Posts tagged with: growth
Tuesday, January 26, Anaheim CA
Wednesday, January 27, Solana Beach, Del Mar CA
Thursday, January 28, Los Angeles CA
Get your company on the road
to Rapid Growth of
Revenue, Profit and Asset Value
Discover the simple steps you can take now to Accelerate Revenue Growth and operating results in this free breakfast seminar. This seminar is a brisk overview of how to achieve revenue goals and build value by discovering and leveraging the unique Value Drivers of your company.
Value growth & exit strategists Kerri Salls and Scott Warner will demonstrate how discovering the key drivers of your business can significantly accelerate growth of revenue, earnings and enterprise value. Learn how to create reliable forecasts that lead to significantly higher valuations.
This 45 minute seminar provides an in-depth look at the how using the right tools and data can substantially simplify executive decision-making and create the leverage to grow your company.
Who should attend
- CEOs and business owners looking to accelerate growth of revenue, earnings and the intrinsic value of their organization whether to capture that value in a liquidity event or simply to produce greater cash flow.
- CEO advisors looking to learn more about this topic to better serve clients.
This seminar is most appropriate for companies with current annual revenues of $2M to $50M.
Cost: Free (breakfast included)
7:00 Breakfast & Registration
7:30 Seminar starts
We will be available for a few private consultations after the program. Contact us to register for your 30 minute session between 8:30 – 1.
Wednesday, January 27
Courtyard Marriott Solana Beach/Del Mar
717 South Highway 101 Solana Beach, California
Thursday, January 28
Zuber Lawlor and Del Duca (Sponsor)
777 South Figueroa Street 37th Floor Los Angeles, CA 90017
Your Momentum Partners at This Way Out Group LLC
Preregistration is required. Registration closes January 22.
Limited seating at each venue. Register early.
When you look ahead to next year, where will your growth come from? Will it be from selling more to your existing customers or finding new customers for your existing products and services? The answer to the growth vs. value question may have a profound impact on the value of your business itself.
Take a look at the research from a recent analysis of owners who completed their Sellability Score questionnaire. The analysis looked at 5,364 businesses and found that the average company that received an overture from an acquirer was offered 3.5 times their pre-tax profit. When we isolated just the businesses that had a historical growth rate of 20 percent or greater, the multiple offered improved to 4.3 times pre-tax profit, or about 20 percent more than their slower growth counterparts.
However, the real bump in multiple appeared when we isolated just those companies that claim to have a unique product or service for which they have a virtual monopoly. Niche companies enjoyed average offers of 5.4 times pre-tax profit, or roughly 50 percent more than the average companies, and fully 20 percent more than the fastest growth companies.
Nurture Your Niche
Chasing “bad” revenue by offering a wide array of products and services is common among growth companies. The easiest way to grow is to sell more things to your existing customers, so you just keep adding adjacent product and service lines. But when a strategic acquirer buys your business, you are asking them to buy something they cannot easily replicate on their own.
A large company acquirer will place less value on the revenue derived from products and services that you have in common. They will argue that their economies of scale position them better to sell the things that you both offer today.
Likewise, they will pay the largest premium to get access to a new product or service they can sell to their customers. Big, mature companies have customers and systems, but they sometimes lack innovation; and many choose a strategy of acquisition as a way to buy their innovation.
Focusing on your niche is one of many areas where the long-term value of your business is at odds with short-term profit. For example, if you wanted to maximize your short-term profit, you might avoid investing in new technology or hiring a head of sales, arguing that both investments would hinder short-term profit. The truly valuable company finds a way to deliver profit in the short term while simultaneously focusing their strategy on what drives up the value of the business.
You can get your own Sellability Score, and see how you compare on the eight key drivers of sellability, by taking our 13-minute survey here.
Exit Planning Exchange
The Sixth Annual Summit
GROWTH: THE BEST ROAD
TO VALUE AND LIQUIDITY
The Conference Center
at Bentley University
May 2, 2014
Join fellow advisers and business owners to explore the many facets of growth. The day is packed with great opportunities to connect, learn and explore.
Some of the opportunities: Learn from a successful business leader on how he has grown several businesses with the aid of trusted advisers. Hear from subject matter experts on topics such as seizing growth opportunities, building value, and exploiting innovation. The afternoon keynote speaker will pass along lessons learned on liquidating / transferring a business. Then take the opportunity to work with peers to delve into a business case study or two.
Join this dynamic day and walk away with great information to share with colleagues or clients, with new connections to expand your professional network, and with a wealth of ideas to make your business or practice even more successful!
[Early Bird rates available through April 11th]
It takes a big commitment to start and grow a business.
You need to be clear on your mission and vision, business model, market research, marketing and sales strategy, and operations to implement your business plan.
You take risks and set goals.
You can be consumed by the day-to-day responsibilities and urgent demands.
All of this eats up time.
There’s another critical piece that gets put off but is as essential to achieving your long-term goals. That is your exit strategy. If you include your exit strategy as part of your initial goal setting, then all of your goal achievements will line up and lead toward your ideal exit strategy and you will have a much greater likelihood of monetizing the business you built. Here are a few guidelines to start:
- Choose the right exit strategy for your goals
You have monthly and annual goals for your business. Commit to these intermediate goals only if they are aligned with your long-term goals and the ultimate goal achievement of your ideal exit strategy. Otherwise, they take you down rat holes or dead end tangents.
- Set business growth goals aligned with your exit strategy
Your growth goals are essential to the health, strength and survival of your business. Look at your growth goals in the context of the exit strategy you want to implement. Be sure your growth goals are taking you in the same direction. Growth that is in conflict with your exit plan or competes with your long-term goals will hurt the business and limit your ability to achieve your exit strategy.
- Identify goals to increase value
The value of the business is not just in terms of assets or cash flow. It’s also in your intellectual property. A lot of your intellectual property is stuck in your head. Your intellectual property could also be in your team, your processes, and in the relationships you cultivate and maintain with clients and vendors, etc. So your objective to increase value before your exit could be to capture the intangible value in these less quantifiable areas. This will translate into a much higher valuation of the firm.
- Plan your exit strategy by intention rather than by default
This sounds like a lot of work. In fact, it is. Nevertheless, if you don’t do the work to plan your exit – your dream of achieving an ideal lifestyle, living your legacy and leaving a dynasty – then you are abdicating both the responsibility and the reward. If you don’t plan your exit by design, then you will settle for what you get by default.
- Systematize your exit strategy to maximize value
The more you can systematize your business so someone else can run it equally well without you, the more a buyer will be willing to pay you to keep it going.
The better you are at systematizing everything, the easier it is for a broker to pitch and leverage that value for a higher price. This step takes discipline and consistency that starts long before you intend to exit.
That’s how you ensure your own successful exit strategy.
Why would two companies in the same industry, with the same financial
performance, command vastly different valuations? The answer often comes down to how much each business is likely to grow in the future.
The problem is that a lot of successful businesses reach a point where their growth starts to slow as the company matures. In fact, the price of doing a great job carving out a unique niche is that the specialty that made you successful can start to hold you back.
If you make the world’s greatest $5,000 wine fridge, you may have a successful, profitable business until you run out of people willing to spend $5,000 to keep their wine cool.
Demonstrating how your business is likely to grow in the future is one of the keys to driving a premium price for your company when it comes time to sell. To brainstorm how to grow beyond the niche that got you started, consider the Ansoff Matrix. It was first published in the Harvard Business Review in 1957 but remains a helpful framework for business owners today.
Sometimes called the Product/Market Expansion Grid, the Ansoff Matrix shows four ways that businesses can grow, and it can help you think through the risks associated with each option.
Imagine a square divided into four quadrants representing your four growth choices, which include selling
- existing products to existing customers,
- new products to existing customers,
- existing products to new markets, and
- new products to new markets.
The choices above are presented from least to most risky. In a smaller business, with few dollars to gamble, focusing your attention on the first two options will give you the lowest risk options for growth.
Existing products to existing customers
It’s natural to feel like you’re being greedy when you go back to the same customers for more of their dollars, but the opposite can often be true. Your best customers are usually the ones who know and like you the most and are often pleased to find out that you – someone they trust – are offering something they need.
Greg is a hardware store owner who came to understand the Ansoff Matrix. Greg earns a 150% mark up on cutting keys but his cutter was hidden in a corner of the store where nobody could see it. As a result, he didn’t cut many keys. One day, Greg decided to move the key cutter and position it directly behind the cash register so everyone paying for his or her hardware could see the machine. Customers started seeing the cutter and realized – often to their pleasant surprise – that Greg cut keys.
Not surprisingly, Greg started selling a lot more keys to his loyal customers. The key cutter didn’t woo many new customers, but it did increase his overall revenue per customer.
If you want to sell more of your existing products to your existing customers, draw up a simple chart of your products and services. Don’t be afraid to dust off those old products that you haven’t paid much attention to lately. List your best customers’ names down one side of the paper and your products across the top. Then cross-reference your customer list with your product list to identify opportunities to sell your best customers more of your existing products.
New Products to Existing Customers
Another approach to growth is to sell new products to existing customers. For example, there is a BMW dealership owner in the Midwest whose typical customer is a family patriarch in his forties. When he felt like he had saturated the market for well-heeled forty-something men in his trading area, he thought about what other
products he could sell his existing customers. But instead of defining his customer as the forty-something man, he decided to think of his customer as the financially successful family and his market as their driveway.
Instead of trying to sell more BMWs into a market of diminishing returns, he bought a Chrysler dealership so he could sell minivans to the spouses of his BMW buyers. He then realized that a lot of his customers had kids in their teens so he bought a Kia dealership to sell the family a third, inexpensive car.
Once you become successful, it can be tempting to sit back and enjoy your success. But in order to drive up the value of your business, you need to be able to demonstrate how you can grow, and the least risky strategy will be to figure out what else you could sell to your existing customers.
What is CRM?
Your CRM system is about how you/your company do business with someone else/some other company. It’s about nurturing the relationship between you and the customer/prospect. It gives you a 360 view to better retain every customer. CRM is a tool to cultivate relationships between people.
Effective use of your CRM system as well as the data reports you can generate from it – both add value to your business that a buyer will pay for. Keeping your CRM system up to date and using it for all sales, marketing and support communications provides substantive, client-specific data to back up the forecasts you use in negotiating a price for your business.
- Choose the CRM tool that is right for your business – customize it so that it fits your company’s needs/objectives. There are many tools out there like ACT!, SageCRM, Saleslogix, MS CRM
- You have to use it to get the ROI from this tool like any other.
- Make sure that the data in the CRM software is as up to date as possible – garbage in is garbage out
- The relationships are key! -Really get to know your customer so that you have a 360 degree view of their needs, likes and dislikes
Why use a CRM system and why study the tracking and measuring reports a CRM system can generate for you?
It helps automate and streamline:
- Building your list
- Building relationships with prospects
- Keeping relationships with clients
- Integrating marketing strategies, such as
- Email campaigns
- A-B testing
- Telephone outreach
Tracking and measuring data can be exported from a CRM system and be used in many systems to build a strong foundation for massive growth.
Do you want to stay a little business, Without a strong, deep foundation?
Do you want to grow a much larger, robust business, With a strong, deep foundation.
Your Business Foundation MUST Have all four:
in order to grow into. You want to buy, train, install, and apply systems and tools that your company will not outgrow in the next 5 years.
At first glance, it may appear to be a futile contradiction for a CEO to try to grow the business and plan the exit at the same time. But when you look at them side by side, you’ll see that growing the business is an essential early phase of any exit plan. The mistake is trying to look at them as sequential projects instead of concurrent projects. The requirements of one will guide the decisions of the other and vice a versa.
- By you increasing revenues – a benefit to potential buyers – so growth itself becomes a growing the business saleable asset
- Increased revenue from growth is easy to measure and monetize when the business is being valued for a potential sale.
- When decisions are made that lead to growth, immediate goals are met. When those same decisions are aligned with the long-term goal of how the owner will exit the business, those decisions have greater strategic value.
- Test every decision – When the long-term goal of the owner’s exit is known throughout the leadership team, every decision can be tested against these long-term criteria before implementation.
- There are many options to consider when CEOs want to grow their business. The options they select have a direct impact on their exit strategy and timeline. And if the exit plan is in place, all options for growth can be sorted to align business growth with the CEO’s exit plan. Here are just a few basic options to use individually or in combination:
- Increase sales prices
- Increase new sales
- Increase volume of sales/customer
- Increase add on sales
- Increase life of each customer
- Open new markets
- Open new channels
- Increase capacity (sales, marketing, customer support, production, facilities)
- Reduce costs
- Reduce overhead
The forethought and documented strategic planning you invest to grow the business develops depth within the entire management team. That depth in leadership as well as the resulting measurable growth increase, adds value to the business that is very attractive to buyers.