a few highly desirable new clients to test and refine the client attraction model before expanding to the broader potential client audience.
    • Build a set of case studies of services and results for new clients.
    • Track and prove out the profitability and workability of this model.
  • How should the effort to expand the market base be constructed?
    • Start with preparation. Research the current prospect list to assure that they are good prospects. Also look at the current company culture – do the company’s strengths align with what is needed to attract and serve new clients?
    • If the research shows that a significant number of prospects are different from current clients, think of this as a new channel. Create a different business unit to specialize in serving these clients. Hire a team to focus exclusively on the new client group, with proper incentives tied to achievement with these prospects.
  • Another company had a similar choice. They created a program to increase their market base and went after it with full focus. It took five years to accomplish vs. the two years that they had planned. Nevertheless, the results have been worth the effort and expense. If the company believes in the model, invest in it.

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What Efficiency Metrics are Most Important? Six Suggestions

Situation: An early stage manufacturing company has established repeatable operations that produce the desired quality. The CEO now wants to focus on efficiency. Early research suggests a number of areas on which they could focus. Based on your experience, what efficiency metrics are most important in manufacturing?

Advice from the CEOs:

  • Much depends upon what is being manufactured, and both the complexity and labor intensity of the manufacturing process. Start with the basics: looks for a relevant quality metric, and a time / delivery metric. Test these for relevance to your operations and adjust or change them as necessary over time.
  • Start with simple metrics and make them more complex over time.
  • On an ongoing basis, monitor your processes for continuous improvement. If an employee comes up with an improvement that increases efficiency and saves money, recognize and reward that employee.
  • Be selective. Limit your focus to 2-3 metrics per quarter. Make first period performance the baseline for the next period.
  • Areas in which to focus:
    • Cycle times.
    • Statistical process control to monitor:
      • Yield
      • Throughput
      • Fall-out
    • On time delivery to production schedule.
    • Quality check at end of production – yield rates versus pre-set targets.
    • Use Google to see what others are using. Google “Manufacturing Performance Indicators”.
  • As you develop your efficiency metrics, include your most effective metrics in performance measurement for bonus awards.

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