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CEO Advisor® Newsletter
April 2019
The Right Growth Capital for Your Company

The decision to accelerate the growth of your business is the best path to greater sales, profits and increasing the value of your business for an optimal exit in the future. The right type of growth capital is critical for each and every company.

CEO Advisor, Inc. advises CEOs and business owners to secure growth capital, and then works with you as your trusted business advisor to improve your business. We also work with you as advisors to re-invest some of this capital into your business to further accelerate growth, increase sales and profits, as well as, increase the value of your business for the optimal future sale.

If you are not ready to sell your company, but have most of your net worth tied up in the business, then you need to evaluate your options to better secure your financial future. A serious market downturn or failing economy could be devastating to both you and your business. Bank financing is not always the best method to secure cash for your business given the many contingencies that come with bank loans, such as a demand for you to pay off the loan when that time to repay may be very untimely. If your personal or business credit is not great, it will also be extremely challenging to secure a bank loan for any reason in today's business environment. 

For an established company with $5+ million in sales, or even for a much larger company, with some reasonable level of profits, growth capital can be very attractive from a Private Equity firm. CEO Advisor, Inc. has relationships with many Private Equity firms and can help you prepare for growth capital through an equity investment at very attractive terms. 

Private Equity investments can be a minority or a majority investment in your company, and in both cases you have the opportunity to take a larger "Second bite of the apple" when you ultimately sell the company to a large strategic buyer. And you can also take some money off the table personally at the time the investment is made to further solidify your financial future.

Accelerating your growth is the key to staying ahead of your competition, increasing sales, margins and net profits, increasing the value of your business, and attracting a buyer down the road at a strong valuation. Without this accelerated growth, you are at risk of declining profits and you will certainly be the owner of your company for a very, very long time - in good health or bad, with a desire to sell the business or not.

Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. at (949) 629-2520 to discuss your growth capital options, valuation and exit strategy in a no cost, no obligation meeting at your office, email MHartsell@CEOAdvisor.com or visit www.CEOAdvisor.com for more information.
8 Reasons Tech Companies Fail
There are many reasons that technology businesses falter or fail. To improve your management decisions and practices, seek help from a Business Advisor to address your specific needs.

Here are 8 primary reasons that tech companies falter or fail:

1. Lack of Market Focus
Growing tech companies often do anything possible to generate revenue, and in the process, try to be all things to all people. Worried about missing out on new business they avoid segmenting the market and refuse to focus on one to three key vertical markets and one or two main products or services. As a result, the company is unable to effectively serve any market segments effectively. Management is suddenly faced with sales and support problems, lack of funds and strained profitability.

2. Undifferentiated Products
Most of the technology products and services that fail lack clear differentiation. Successful companies differentiate their products and articulate these differences in all marketing and selling. Differentiation is critical on the bases of five fundamental factors: function, time utility, problem solved, price and positioning. These five elements are key to uniquely positioning your products and services to achieve increased sales and profits. By emphasizing benefits and value enhancements, you come from a position of strength.

3. Poor Market Research
Your research doesn't have to tell you that your new products and services are first to market or completely unique, but your products and services clearly need to be valuable, in demand and sellable. Many companies routinely perform the wrong type of market research. Statistical surveys of customers alone do not provide the qualitative information that is needed. Because your target audience often relies as much on perceptions as on facts, qualitative research intended to identify existing needs has equal or greater value in assessing, planning and executing a company's marketing strategy.

4. Miscalculated Product Improvement or Lack of Product Management
Tech products and services are generally used over an extended period of time, are integrated with complementary products and impose learning costs on customers. Customers require time to implement and recover their investment in technology products. The rapid introduction of new and improved versions are important, but can also make a customer regret a previous purchase, delay all new purchases, and agonize over similar purchases in the future. Additionally, the time and costs related to excessive or miscalculated product development can delay product launches and delay sales opportunities and revenues.

5. Lack of Quality and Support
Customers view products very differently than the technology companies that create or supply them. Technology companies tend to try to sell products on the basis of price, special features and technical specifications. These technical factors are often favored by the engineers who typically run most tech companies.

The problem is that most customers consider factors such as benefits, training, product support and company reputation to be more important. The feature rich products created by engineers are seen as overly complicated by many customers. Rather than competing on features alone, tech companies should focus on the "intangible" factors that are mostly attractive to customers, such as benefits (how does this product increase sales, reduce costs, save time, etc.), quality, lack of bugs, training and U.S. based support, etc.

6. Poor Planning and Marketing
Marketing is both an art and a science. Positioning, pricing, sales strategy, target vertical markets and other factors contribute to the success or failure of your products and services and the corresponding sales. Proper planning and a well-crafted marketing plan and budget is critical to success. Improper marketing or lack of marketing can be a product killer or cripple your company's sales as a whole.

7. Using Price Alone to Drive Sales
It is easy to misinterpret the role price plays in the market. And it is a mistake to believe that a technology product or service would be widely used and purchased if its price was low enough. Price is a function of value and utility, and products and services should be positioned and marketed accordingly.

8. Sales Mismanagement
There's more to sales management than most companies realize. Specific skills are required to effectively manage both direct sales and the sales channel. These skills must be developed internally starting with an effective direct sales force. Unique management challenges exist for each type of sales channel: direct sales, online sales, dealers, manufacturers "reps" or agents, OEMs, value-added resellers (VARs) and referral partners. Seek a business advisor to assist you in optimizing your sales strategy as a critical factor in your success and for preparing for and hiring the proper sales management.

To further evaluate your management decisions, grow your business to the next level and increase your sales, margins, profits and value of your company, contact Mark Hartsell, MBA, President of CEO Advisor, Inc. at (949) 629-2520, by email at MHartsell@CEOAdvisor.com  or visit us at www.CEOAdvisor.com for more information.

Testimonial  


"Thank you Mark! And thank you for all your help over the years. It is truly appreciated and it was a great ride of accomplishment for all of us. Stay in touch!


Echoing Craig's statement of much thanks and appreciation for the many years in the trenches together with us and helping us achieve a successful exit."

CEO and President, Digital Agency Client
(After Their Successful Sale)

CEO/President, Engineering Services/Manufacturing Company


Whether it is growing a business to the next level, turning a distressed company around or preparing a company for an exit, Mark's firm, CEO Advisor, Inc, provides a broad range of services and Mark is there for the CEO every step of the way."

 


Partner

Haynes & Boone, LLP

Words of Wisdom


"Planning is bringing the future into the present so you can do something about it now."

Alan Lakein
Business Author