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11.10.2008

Welcome Inc bloggers

Poll Directions – on the left side of the page are two polls important to next weeks Inc's blog. The first poll asks about your end game – when the time comes for you to leave the business, how will that happen? The second poll asks about your current stage of growth - what are the real priorities demanding immediate attention and what can be postponed to a later date? We intend to build next week’s article from your responses – so decide what we write!

Your End Game


Instead of discussing the pro’s and con’s of your end game options, lets start the discussion by working backwards – How are Businesses Valued? When an outsider looks at the business - how is value determined? By understanding how they will view the business, you can make a better decision about your growth strategy. There are three methods used by business brokers, merger & acquisition firms, and venture capitalists to determine value:
  • Net Asset Value
  • Market Multiple Value
  • Income or Discounted Cash Flow Value
Net Asset Value looks at the market value of components of the business. It works well for acquisitions where the buyer wants individual pieces, not the whole operation. Some times the individual parts are worth more than the whole and this is a method to pull value out. It works well for companies that are comprised of mostly hard assets like real estate and natural resources.

Market Multiple Value looks at the expected earnings and cash flow over a period of time generated by the entire operation to establish a formula. The valuation establishes the worth of the business like 2 or 3 times sales. It works well for mergers where the buyer wants the operation to improve or enhance an existing business. In addition, it works well for companies comprised of soft assets like brand reputation and knowledge.

Income Value looks strictly at cash flow over a period of time. It's valuation is a function of how much this additional cash flow is worth to the acquiring business. It works well with companies that have large and predictable high velocity cash flows like pay day loans, pawnshops, bars and clubs.

Here is my rationale, if you know how the business will be valued, that should determine which growth strategies make the most sense. For example, if your end game is to grow and sell, then investing in either hard assets or functions that improve the amount and velocity of cash flow make sense. Making sizable investments in human resources or infrastructure will actually decrease your valuation! These investments make sense if your end game is to grow and hold such as taking the company public and the value will be captured as part of a Market Multiple approach.

We will investigate this further on next week’s 1:1 meeting @Inc. blog.

9.17.2008

Hot News

Look for a Press Release later today on the topic but for all of our readers - no sense waiting. Our Chairman and Founder Bill Eastman has joined the staff at INC Magazine's Online Portal and will be writing a weekly blog - CGO4Hire - Chief Growth Officer for Hire.

Look for a full transcript of the Press Release later today.

8.25.2008

You Must See This Movie - IOUSA

We typically don't involve these blogs into the world of politics. However, occasionally there are issues that transcend politics because of its potential impact on the economy. As entrepreneurs, there are 26 million solopreneurs and small business (under $50m in revenue) in the United States representing 40% of the jobs, there are issues that cannot go unnoticed. We have been on this story for quite awhile and used these projections into our growth plans - our editorial board this information should be shared.

Review and let me know your thoughts.

4.09.2008

Growth in a down cycle?

I just finished a long road trip meeting with clients and our guild members in the MidWest. One thing is becoming very clear, it doesn't matter what the FED says, most our network believes we are at the beginning stages of a recession. There is an obvious fear about discretionary spending. The common theme of the discussion with our guild members is: should we change our message away from growth to cutting costs?

My answer was no and here is why: economic downturns are the time to prepare for rapid growth and here is how I got there.

Using the Business Life Cycle Model and matching it to the economic cycle leads to the following 4 tactics:
  1. Begin to look for operational efficiencies. Take a hard look at your processes for delivering products and services and determine if you are currently operating @90% capacity. In other words if everything works as it should, are you building, selling, servicing at a level that is 90% of the businesses capability? If you're not (the right answer 99% of the time) then look to remove all non-value added activities; those things you do to produce, sell, deliver, service that you couldn't add to the invoice. Identifying those gaps between todays efficiencies and what is possible will reduce cycle time and waste, and most importantly improve margins. Imagine if you could charge for everything required to exceed customer expectations!
  2. Determine which of your competitors that will be hit the hardest by the economic downturn. Who will go out of business or will be so seriously damaged that when the economic trends begins its upward cycle, they will be just hanging on. Look closely at the specifics of their offer: the features of their products and services, and the prime accounts you would like to own.
  3. Asses your offer and capacity to deliver on these future sales. Since you have already upgraded your operations (Tactic 1), what additional capacity do you need to add. Use some the money gained from increased margins with existing accounts and build the capacity to sprint out of the blocks.
  4. Launch and create buzz. Ready your marketing campaign, you don't need to spend allot of money - just have some in reserve to raise your exposure to the targeted accounts you seek to steal. Most company's who use this tactic upgraded their marketing materials, enhanced their packaging, and bought limited but effective media - like radio or local publications.
When we first built our library of best practices for fast growth, it was apparent the best of the best timed their operational improvements with a downturn in the economy and where ready to sprint when the cycle upturned and drove new sales from their weakened competitor.

Your thoughts?

3.01.2008

Our Unique Offer

We have moved our successful big business consulting practice to the mid-market and start-ups where high growth companies live. We grew weary of trying to “boil the ocean” which is common to all large corporations. We decided to stop fighting bureaucracy and work with clients who shared our sense of urgency for getting things done. Our offer is equal to the large consulting firms with one significant difference; we have eliminated price point as a legitimate objection.

After two years of development by researchers with over a half-century of delivering results to the Fortune 1000, we have created a new business model for delivering knowledge to business.

Our extended team represents recognized thought leaders in the issues essential to growth: Market Intelligence (competitive advantage), Brand Superiority (core competence), Talent (discretionary performance), and Operations (productive capacity).

Where do we look to achieve Optimum Growth for our clients?

  • Core Measures – Measuring to Manage: what are the most significant (and few) measurements in your business that will determine success and failure?
  • Leading Indicators – Predicting the Future: based on core measures, which metrics identify barriers and opportunities for growth, and drive this yearÂ’s strategy?
  • Real Time Indicators – Leading in Real Time: based on leading indicators, what can be measured daily (weekly) to indicate progress?
  • Trailing Indicators – Evaluating to Learn: what was the impact of the business strategy on financial performance, and what can we take forward to next year?

The team members at AKL all have long-standing reputations for achieving results, helping clients reach the next level. Each member has years of industry experience within specific areas of consulting practice:

  • Strategy and Optimum Growth
  • Product and Service Quality
  • Human Capital

Given the nature of the consulting business, the challenge of measurement presented us with two problems. Starting inside our company, how do we effectively measure performance in a labor-intensive business? Then transferring our attention to clients, how do we measure the impact of partnerships? In both cases, our added value was the application of knowledge. Since you cannot manage what is not measured, how do you measure the application of knowledge internally to become the lowest cost provider? How do you manage the application of knowledge externally to create a return on performance for clients? These concerns have occupied our best minds for years.

Our journey brought us to a simple understanding of the role of measurement in business and the demands of management.

The application of business measures has just three objectives:

  • Predict: based on a set of Leading Indicators, if nothing changed - what will happen, if we make change – what should happen
  • Describe: based on a set of Real-Time Indicators, how do we measure performance daily and weekly to ensure progress is being made or obstacles identified
  • Evaluate: based on a set of Trailing Indicators, the ability to match the cost of actions taken against the return achieved

The AKL has collected an extensive list of best practices over our half-century of driving business results. Our organizational assessment FORECAST measures the best practices in four critical strategic elements of growth.

  • Competitive Advantage
  • Core Competence
  • Productive Capacity
  • Discretionary Performance

2.08.2008

Best Companies - A Simple Answer

I just finished attending an executive team meeting with one of our channel partners, and instead of participating I was trying to rationalize my unease.

It seems most people at this paygrade, in order to sound smart, need to over complicate business. I didn`t have our library of best practices at my finger tips, but when it was my time turn - the following simplicity made sense.

The very best companies did a couple of things better than their good competitors, things that distiguished them from the crowd. Here is what I said:

1. They understand where the current and future competitive advatange exists.
2. They created an overarching brand that embodies their competitive advantage.
3. They aligned people with strategy, and processes with customers.
4. They built processes for production and service where ordinary performance creates extraordinary results, and
5. They developed employee problem solving and decision making skills so people could self-manage.

This is very similar to our four major catories of best practices for sustainable growth:
• Market Intelligence
• Brand & Strategy
• Systems & Processes
• Human Performance

But that doesn`t roll off the tongue, and didn`t make me sound smart. Or did it?

1.12.2008

Best Practice - Intellectual Leadership

From Monday, 14JAN08 Investors Business Daily:
TOP EXECS CROWD SPEAKER CIRCUIT
´´Big companies are putting more chief executives and other honchos on the global speaking circuit to hone their corporate reputations.
A study by PR firm Weber Shandwick found....´´

Nice reference point for one of our best practices for fast and sustainable business growth - Intellectual Leadership.
Our research found that the fast growth - quickest to a billion dollars - companies achieved their success through creating brand. And that happened when the corporate executives made market intelligence a role responsibility and then used various media sources to make it known.

What are you doing to:
1. Understand the future of your industry and it`s clients, and
2. Capitalizing on the knowledge to enhance your brand?

notes from the field on our nokia8000 VIA (Virtual Internet Assistant)