The recession is spawning concern from business owners regarding business value. Driving Business Value in an Uncertain Economy, a book by Mark Jordan, offers business owners the key factors that drive business value in any economy.
FOR IMMEDIATE RELEASE
PRLog (Press Release) – Feb 16, 2009 – The recession is spawning concern from new entrepreneurs, executives and seasoned business owners regarding their business value. Driving Business Value in an Uncertain Economy ($11.95, ISBN-13: 978-0-9816572-4-0) offers business owners the key factors that drive business value in any economy.
“The common misconception among business owners is that economic and market trends are the only factors for determining business value,” states author, Mark Jordan. He adds, “When they encounter a scenario like this, fear paralyzes them. They ignore things they can do everyday to boost business value regardless of the economic circumstance.”
Jordan reveals that business value is, in fact, a combination of internal and external drivers. Chief among them is maintaining and improving sales, gross margin and earning trends. The author and Managing Principal of the middle market investment bank, VERCOR, also stresses the importance of leveraging a business’s best assets. The business advisor states a strong management team is an intangible and internal value driver. Finding new ways to capitalize on existing intellectual property is another way to boost business value. “Your management team and intellectual property are what makes your business unique. Any business can turn a profit. Your talent pool, and what they create, will set your business apart in the market,” Jordan shares.
Jordan complements the study of value drivers with frank advice based on his own experience aiding clients in their quest to boost business value prior to a business sale. Case studies and easy to follow action items serve as homework for readers ready to take the first step in growing their companies. Jordan states, “Business owners do not have to wait until the economy turns around to improve their business value, or get it ready for sale. They can do it right now.”
Driving Business Value in an Uncertain Economy (Decere Publishing, 2009) is available for purchase at major booksellers, or online at http://www.amazon.com/ or http://www.vercoradvisor.com/. Lightning Source, a subsidiary of Ingram Industries, Inc., is distributing the book.
About Mark Jordan
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of Selling Your Business the Hard Easy Way (Decere Publishing, 2008), Enhancing Your Business Value…The Climb to the Top (Decere Publishing, 2002) and co-author of The Business Sale…A Business Owner’s Most Perilous Expedition (Decere Publishing, 2001). He is also the author of numerous articles on mergers and acquisitions. For more information about Mark’s books, visit www.vercoradvisor.com.
Tuesday, February 17, 2009
Monday, February 16, 2009
Secrets to Executing a Successful Strategy
When examining cost-cutting strategies, companies often focus on reducing staff and flattening organizational charts. But this action often ignores underlying issues, and doesn’t result in long-term success. After several years most companies add back layers to their organizational chart, and end up in the same position as before – with increased costs.
Successful companies look past shrinking their workforce, and focus on strategies that address underlying costs. Focusing on areas with potential for greater efficiency, such as decision making accountability, will produce lasting results.
Focus on Execution Strategies
The key to creating effective execution strategies is ensuring every manager understands their decision making responsibilities. This prevents confusion about who is responsible for which decisions and allows managers to understand the scope of their authority. As a result, companies experience a boost in efficiency, and mangers spend less time justifying decisions to upper management.
Streamline Decision Making
Many companies have a single person, such as the Chief Executive Officer, making all of the decisions. This can severely bog down the decision making process and waste the CEOs valuable time. Instead, reserve the most important decisions for the CEO, and delegate the majority of decision making to several mangers, each with their own responsibilities and accountability. This will allow customers to be served better with quicker decisions and easier communication flow.
Make an Accountability Visual
Once management understands the scope of their decision making authority, compile the information into a grid. The visual should clearly demonstrate who is responsible for what decisions. This solidifies the process, and can be used as a communication tool for business units to understand who is responsible for what. Plus, having an official document will hold individuals accountable.
Clarify the Approval Process
Once decision making responsibilities are finalized, employees need to understand the approval process. Processes should be designed to promote the seamless flow of communication, resulting in fast decisions. Employees should receive a copy of the accountability visual, accompanied by protocols for requesting approval.
Avoid Second Guessing Decisions
Decision makers need to feel empowered and supported in their decisions. For this reason, second guessing activities should be avoided. Preventing these activities will prevent productively and communication issues.
Streamline Communication
Another important component to successful execution, is educating employees about how their actions impact the company’s bottom line. Strategies and measurement tools should be implemented to remind employees consistently of their ability to impact business. Plus, procedures should be put in place to promote the upward flow of communication from the front line to upper management. This will give management the ability to quickly solve problems such as pricing and service issues.
Keep Decision Making Close to Activities
When too many decisions are made at the corporate office, the reality of what’s going on with customers can be lost. This is because information moving from front line employees upward can get fine tuned and refined before reaching upper management. This results in decisions based on disseminated information, which produces unsuccessful strategies. The solution to this issue is keeping as many decisions as possible close to where the activities are occurring. This allows individuals with first-hand experience to resolve issues.
Increase Lateral Management Opportunities
Many companies discourage lateral management moves because they think it isn’t productive. However, allowing these moves can be a smart strategic decision. When laterally moving managers, other business units can benefit from cross-unit cooperation. The company may also experience less turnover, because middle-level managers won’t get bored and feel like opportunity is limited.
Foster Cross-Unit Collaboration
Execution strategies can be improved by examining communication flow between business units. This will result in more accurate forecasts on costs and lead times. Potential demand and production challenges will also be identified earlier, allowing quicker reaction and increased customer satisfaction.
Increase Rewards for Positive Contributors
If your company doesn’t already have an incentive plan, adopting one is a good decision. This action will assist in supporting your company’s strategies and goals. Assign measurable goals to employees, and hold individuals accountable for their performance. Positive motivation can be established with monetary compensation, gift cards, or other rewards. This allows individuals to be rewarded for their positive contributions.
Encourage Staff to Move Across Business Units
Like managers, having staff move into lateral positions makes a more well-rounded business model. Your business units will enjoy enhanced productivity and employees will be more stimulated and feel more valued.
Reshaping the way your company thinks about executive strategies will assist in identifying and cutting underlying costs. As a result, your company will enjoy success that won’t disappear in several years. And your company will benefit without cutting jobs and flattening your organizational chart.
Resource:
Gary L. Neilson, Karla L. Martin and Elizabeth Powers.” The Secrets to Successful Strategy Execution.” Harvard Business Review.
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of “Driving Business Value in an Uncertain Economy,” “Selling Your Business the Easy Way,” “Enhancing Your Business Value…The Climb to the Top,” and co-author of “The Business Sale…A Business Owner’s Most Perilous Expedition.” For more information, contact him at 770.399.9512 or email him.
Successful companies look past shrinking their workforce, and focus on strategies that address underlying costs. Focusing on areas with potential for greater efficiency, such as decision making accountability, will produce lasting results.
Focus on Execution Strategies
The key to creating effective execution strategies is ensuring every manager understands their decision making responsibilities. This prevents confusion about who is responsible for which decisions and allows managers to understand the scope of their authority. As a result, companies experience a boost in efficiency, and mangers spend less time justifying decisions to upper management.
Streamline Decision Making
Many companies have a single person, such as the Chief Executive Officer, making all of the decisions. This can severely bog down the decision making process and waste the CEOs valuable time. Instead, reserve the most important decisions for the CEO, and delegate the majority of decision making to several mangers, each with their own responsibilities and accountability. This will allow customers to be served better with quicker decisions and easier communication flow.
Make an Accountability Visual
Once management understands the scope of their decision making authority, compile the information into a grid. The visual should clearly demonstrate who is responsible for what decisions. This solidifies the process, and can be used as a communication tool for business units to understand who is responsible for what. Plus, having an official document will hold individuals accountable.
Clarify the Approval Process
Once decision making responsibilities are finalized, employees need to understand the approval process. Processes should be designed to promote the seamless flow of communication, resulting in fast decisions. Employees should receive a copy of the accountability visual, accompanied by protocols for requesting approval.
Avoid Second Guessing Decisions
Decision makers need to feel empowered and supported in their decisions. For this reason, second guessing activities should be avoided. Preventing these activities will prevent productively and communication issues.
Streamline Communication
Another important component to successful execution, is educating employees about how their actions impact the company’s bottom line. Strategies and measurement tools should be implemented to remind employees consistently of their ability to impact business. Plus, procedures should be put in place to promote the upward flow of communication from the front line to upper management. This will give management the ability to quickly solve problems such as pricing and service issues.
Keep Decision Making Close to Activities
When too many decisions are made at the corporate office, the reality of what’s going on with customers can be lost. This is because information moving from front line employees upward can get fine tuned and refined before reaching upper management. This results in decisions based on disseminated information, which produces unsuccessful strategies. The solution to this issue is keeping as many decisions as possible close to where the activities are occurring. This allows individuals with first-hand experience to resolve issues.
Increase Lateral Management Opportunities
Many companies discourage lateral management moves because they think it isn’t productive. However, allowing these moves can be a smart strategic decision. When laterally moving managers, other business units can benefit from cross-unit cooperation. The company may also experience less turnover, because middle-level managers won’t get bored and feel like opportunity is limited.
Foster Cross-Unit Collaboration
Execution strategies can be improved by examining communication flow between business units. This will result in more accurate forecasts on costs and lead times. Potential demand and production challenges will also be identified earlier, allowing quicker reaction and increased customer satisfaction.
Increase Rewards for Positive Contributors
If your company doesn’t already have an incentive plan, adopting one is a good decision. This action will assist in supporting your company’s strategies and goals. Assign measurable goals to employees, and hold individuals accountable for their performance. Positive motivation can be established with monetary compensation, gift cards, or other rewards. This allows individuals to be rewarded for their positive contributions.
Encourage Staff to Move Across Business Units
Like managers, having staff move into lateral positions makes a more well-rounded business model. Your business units will enjoy enhanced productivity and employees will be more stimulated and feel more valued.
Reshaping the way your company thinks about executive strategies will assist in identifying and cutting underlying costs. As a result, your company will enjoy success that won’t disappear in several years. And your company will benefit without cutting jobs and flattening your organizational chart.
Resource:
Gary L. Neilson, Karla L. Martin and Elizabeth Powers.” The Secrets to Successful Strategy Execution.” Harvard Business Review.
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of “Driving Business Value in an Uncertain Economy,” “Selling Your Business the Easy Way,” “Enhancing Your Business Value…The Climb to the Top,” and co-author of “The Business Sale…A Business Owner’s Most Perilous Expedition.” For more information, contact him at 770.399.9512 or email him.
Building Better Strategies: Dealing With an Uncertain Environment
Entering a market full of uncertain variables can make forecasting a difficult task. And making the mistake of using precise forecasting methods can cost your company time, energy and money. That’s because forecasting outcomes with so many variables is tricky – and precise models aren’t flexible to change. And even worse, some executives rely solely on instinct, which is also a dangerous mistake.
But if precise models and instinct don’t work, then what does? Breaking away from static models and building more flexible scenarios that react better to change will give your company the ability to perform better in an uncertain environment.
Functioning with Limited Information
Having limited information about market conditions can make planning challenging. For this situation, consider developing a single model strategy. The model will be based on available market research, competitor information, and any other available resources. But this model will differ from traditional versions, with the ability to quickly and easily adapt to change.
Planning for Unstable Conditions
If market conditions are unstable, consider choosing a few flexible scenarios. Build each scenario with several elements, and strategize reactions to changes in market conditions. Also, carefully work out the risk and return on investment for each situation. Examples of companies that may benefit from this strategy are those affected by government laws or regulations, like the pharmaceutical and medical devise industries.
Focus on Trigger Events
For companies launching products or services in emerging industries or an entirely new market, consider developing 4-5 different scenarios that focus on trigger events. When embarking on this process, make sure that each scenario is distinctly different. This will save resources on developing strategies that are too similar. Management should discuss the risks of each scenario, and the appropriate reactions. The ability to expand distribution potential should also be discussed in detail to plan for future growth. Also keep in mind that merger and acquisition activities may be viable options for accommodating growth.
Dealing with Scenarios that Seem Impossible to Predict
Breaking into new markets and countries is difficult because there isn’t any existing experience to pull from when predicting factors like demand. When building scenarios, isolate variables that may indicate how your product will act in the new market. You can also study related markets to forecast product success.
Secure Your Market Position
Once you’ve entered a new market, it’s important to secure and maintain your market position. To establish a leader market position, seek the best information available on pricing, and establish strategies to grow and maintain customer relationships.
The Value of Market Research
If you have an emerging product or service, purchase enough market research to get a snapshot of similar markets and their success. However, don’t spend too much, because this information doesn’t always accurately predict your success. Instead, use the information you have to build flexible models, with the ability to accommodate expansion and growth activities.
Evaluate your Models Regularly
Models quickly become outdated, especially in emerging markets where information is changing constantly. Ensure your models stay current by evaluating them every 3-6 months and making the necessary changes.
Invest in Pilot Trials
When developing your models and plans, consider launching a pilot program for new products and services. While this activity can be expensive, it’s valuable for companies with little or no market research. The results provide a glimpse into consumers’ reactions to your product, and allow you to quickly make adjustments before bringing a product or service to market. This is a good strategy for those interested in launching new products in emerging markets or new counties.
Invest for Growth
Launching a new product or service is a large financial investment. And when a product becomes successful, it’s important to have strategies in place for growth. If your business grows quickly, strategies should be swiftly implemented to preserve customer service, expand production, while maximizing profit. One solution to consider is participating in merger and acquisition activities, which may be more cost effective than expanding operations.
Minimizing Your Risk
Some companies can’t afford to take all of the risk alone. Minimize your risk by entering a joint-venture business arrangement. This allows businesses to share costs and risks when entering uncertain environments, such as a new market or country. Although profits are shared between the companies, it can be a beneficial arrangement, allowing high-profit potential for companies that wouldn’t have entered the market alone.
Building better strategies and planning methods will allow your company to experience greater success. Because more flexible planning allows businesses to react smarter, which positively affects the bottom line. And when outcomes are uncertain, management will be able to react quicker, contributing towards revenue growth, and enhanced productivity.
Resource:
Scott Cade, Robert-Jan Hagens, Caroline Moss and Muir Sanderson. “Moving Beyond Cost-Cutting.” Booz Allen and Hamilton.
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of “Driving Business Value in an Uncertain Economy,” “Selling Your Business the Easy Way,” “Enhancing Your Business Value…The Climb to the Top,” and co-author of “The Business Sale…A Business Owner’s Most Perilous Expedition.” For more information, contact him at 770.399.9512 or email him.
But if precise models and instinct don’t work, then what does? Breaking away from static models and building more flexible scenarios that react better to change will give your company the ability to perform better in an uncertain environment.
Functioning with Limited Information
Having limited information about market conditions can make planning challenging. For this situation, consider developing a single model strategy. The model will be based on available market research, competitor information, and any other available resources. But this model will differ from traditional versions, with the ability to quickly and easily adapt to change.
Planning for Unstable Conditions
If market conditions are unstable, consider choosing a few flexible scenarios. Build each scenario with several elements, and strategize reactions to changes in market conditions. Also, carefully work out the risk and return on investment for each situation. Examples of companies that may benefit from this strategy are those affected by government laws or regulations, like the pharmaceutical and medical devise industries.
Focus on Trigger Events
For companies launching products or services in emerging industries or an entirely new market, consider developing 4-5 different scenarios that focus on trigger events. When embarking on this process, make sure that each scenario is distinctly different. This will save resources on developing strategies that are too similar. Management should discuss the risks of each scenario, and the appropriate reactions. The ability to expand distribution potential should also be discussed in detail to plan for future growth. Also keep in mind that merger and acquisition activities may be viable options for accommodating growth.
Dealing with Scenarios that Seem Impossible to Predict
Breaking into new markets and countries is difficult because there isn’t any existing experience to pull from when predicting factors like demand. When building scenarios, isolate variables that may indicate how your product will act in the new market. You can also study related markets to forecast product success.
Secure Your Market Position
Once you’ve entered a new market, it’s important to secure and maintain your market position. To establish a leader market position, seek the best information available on pricing, and establish strategies to grow and maintain customer relationships.
The Value of Market Research
If you have an emerging product or service, purchase enough market research to get a snapshot of similar markets and their success. However, don’t spend too much, because this information doesn’t always accurately predict your success. Instead, use the information you have to build flexible models, with the ability to accommodate expansion and growth activities.
Evaluate your Models Regularly
Models quickly become outdated, especially in emerging markets where information is changing constantly. Ensure your models stay current by evaluating them every 3-6 months and making the necessary changes.
Invest in Pilot Trials
When developing your models and plans, consider launching a pilot program for new products and services. While this activity can be expensive, it’s valuable for companies with little or no market research. The results provide a glimpse into consumers’ reactions to your product, and allow you to quickly make adjustments before bringing a product or service to market. This is a good strategy for those interested in launching new products in emerging markets or new counties.
Invest for Growth
Launching a new product or service is a large financial investment. And when a product becomes successful, it’s important to have strategies in place for growth. If your business grows quickly, strategies should be swiftly implemented to preserve customer service, expand production, while maximizing profit. One solution to consider is participating in merger and acquisition activities, which may be more cost effective than expanding operations.
Minimizing Your Risk
Some companies can’t afford to take all of the risk alone. Minimize your risk by entering a joint-venture business arrangement. This allows businesses to share costs and risks when entering uncertain environments, such as a new market or country. Although profits are shared between the companies, it can be a beneficial arrangement, allowing high-profit potential for companies that wouldn’t have entered the market alone.
Building better strategies and planning methods will allow your company to experience greater success. Because more flexible planning allows businesses to react smarter, which positively affects the bottom line. And when outcomes are uncertain, management will be able to react quicker, contributing towards revenue growth, and enhanced productivity.
Resource:
Scott Cade, Robert-Jan Hagens, Caroline Moss and Muir Sanderson. “Moving Beyond Cost-Cutting.” Booz Allen and Hamilton.
Mark Jordan is the Managing Principal of VERCOR, an investment bank that creates liquidity for middle market business owners. He is the author of “Driving Business Value in an Uncertain Economy,” “Selling Your Business the Easy Way,” “Enhancing Your Business Value…The Climb to the Top,” and co-author of “The Business Sale…A Business Owner’s Most Perilous Expedition.” For more information, contact him at 770.399.9512 or email him.
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