Do you understand Business Operations Optimization Concepts and how they apply to your business?

Pricing and when to raise or discount prices is a very touchy topic in most companies. I share the various ways to price a product or service, along with the advantages and disadvantages of each. 

Knowing when to raise the price is a strategic way to raise profits and can be done without damaging sales or revenue.

Discounts are a confusing way to try to increase sales or accounts receivable payments but what is the cost? I explain when to discount and what an enormous cost some discount plans can have on company profits.

In one company, I found that 30% of their products were losing margin because of cost creep without price increase proportionally.

Brad Praised Dale Richards Knowledge is Power Business Optimization Presentation – Systems

 

Brad Fultz, Augusta Georgia, was especially excited about turning tribal knowledge to systems he learned from Dale S Richards’ presentation on Business Valuation Principles – How to Increase Your Business Revenue, Profits and Value 2X

Do you want to successfully turn your company around?

Business Operations Improvement: I’ve identified a number of operational areas that I pinpointed in a 53-element questionnaire and analysis that will guide you to improved performance, success and profits.

First, some free tools to help get you started. This section has three success-generating topics:

1. Business Operations Improvement (Register to get your Free Sample Scorecard)
2. Financial Performance (Download Sample Index)
3. Turnaround Management (Register to get your Free Sample Report)

You can also contact me at Successbiznow and learn more about the areas that are covered in my analysis, including:

1. Strategy and Goals
2. Employee Recruitment
3. “Productivity Pyramid® – Increase Employee Productivity 2X-5X proven 50+ Times
4. Employee Compensation and Incentives
5. Systems to Reduce Risk & Increase Effectiveness
6. Customer Service: 80/20 Customer “Gold Program”® – Increase Revenue 2X-5X
7. Competition Analysis
8. Product Pricing Optimization for Increased Profits
9. Marketing vs. Selling Concepts
10. Financial Operational Performance

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Feeling stuck? Can’t overcome all the issues you may be facing day-to-day?

Vistage Staff did some research to help CEOs and other senior leaders overcome being stuck in the weeds. In their article How CEOs overcome being stuck in the weeds, they address some reliable ways to clear the field and help you to begin to lead the way you envision.

Some positives: Plant something for the future

1. Develop the team

2. Delegate tasks

3. Trust your executive team

4. Overcome fear of failure

Some Negatives: Start digging your way out

What are some of the problems you may have experienced when you found yourself stuck in the weeds?  Did you become your own dreaded micromanager? No one, and I mean no one, likes a micromanager. Maybe your team’s growth has become stunted, combined with added stress and a complete loss of focus on what really matters. It is so easy to lose the ability to consider the big picture when you are stuck in the weeds.

How does a CEO overcome being stuck in the weeds? How CEOs overcome being stuck in the weeds is an insightful read full of ideas to help you start to think about how to dig your way out of the weeds, and begin planting good things for the future.

 

ABOUT DALE S. RICHARDS:

Dale S. Richards specializes in management, marketing, operation optimization & business valuation consulting and is a 30+ year turnaround expert. He has implemented success concepts into results in 150+ companies. Dale is a Certified Valuation Analyst (CVA) with NACVA, Eight-Year Vistage Chair & International Speaker. 

Some CEOs take to retirement much easier than others. Being a CEO has its many perks, and stepping down into retirement means walking away from a lot – if not all of those perks.

Retirement is something best eased into carefully. You want to avoid sliding into the home plate, skinning your knees and elbows, and having the umpire call you “OUT”. Allowing yourself time to transition into this new phase of life requires thoughtful planning and preparation. It’s a good idea to plan your exit strategy with your transition team well ahead of time.

It’s a good idea to plan your exit strategy with your transition team well ahead of time.

In the article The CEO’s guide to success in retirement, Vistage staff presents a number of well-thought-out ideas to help CEOs start to think about how they will transition. In this article, Vistage Chair Simon Holt explains it this way:

“Being a CEO makes you feel like you are needed, wanted, and have a meaningful part to play,” “For many people, walking away from this is hugely mentally challenging.”

~Simon Holt

Having a good transition team in place is important to both the future of your business and you personally. You want to know that what you have created will continue on, and so it should. No matter what phase of retirement you find yourself in, any amount of planning for retirement is better than none. Be kind to yourself.

 

ABOUT DALE S. RICHARDS:

Dale S. Richards specializes in management, marketing, operation optimization & business valuation consulting and is a 30+ year turnaround expert. He has implemented success concepts into results in 150+ companies. Dale is a Certified Valuation Analyst (CVA) with NACVA, Eight-Year Vistage Chair & International Speaker.

 

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McKinsey & Company – 4 ways CEO leadership is changing

4 ways CEO leadership is changing

Will the changes and expectations you set today change over time?

McKinsey & Company partners Carolyn Dewar, Scott Keller, Kevin Sneader and Kurt Strovink outline four ways in which CEOs are transforming the way they lead. About the Staff

1. CEOs are harnessing the full power of their CEO peer networks.

2. CEOs are unlocking bolder aspirations.

3. CEOs are fully embracing stakeholder capitalism.

4. CEOs are elevating “to be” to the same level as “to do”

“These changes, hurled by the global pandemic, include harnessing the full power of their CEO peer networks, unlocking bolder aspirations, fully embracing stakeholder capitalism, and elevating their “to be” list to the same level as their “to do” list. Here is a brief summary of each leadership shift.”

McKinsey’s analysis shows that CEOs are shifting toward each of the four above mentioned areas. As soon as the pandemic period passes, “CEOs will be the ones to decide whether these methods are short-term or will remain a permanent part of their approach to leadership”.

Vistage is a facilitator for CEO peer advisory groups and Senior leaders, with an emphasis on solution focus, increased growth, and refining performance.

#ceos #leadership #advisory

 

ABOUT DALE S. RICHARDS:

Dale S. Richards specializes in management, marketing, operation optimization & business valuation consulting and is a 30+ year turnaround expert. He has implemented success concepts into results in 150+ companies. Dale is a Certified Valuation Analyst (CVA) with NACVA, Eight-Year Vistage Chair & International Speaker.

 

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ABOUT DALE S. RICHARDS:

Dale S. Richards specializes in management, marketing, operation optimization & business valuation consulting and is a 30+ year turnaround expert. He has implemented success concepts into results in 150+ companies. Dale is a Certified Valuation Analyst (CVA) with NACVA, Eight-Year Vistage Chair & International Speaker.

 

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DELEGATION AND FOLLOW-UP

REASONS FOR DELEGATION

The use of effective delegation can increase your productivity MANY times over.

An exercise I conduct with executives, directors and managers is a fifteen minutes analysis of their time. For one week, track your activities in 15-minute increments. It may seem tedious but the reward can be great. Most analyses reveal 20%-40% of their time available for delegation. An executive should focus on the key strategic and operation tasks that are prime for their skill set.

Delegation has risk but the long-term payoff is large.

Expectations for delegation include:

1.    30%-40% will be completed correctly and the way you instructed to be done

2.    30%-40% of the tasks will be done correctly but differently than you instructed or expected.

3.    10%-20% will only be done partially.

4.    10%-20% will not be done correctly

STEPS TO DELEGATION

1. Select people with skills to complete the task

2. Communicate expectations/results needed – explain why?

3. Indicate your belief in their ability to accomplish the task

4. Negotiate/agree on the task milestones and deadlines

5. Give needed instruction, authority, and resources to succeed

6. Provide opportunities for them to use own initiative and ideas

7. Set distinct follow-up dates to report progress

           Insist that they bring solutions to problems

8. Reward them appropriately for results

9. DO NOT DO THE JOB FOR THEM!!!!

If you do a task yourself – you can ensure the quality and outcome. Delegation has risk but can increase your productivity greatly.

 

ABOUT DALE S. RICHARDS:

Dale S. Richards specializes in management, marketing, operation optimization & business valuation consulting and is a 30+ year turnaround expert. He has implemented success concepts into results in 150+ companies. Dale is a Certified Valuation Analyst (CVA) with NACVA, Eight-Year Vistage Chair & International Speaker.

 

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The objective of this blog is to point out key activities and methods that will provide the company with quality employees, decreased turnover, increased performance and productivity.

I. Hiring Quality People that will remain with the company

The person’s performance quality and the retention are directly related to their supervisor’s coaching skills and their individual character.

How to find the right people? For each job function, write down a job description and characteristics that are needed for that job. That will result in a match between job requirement and employee.

Traditionally, newspapers ads are the easy cop-out solution to finding employees. More appropriate would be to use a referral network of friends and associates to attract quality employees. FACT: between 60%-80% of all jobs are filled through networking. The job post never reach the classified ads. That tells us that quality people are found through a network and not necessarily from a classified ad.

How do I find the network? Network opportunities exist in social media outlets, service groups, local clubs and agencies, or at recreational areas where the type of employee might reside.

For example, if you are looking for someone with skills to climb telephone poles or buildings that is not afraid of heights, you might contact the local mountain climbing sports centers and put an ad in the paper there.

II. How to Reduce Turnover

1. FACT: If you lose an “A” performer it costs to up THREE years of salary to replace them.Spend more time coaching proactively than criticizing
2. Survey employees for ideas.
3. Make each employee feel important
4. Use Active Listening techniques to help employee feel understood
5. Performa exit interviews to find ways to improve the company
6. Focus on one or two things at a time to improve on and make sure they get implemented

III. Productivity Enhancement – Productivity Pyramid ®

The previous blog gave very specific details on the Productivity Pyramid ®. The graphical representation is shown to the right. A summary of the principle includes:

A. Establish with employees 3-6 company goals with one a personal goal.

B. Coach each one monthly: Ask questions, instill innovation and thinking out of the box

C. Use sandwich principal of method to accomplish the objective

• Positive comment – suggestion – another positive comment
• In order for people to have high self-esteem, they require 2-4 positive affirmations to every negative one.
• Our society operates on negative comments. “I only hear from my boss when I do something wrong.”

D. Between 20-25% of the population has low self-esteem.

E. Hold employee accountable for performance. But help/ encourage rather than criticize.

F. Provide individual – team and company excellent performance rewards.

Typical Critics:

• Talk and suggest
• Impatient with questions
• Expect results without assistance
• Constantly look over your shoulder
• Only comment when things go wrong
• Complain

Good Coaches:

• Listen to understand
• Help and willingly train
• Gathers resources to assist
• Allows freedom to Excel
• Has positive quality checks along the way
• Compliments good performance

Common Performance Demotivators:

• No or small Salary increase
• Poor Health insurance benefits
• Unfair or poor vacation/sick leave
• Inconsistent administration of benefits
• Lack of interaction with management
• Criticism without coaching

Common Performance Motivators:

• Responsibility with opportunities
• Recognition among peers
• Verbal and written Compliments
• Properly designed Incentive Programs
• Open communication with Management
• Be included in decision making

What is a system or process? A series of steps that detail the process for any area. Sales, Marketing, Production, Customer Service, Accounting and any department can have a system. Systems increase efficiency, effectiveness, scalability and reduce risk.

Systemizing turns tribal knowledge into systems. Many think that their company may have large value because they have many seasoned managers that have been with the company for many years. BUT this tribal knowledge is actually a negative in a merger unless the tribal knowledge has been turned into systems.

Listen and Learn From Dale talk about Systems vs. Tribal Knowledge

Most companies do not have quality systems until they are near $75 to $100 million in revenue. If a smaller company has systems in place they will have a significantly higher value in the market place. Have you had an experience where you hired a professional and it helped you out?

Have you had an experience where you hired a professional and it helped you out?

The systemization process is long and usually hard to have staff members complete. If you break up the task into small pieces and then have the employee use their phone to talk into on a specific topic. The resultant information can then be emailed to the office. Then a college student can be hired to format the information and make the recordings into a system.

A system is not of value if it is not managed against performance metrics. The system should have performance metrics defined and then compared to performance to achieve the greatest advantage from systems.

 

ABOUT DALE S. RICHARDS:

Dale S. Richards specializes in management, marketing, operation optimization & business valuation consulting and is a 30+ year turnaround expert. He has implemented success concepts into results in 150+ companies. Dale is a Certified Valuation Analyst (CVA) with NACVA, Eight-Year Vistage Chair & International Speaker.

 

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Elements to increase Your Company Value: Strategically: Part III

Why Do Customers Buy From You?

This blog is a continuation of the series on Elements to Increase Your Company Value: Strategically– Part III

If you have implemented the 80/20 Customer “Gold Program”® then there is a specific opportunity to proactively interact with key personnel at your customer’s companies. While you interact, please ask them “Why do you buy from us?” or “Why do you not buy from our competitors?”

Make a detailed list of the responses and prioritize them based upon the number of responses.  Then have your key managers list why they think customers buy from you?

Try this Exercise with your employees

A fun exercise is to give them each three sticky post notes and make a histogram of their responses. Take the top three responses and quantify the responses.

Some typical reasons may include:

A. Good customer service

B. Positive reputation

C. High-value products

D. Strong relationship

E. On-time delivery

F. Responsive

Are your competitors saying the same thing? Of course, YES. The way to differentiate from your competitors is to quantify the top three answers. For example, for on-time delivery, a quantification might be “we have a 99% on-time delivery while our competitor’s delivery time is only 90%.” Once the quantification is determined, then these reasons can be used to build your brand for essentially free.

How many conversations, email, invoices and contacts with customers do you have in a month as a whole company? Most companies have hundreds or thousands of touchpoints.

What is a typical response to close a conversation with a customer? “Thanks for the order and have a good day.”

What if instead of the above response, the conversation was: “Thanks Bill for the order. Did you  realize that we have a 99% on-time delivery compared to our competitors 90% and we will deliver on-time for you!” In a few seconds, this statement can reinforce to the customer why they purchased from you and it will build your brand for very little expense.

Train your employees to use the closing phrase. Rotate the three top phrases each month. Add the phrase as a tag line to all email, invoice, and letterhead. With this methodology, a company can build its brand significantly for a very low cost.

BUILD YOUR BRAND FOR LITTLE COST MANY TIMES DAILY

 

Elements to Increase Your Company Value: Financially: Part IV This blog is a continuation of the series on How to increase your business value with financial concepts:

• Financially – Part IV

Today’s blog will present the addition of financial metrics different from the traditional bank financial ratios and metrics.

A/R Days – A/P Days

So many companies are now using invoicing software to help them when it comes to managing their invoices, but how many companies have invoices at “NET 30 DAYS” or “2% NET 10”?

Both of these will result in loss of cash flow and possibly overall A/R collection. Here is how a typical A/P clerk handles and invoice.

EXAMPLE: The invoice is dated on the 1st of the month. The A/P clerk receives it on the 3rd or 4th. It says net 30 so it goes into the next month 3rd or 4th bin but what if checks are only paid on the 15th and 30th so it goes into the 15th bin. It is processed on the 15th, mailed and the payment is received on the 20th. RESULT IS 50 DAY COLLECTION.

Unfortunately, your net 30 days will almost always give you a collection of 40-50 days.

SECRET: Invoice your statements with the date that is 10 days from the date of the invoice. For example: if invoiced on the 1st make the due date the 11th. THEN call between the 7th to the 10th and verify that they received your invoice. These two easy steps will reduce A/R collection from 40-50 days to 20-30 days and save you one-half month of lost monthly cash flow.

This does not always work because of late pay contracts but it is a simple fix to try and the benefits in cash flow can be large.

2% off if paid in 10 days

For the example what if you have a “2% off if paid in 10 days”, the big companies take off 2% and still pay in 30-50 days. It hardly ever works as designed. If the above collection technique is completed then the cash flow difference is only 5 to 15 days from the supposed “2% if paid in 10 days” and there is no need for a loss of 2%.

The author has used this A/R method for years to take companies from 60 to 90 days A/R collection to 20 to 30 days. Put an actual date when it’s due and call to follow-up.

A/P Financing

You can use account payables (A/P) as a means of financing for your business. You can usually go to 45 days and no one will scream at you.

Topics on Financial value increase tools to follow include:

Financial Qualitative Performance

o Cash Flow

o Valuation Metrics

o Performance Dashboard

 

ABOUT DALE S. RICHARDS:

Dale S. Richards specializes in management, marketing, operation optimization & business valuation consulting and is a 30+ year turnaround expert. He has implemented success concepts into results in 150+ companies. Dale is a Certified Valuation Analyst (CVA) with NACVA, Eight-Year Vistage Chair & International Speaker.

 

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Keep your top A performers! Employee Retention.

Valuation & Optimization – Productivity Pyramid®. The rule of thumb is if you lose an A performer, it takes you 3 years of salary to get them back. Having goals, accountability, and rewards for your team ensures that you keep your A performers because it’s a huge expense to get another one back. It’s important to try and keep your high-performing employees as they know the job and they can do it correctly. If they were fired, someone would have to learn a whole new job, which could take a long time. That’s why it’s so important that businesses focus on employee retention and HR to make sure all staff are content. Instead of hiring someone to focus on these things, some companies prefer to use peo services instead. If you’re wondering “what is a peo service?”, you might want to learn more about it. Businesses are using peo to help them be more productive with their recruitment and retention. A peo service would allow businesses to complete all of these essential tasks without having to hire more people. This increases productivity. By using peo, businesses could ensure that their staff are receiving good benefits, keeping them at the company.

A productivity improvement program (“Productivity Pyramid®”) with a pay for performance program where there are company and employee goals with monthly coaching sessions should be implemented. This method can raise company productivity by over 400% and help you get those A performers.

If monthly coaching sessions are held, how easy do you think it would be to hold an employee accountable? Much easier than an annual review.

The important parts of the rewards system are:

A. Quantifiable

B. Timely

C. Performance-based

D. Fair

E. All participate commensurate to their responsibilities and achievements

What is the productivity change for an annual employee review system? I’ve known several speakers that indicate that an annual review has zero or negative impact on employee productivity.

Valuation & Optimization – Productivity Pyramid

A CEO of an Employee Assistance Program (EAP), reported that 20%-25% of all people are having some life issue right now. That means many employees are currently struggling with a life issue. Life issues could include: financial problems, a sick child, sick parents, divorce, close relative untimely death, abuse, etc. If the workplace can help employees cope with these life difficulties, productivity will increase.

Things to think about as you begin to think about holding onto those A performers.

Dale Richards Valuation & Optimization Presentation Scores High Marks in Milwaukee. Jim Van Hecke loved the Productivity Pyramid ®, Coaching techniques and the 80/20 Customer “Gold Program”® to help his business immediately. The Vistage members learned key business concepts from Dale Richards’ presentation on Business Valuation Principles – How to Increase Your Business Value, Financially, Operational and Strategically.

 

Elements to Increase Your Company Value: Financially: Part III

(Management Accounting vs. Financial Accounting)

This blog is a continuation of the series on How to increase your business value with financial concepts:

• Financially – Part III

Today’s blog will present the concept of Contribution Margin.

This may seem an obvious concept but is often misunderstood. If you reduce business expenses by one dollar, how much net income will increase? (ONE DOLLAR)

Reduce $1 Expense = $1 Net Profit Gain

EXAMPLE: What will happen if your marketing department proposes to the executive team a program estimated to spend $1 million dollars and bring in $2 million revenue? How much net income will you bring in?

The answer depends upon a financial term that is often misunderstood – CONTRIBUTION MARGIN.

Almost all businesses track REVENUE, COST OF GOODS or SERVICES with the resultant – GROSS MARGIN. However, there is a principle called VARIABLE COSTS. A variable cost is one that is a function of revenue. Meaning, when revenue is created; then an expense is triggered. Many hidden variable expenses are accounted for as administration or overhead costs when they are actually tied to revenue and should be categorized as “Variable Expenses”. When all of the variable costs are subtracted from GROSS MARGIN, then a magic number happens called the Contribution Margin (CM).

Most accounting software programs do not calculate the CM. Why is the CM so important? Because when you know the CM percentage then you can calculate the Break-Even for the overall company or any revenue-generating project.

Let us examine some potentially hidden variable costs that may be in fixed costs or the administration/overhead area.

A.   A Salesperson’s Commission (salary is a fixed expense). A sales representative income should be booked in two different accounts: Salary (Fixed: Marketing) Commission as a variable marketing expense and should be in the VARIABLE COST section which is subtracted after GROSS MARGIN.

B.   Freight/Postage: Some postage is for samples, mailers, regular mail and should be booked as a Fixed Expense – Overhead, but shipping expenses for products should be booked as a product cost of goods sold (Variable Expense).

C.   Customer Product Installation

D.   Customer Training related to the product sale

E.    Warehouse/Production expenses that would not occur if sales did not happen.

Go through your profit and loss statement and examine every expense to see if it is a variable expense component – then account for it properly. Some expenses are part variable and part fixed. These should be booked in the two different accounts.

Why go to the trouble of finding all the variable expenses and determine your contribution margin? An example is in order:

BACK TO EARLIER EXAMPLE: What will happen if your marketing department came to you with a proposal that cost $1 million and they said it would produce $2 million in revenue? Your Gross Margin (GM) is 60%. You might approve the project because in GM theory, the project would make $1.2 million. ($2M x 60% GM = $1.2 GM profit). HOWEVER, what would happen if the real Contribution Margin (CM) were 50%? The proposal would just barely break-even ($2M x 50% CM = $1 million CM). Then the project would be just break-even and be too risky to approve.

Many CEOs have asked why a revenue-generating project with a supposed high GM, that should be making money, is actually losing money.  The reason is that the CM is not calculated, nor considered in the project proposal and is lower than the GM.

Once you know the CM, it is a magic number to determine the break-even for the company, division, project, department or another category.

To change a company’s accounting system and booking procedures to a CM basis takes 3-6 months.

Your controller may not like this concept very much because this process takes time to change your accounting system. More bookkeeper work is necessary to make the expense entries. When the credit card bill comes in – if it is part variable and part fixed, then more data entries are required. When the salary check goes out, if it is part variable, and part fixed, more entries are required.

Topics on Financial value increase tools to follow include:

Financial Qualitative Performance

o  A/R Days – A/P Days

o  Cash Flow

o  Valuation Metrics

o  Performance Dashboard

Learn more about Business Valuation Principles by Dale S Richards http://a.co/cVsYyNN https://successbiznow.com/books/business-valuation-principles-by-dale-richards

 

ABOUT DALE S. RICHARDS:

Dale S. Richards specializes in management, marketing, operation optimization & business valuation consulting and is a 30+ year turnaround expert. He has implemented success concepts into results in 150+ companies. Dale is a Certified Valuation Analyst (CVA) with NACVA, Eight-Year Vistage Chair & International Speaker.

 

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Graphical Representation Of Cash Flow

A graphical representation of cash flow is one of the most important tools for an executive and should be included on any performance metrics dashboard. A spreadsheet should also be used to translate the accounting cash flow statement into a rolling 12-month history and a 12-month future cash flow measurement tool.  Graphical cash flow with rolling historical data can make future projections easier to complete. These tools can be critically important for growth, seasonal trends or shrinking companies.

Many companies have died in their growth because they did not track cash flow or the needed cash flow resources.

Financial Reporting Dashboard

Some elements that could be included in a graphical dashboard are shown below. Graphs are much easier to review and assess company performance than a series of data tables. I like to suggest the following graphical metrics:

• A/R
•  A/P
• Inventory
• Capital
• Overall Cash Flow
• Contribution Margin (CM)
• Break-even Dollars and Units
• Productivity Index: (Rev. $/FTE & CM$/FTE)
• Revenue
• Net Income
• -Average Sales Price/Unit

Financial Performance Metrics Graphs – Examples

Revenue Actual with Forecast

Price – $ per Unit Sold

Productivity Indexes:

Revenue per Full-Time Employee (Rev/FTE)
Margin per Full-Time Employee (GM/FTE)

_______________________________

Performance Dashboard is key to enhancing performance from Dale Richards Valuation Presentation.

Dale Richards’ Valuation & Dashboard Presentation was a hit in Virginia. Matt McKelvey, a valuator himself, learned many new methods and uses for the Valuation analysis, calculations and report as described by Dale. He also plans to implement the Contribution Margin and Cash Flow graphical techniques for his clients. He highly recommends Dale as a presenter, author, and certified valuator.

 

Corporate Valuation Services

 

 

 

ABOUT DALE S. RICHARDS:

Dale S. Richards specializes in management, marketing, operation optimization & business valuation consulting and is a 30+ year turnaround expert. He has implemented success concepts into results in 150+ companies. Dale is a Certified Valuation Analyst (CVA) with NACVA, Eight-Year Vistage Chair & International Speaker.

 

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Do you have what it takes to be an entrepreneur or part of an entrepreneurial management team? Though the term entrepreneur is sometimes used loosely today, it means much more than someone who came up with a good idea and found a way to make money. The child who plans to babysit for cash is much different from the child entrepreneur who sets up a New Year’s Eve babysitting service with a set time, cost, and clear parameters. Do you see the difference?

To be an effective and motivated part of an entrepreneurial management team you have to have the ability to wear many hats at once. Below are some examples.

Financial Team:

Finances can be the issue that will tear a management team apart faster than anything. You need to have a system of checks and balances in place so that each member of the financial team (who is probably also a member of every other team) has the ability to offer input. Hint: If you cannot pay your own bills at home, then you need a qualified financial team member. If you find finances, including bookkeeping and other accounting procedures, too difficult to do yourself, then you may benefit from outsourcing a professional. Accountants like Dave Burton will be able to address any issues you may have about tax or bookkeeping, and walk you through it.

Production:

Who is going to actually make the items you are developing? How will they be compensated? If you have a three-man crew, it is likely that each of you is going to be a part of each team. The key is to play off of each other’s skills. If you cannot manage a hammer and you are trying to build unique doghouses, stay out of the production area and put your skills to use somewhere else.

Marketing:

How are you getting the word out about your product? You cannot sell what people do not know about.

Keep in mind that the team must work towards the same preset goal while each is using their own skills. This does not mean that any skill is worth more than another. The key element is to recognize your weaknesses and fill your team with stronger members that can improve your business. Learn the keys of delegation and hold the team responsible, then reward for quality performance.

Most of the time when you hear about a company being bought out, there is a ripple of panic that goes through the entire company. Layoffs are expected and an entirely new management team is expected to arrive at any moment. Time studies will most likely be done and people who have been doing their jobs correctly for years will start questioning every step the new team will take as they attempt to grow the company.

When it comes to entrepreneurship and commercializing companies, some of these same things should be expected. After all, small businesses are not the same as commercial level businesses, so the methods used are bound to be different. If the current staff wants to be a part of the commercialization, some adjustments may have to be done once the staff is evaluated.

Management on the commercial level is a whole new ball game. Though some managerial skills are the same across the board, the level of those skills need to show some potential for growth. This may mean that the current management team is perfect for the current setting, but may need to seek outside resources in order to meet the needs of a commercial setting. For instance, how are the finances managed? Small businesses cannot buy in bulk as often and they do not have to make decisions concerning large amounts of money and risk management. If the current management team is unable to realize a profit or get the bills paid under the current circumstances, commercialization may be something they cannot handle.

Part of the valuation process deals with the skills of the management team. If the team is unable to handle the current situation, offering them more weight on their plate is unlikely to be helpful. If the team is flexible and shows a high level of organization and a willingness to build on current skills, they will most likely see a more promising valuation.

 

ABOUT DALE S. RICHARDS:

Dale S. Richards specializes in management, marketing, operation optimization & business valuation consulting and is a 30+ year turnaround expert. He has implemented success concepts into results in 150+ companies. Dale is a Certified Valuation Analyst (CVA) with NACVA, Eight-Year Vistage Chair & International Speaker.

 

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