CEO Advisor Newsletter February 2017
The Right Growth Capital for
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, as well as, the monthly payments and the need to pay back 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 receive 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, and 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 out of the company 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.
Reasons Tech Companies Falter or Fail
Here are 8 primary reasons that tech companies falter or fail:
1. Undifferentiated ProductsMost of the technology products and services that fail lack 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, and by stressing benefits and value enhancement.
2. Poor Market ResearchYour research doesn't have to tell you that your new products and services are first to market or completely unique, but they 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.
3. Lack of Market FocusGrowing 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, and management is suddenly faced with sales and support problems, lack of funds and too much competition.
4. Miscalculated Product Improvement or Lack of Product ManagementTech 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 high-tech 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 SupportCustomers 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 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 quality, lack of bugs, training and U.S. based support, etc.
6. Using Price Alone to Drive SalesIt 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 cost was low enough. Price is a function of value and utility, and products and services should be positioned and marketed accordingly.
7. Poor Planning and MarketingMarketing 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 is critical to success. Improper marketing or lack of marketing can be a product killer or cripple your company's sales as a whole.
8. Sales MismanagementThere's more to sales management than most companies realize. Specific skills are required to effectively manage both direct sales and the indirect 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 selling, online sales, dealers, manufacturers "reps" or agents, OEMs, alliance partners, 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 success, sales, margins, profits and value of your company, contact Mark Hartsell, MBA, CEO of CEO Advisor, Inc. at (949) 629-2520, by email at mhartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information