Monthly Archives: April 2013

Pick Up Speed

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Does this sound familiar?

The tedious process of major prospects makes your sales people sound like they are waiting for several decisions.

The production department(s) express agitation about waiting so long for the accounting department to distribute financial reports. They want to know how much gross profit they generate and if the numbers suggest they have to hire, make do, or lay off anyone.

And the marketing department can’t tell if they can start working on their new campaigns.

It’s not a good sign when your department heads are waiting and looking for data.

Yes, you need timely financial reports about how last month, last quarter, and last year turned out.  But creating better results for next month, next quarter and this year is more important.

Putting department heads together once/month to compare projections for the next month, the next three months, the next twelve months pays off. What revenue can they count on for each period? What is the best educated guess about additional revenue that can reasonably be expected? What direct costs (COS) can already be projected? Which capacity utilization and billing multipliers apply to improve the short term future?

Accountable department heads do not just coordinate, react, and allocate resources on a day to day basis. They learn the metrics and create next month’s success, next quarter’s improved results, and next year’s growth.

Are your department leaders putting their heads together to compare projections and make decisions to get ahead of day to day implementation and create success?

This is especially important if/when your company is going after larger more complex clients. A client going through a merger or IPO will bring even more bureaucracy and delay. To prepare for larger accounts, it’s essential to pick up speed and get ahead of your own day to day process. 

Is your sales manager looking for ways to leverage and replicate the lessons learned from major proposals?  Is the marketing department finding ways to multi-purpose the contents of published articles, speeches, webinars, etc? Is the production department creating standards and delegating tasks down as far as possible?  Does your accounting department need to move beyond just reporting the past results to become a resource to the other departments?

 

Corporate Board Members Walk a Fine Line [video]

Corporate Board Members Walk a Fine Line

When you accept a position on a corporate board, you become part of the culture, ethics, priorities, logic, metrics, reputation, and the public perception of the corporation. A few of a corporate board’s primary responsibilities include hiring the CEO and providing clear logic and metrics for performance review and compensation.  Board members have a fiduciary responsibility to the shareholders. A board has oversight responsibility (stick your nose in) but should not interfere with the actual management (put your fingers in) of the corporation.

Those sentences are clear enough…right?  But walking the fine line can be difficult.

A recurring topic of debate/discussion among experienced directors who serve on corporate boards focuses on “Nose and Fingers.”

Imagine you serve on the board of a major corporation that practically created the entire industry. Your company consistently makes money for its shareholders. Your CEO is the son of the Founder, who has been an industry icon for decades. There are risks associated with your industry so customers are asked to sign documents acknowledging that they understand and accept those risks.

To be more specific, you are one of the directors serving on the board of CARNIVAL. After several months following the incident, one of your ships is still leaning in shallow waters off the Italian coast while another ship in your fleet is being towed into an Alabama port after its main engine and sewerage systems have failed.  As a board member, you are undoubtedly concerned about the negative media coverage and possibility of law suits. But how far would/could/should you go?

It is very easy for someone from the outside looking in to be a “Monday Morning Quarterback.” Some media personalities were quick to demand answers about why passengers were left on the TRIUMPH for so many days following the loss of the main engine.

Give this some considered thought. When there is an incident, should you (as a board member) speak to the press? Should you support your CEO or “throw him under the proverbial bus?” Should you ask questions about the value of passenger safety compared to corporate profit? Should the board request a presentation from the company’s Chief Risk Officer? Should the Crisis Prevention and Management Plan be reviewed?

If you as a board member, (even though you are very bright and experienced) step in to do the job(s) that executives and managers are supposed to do, why is the company paying those people?  Should the board establish a special committee to review recent crises? Should the board convene the executive compensation and performance review committee to revisit its logic and metrics? Should you resign because your suggestions about passenger comfort and safety have been ignored?

Note: Think beyond the negative media coverage. Consider the distinct possibility that the shareholders, board members, executives, and managers have been and are perfectly happy with how things are handled at CARNIVAL.

 

 

 

[video] Look to the CFO and CMO to Eliminate Worries About Growth Financing

Look to the CFO & CMO to Eliminate Worries about Growth Financing

Some of the most heated debates I have witnessed between executives within privately held companies have been about whether they need to obtain outside growth financing or should continue to fund growth through reinvestment. The arguments sound pretty much the same whether the outside money would come from private investors or an initial public offering (IPO).

  • If we were able to grow faster without an infusion of capital, wouldn’t we have done that by now?” asks the impatient VP Operations.
  • “Why should we be so convinced that having more money will drive growth any better?” asks the skeptical Human Resource Director.
  • “We are not moving fast enough! We need the money to speed us up,” declares the Marketing Director. “We can’t keep doing this on a shoestring.”
  • Why should we dilute our shares any further?” frets one of the formerly silent founding partners.
  • If we attract enough money to actually change our situation, [they] will think [they] have the right to tell [us] what to do,” says a worried Chief Science Officer. “After all, [they’ll] get multiple board seats. Right?”
  • Can we really afford to have our CEO distracted for months-on-end dealing with lawyers and the SEC?” asks the VP Sales.

Arguments about if a company needs to attract outside money… and if so, when and how much…typically flow from fear, assumptions, guesses, and jumping to conclusions based on another company’s situation.  Arguments based on an absence of information often occur because the President has asked executives to report about the past more than create the future.  Of course, that pattern can indicate that the company is ready for a new President or a CEO. At a minimum, the company needs a CFO instead of just a Controller and a CMO instead of just a Marketing Coordinator.

A CMO would answer the questions about market demand, competition, pacing, optimum size, etc.  And the CFO would answer the questions about if outside money is needed, if so when and how much.  The CFO also answers the questions about the costs and tradeoffs involved with outside money.

When outside funding sources start their due diligence, they ask about market dynamics, growth potential, anticipated use of proceeds, return on investment, etc.  Members of the executive team deserve the same information that outside funders need.  In fact, without clear answers from detailed scenarios and projections (provided by the CFO and CMO) the concerns of executives are inadvertently conveyed to prospective investors and funding does not happen.

When I am asked questions about the optimum timing for a company to seek growth financing, I find myself immediately asking questions about how well the company’s CFO and CMO create the future and provide answers that replace worry with excitement.                                                                       

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 achieving accelerated growth with sustained profitability® through opportunity & resource analysis, 4 approaches to strategic planning, executive advisory services, growth financing, and targeted search.  2013 is Ambler’s 9th 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.    

Inadvertently Choosing to Stagnate

Jeff and Jim have been running the 12 year old family business since their father (the Founder) suddenly passed away. At first, they had steady growth.  They are in a specialized field, so Jeff and Jim have learned everything they can about product formulation and packaging, customer service and retention, vendor sourcing, quality assurance, and distribution channels. The gross revenue was up around $20 Mil when the financial industry imploded in late 2008. Their revenue dropped to $14 Mil/yr. by early 2009, bottomed out at $10 Mil/yr in early 2010 and has been hovering there ever since.

Jeff and Jim trimmed their top heavy organization and budget.  They upgraded technology and continue to make improvements to operational efficiency.  When they disagree or experience some tension, the topic has usually been about new customer acquisition.  One year they tried throwing money at banner advertising and the website.  Another year, they went back to their roots in direct mail and local radio advertising. Last year, they dabbled in social media, so they now know what is meant by tweeting, liking, blogging, and following. Their customer retention numbers have remained fairly consistent (which is good) but their new account acquisition numbers have remained the same (which isn’t so good).

They don’t really know if the company’s plateau is due to market saturation, inadequate execution of marketing campaigns, shifts in buying patterns or market preferences, or hidden competition.  Jeff and Jim have concluded that they know their product and their customers…so they don’t understand why their business isn’t growing.  Their concern now is that if they bring in a marketing/advertising firm to look at their situation, all that will result from that is an expensive proposal for the services that are provided by that firm. It feels like a bad game of Jeopardy® to them.  “The answer is our services…what was the question again?”  Their reluctance to be sold anything is keeping them from obtaining an objective assessment of their opportunities, resources, needs, strengths, etc.  Where is the risk if the strategic consultant who evaluates their needs doesn’t provide the marketing services that will probably be indicated to get Jeff and Jim’s company growing again? 

Staying at the current size invites Jeff and Jim’s employees to coast, get set in their ways, and resist innovation and change.  They are in growing industry, so Jeff and Jim are getting further behind each year they choose to remain stagnant. My guess: this company needs a real President.         

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 achieving accelerated growth with sustained profitability® through opportunity & resource analysis, 4 approaches to strategic planning, executive advisory services, growth financing, and targeted search.  2013 is Ambler’s 9th 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.            

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