Monthly Archives: February 2012

[video] Joint Ventures – The Ties that Bind

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JOINT VENTURES – THE TIES THAT BIND

You and a key vendor (Vendor A) conclude that if you work together to create a tailored version of a product/service, both companies will be able to make a lot more money.  So you both invest the time, money, and effort to do that and it starts to pay off. You also agree that Vendor A can’t sell the new product to your competitors in return for your investment in them and your marketing/sales efforts to bring them more business.

Was this a loose strategic alliance?  Or was this a firm joint venture?

Here’s the test.

Your business does well.  You are now attracting even more demanding clientele and you are wondering if Vendor A can keep up with you and your new larger clients. A competitor of Vendor A has approached you and Vendor B’s product seems a lot better. Plus Vendor B’s commitment to growth seems a lot stronger than Vendor A’s.

Should you and can you switch vendors? Ethically? Legally? Practically?

What did your written agreement with Vendor A say about that?

 

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST™. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB clients get on…and then stay on…the published lists of the fastest growing privately held companies. She owns and operates a suite of companies that help privately held midsized companies achieve accelerated growth with sustained profitability® through opportunity & resource analysis, 4 approaches to strategic planning, executive advisory services, growth financing, and targeted search.  2012 is Ambler’s 8th year hosting a weekly peer-to-peer-to-peer syndicated on line talk show that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. An archive of over 300 interviews is available at www.GrowthStrategistShow.com. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.   

Is There Any Such Thing as a Truly Silent Partner?

To scale an incorporated career to become a genuine enterprise, business owners often seek growth funding from their relatives and friends.  That makes sense because private investors often ask for evidence that the business owner has already put up his/her own money and asked his/her relatives and friends to step up.  Plus the interest rate is usually lower with relatives and friends than bank financing. And hopefully the relatives and friends won’t demand quite as much control or return on their investment as venture capitalists do.

But then again, it may not be a favor that some relatives and friends don’t immediately make demands.  Their silence can be misleading. Try not paying them back or providing positive ROI (in about the same timeframe as the banks or VCs, by the way) and previously silent partners tend to become very vocal.  I know a few situations where the majority owners have given themselves big raises or bonuses and haven’t provided any profit sharing for minority owners in YEARS.  Not surprisingly, those business owners didn’t want to show us their partnership agreements when we were invited in to help with strategic growth planning.

For a long while, I agreed with many business owners when they would rail against venture capitalists. “I don’t want money from those vultures! They’ll want to tell me what to do and it’s MY business!”   My 40 years of helping midsized businesses keep growing has shifted that view because one of the benefits of outside financing is the participation of expert(s) on a company’s board of directors who actually hold the business owner(s) accountable for a reasonable return on investment. In many ways, if a business owner only wants to do what he wants to do and can’t hear advice from informed people, that business owner hasn’t grown past the mindset of an incorporated career and may not deserve growth financing (from a bank, a venture capitalist, a relative or a friend).

 

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST™. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB clients get on…and then stay on…the published lists of the fastest growing privately held companies. She owns and operates a suite of companies that help privately held midsized companies achieve accelerated growth with sustained profitability® through opportunity & resource analysis, 4 approaches to strategic planning, executive advisory services, growth financing, and targeted search.  2012 is Ambler’s 8th year hosting a weekly peer-to-peer-to-peer syndicated on line talk show that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. An archive of over 300 interviews is available at www.GrowthStrategistShow.com. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.

[video] Is there any such thing as a Truly Silent Partner?

[video] Disillusion

Disillusion

Disillusion.  What a fascinating word. How many Baby Boomer business owners do you know (perhaps yourself?) who have become disillusioned?

The recession and the long period of uncertainty that has followed. It looks like the underlying causes of the implosion of the financial industry in 2008 haven’t been addressed let alone resolved.  Government officials haven’t risen to the occasion and done the jobs citizens pay them to do. Disillusion.

International competition.  Most Baby Boomer business owners recognize globalization.  But how does a privately held US based company compete with a business based in China where the hourly workers are paid so much less and work so many more hours without overtime rates involved? Disillusion.

Advances in technology.  Oh it’s great to participate on a SKYPE call with your grandchildren who live on the other side of the country. And Wii bowling is fun. Getting movies through Netflix for your flat screen HD/3D television is a pleasant perk. But on the business side, technology keeps raising customer expectations and the EXPENSE, the constant training, the disruption, and the bottomless pit of change related to IT can be very discouraging to a Baby Boomer owner of a privately held midsized company.  Disillusion.

If it is a family owned business, the next generation doesn’t seem to want to learn leadership skills or work hard.  They don’t seem ready or as interested in taking over the family business.  An unfulfilled life plan. Disillusion.

There are solutions to this situation.  They all begin with the Baby Boomer owners doing some self examination to admit how disillusioned they have become.  Plus, in many cases, they would need to be willing to be a whole lot less stubborn. Less pride and less secrecy. The rules have changed and continuing to run a business in a state of denial won’t help.

My prediction?  There will be a SPIKE (huge rise) in the number of (formerly midsized) businesses being dissolved in a few years. Unaddressed disillusion leads to dissolution. 

 

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST™. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB clients get on…and then stay on…the published lists of the fastest growing privately held companies. She owns and operates a suite of companies that help privately held midsized companies achieve accelerated growth with sustained profitability® through opportunity & resource analysis, strategic planning, executive advisory services, growth financing, and targeted search.  2012 is Ambler’s 8th year hosting a weekly peer-to-peer-to-peer syndicated on line talk show that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. An archive of over 300 interviews is available at www.GrowthStrategistShow.com. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.         

The Secret is to Reverse the Phrase

Each week I close my peer-to-peer talk show with presidents of midsized businesses with the same message: “My wish for you is accelerated growth with sustained profitability®… and remember the secret is to reverse the phrase. First, you need to know what drives your profitability. Second, you must have a system to sustain that profitability. THEN, you can consider growth strategies like acquisitions, geographic expansion, franchising, or whatever. And fourth, you can step on the gas to accelerate.” Apparently, that concept needs to be reinforced in my blog.

Here are some examples. Suppose your company specializes in content management for large websites, and you view one specific program/language as the superior choice. You now lead with that software not just content management or websites. That one decision says that what drives your profitability is your ability to attract website projects that would be best served by the language you have chosen. If/when there is a great fit between the projects and your language, you can charge premium pricing. To sustain that profitability, you will need a marvelous system for recruiting, training, paying, supervising and retaining programmers who also believe in the language you have chosen. Until you can do that, several growth strategies will feel out of reach. The techniques you’ll consider will be survival strategies, not growth.

Let’s try another one. Suppose your company has an approach that dramatically improves your customers’ sales results. That’s pretty exciting, right? Perfecting the approach drives profitability for a while, but if you don’t find a way to protect your intellectual property (IP), your profitability will decrease due to copy cats, pirates, thieves (whatever you want to call them these days). If you do address sustainability, you can quickly move into growth strategies like licensing or franchising. It’s a “compliment” when people want to use your “stuff.” So instead of getting mad at that, make sure they pay for the privilege.

[video] The Secret – Reverse the Phrase

Growth Strategy Tip

Testimonials

Aldonna Ambler played a key role in driving the rapid growth of MarketingWorks, Inc. [In addition to having] a strategic growth plan in place, we obtained appropriate growth financing, have a much stronger management team; we have expanded our services and are already profiting from our new marketing department.

Gerry Bogatz, President and Founder
MarketingWorks, Inc.

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