CEO Advisor Newsletter October 2014
Five Critical Traits of High
Performance Companies
Are you completely prepared to optimize sales, profits and the value of your business in 2015? Have you executed on your 2014 Plan and achieved the results you were looking for? CEO Advisor, Inc. works directly with CEOs, presidents and business owners of small and mid-sized companies, and we have helped many companies achieve their goals, optimize their sales and profits and grow their business to the next level.
What does it mean to be a high performance company today? Most companies take a unique approach to the way they recruit talent, motivate employees, hold employees and vendors accountable, and create long-term customers. Many companies claim to be high performance companies, but few have the leadership or processes in place that actually allows them to do things the competition only dreams of. Here are five critical traits of high performance companies:
1. 100% Sales CultureIn a true sales culture, everyone is proactive and is accountable - the CEO, the sales team, marketing, operations, all the way to human resources. Making everyone proactive and accountable helps the company become all about customer success. When you hear about a company having a true sales culture, everybody talks to customers, everyone is a prospective or existing customer, and every action impacts the customer. This enables a singular focus on the customer's success in every single thing that the company does.
2. Insane Focus on Their People This is what I like to call Winning As a Team. Smart companies have developed a methodical and more predictable approach to whom and how they recruit, how they train, and how to keep people motivated and on goal. For example, train the sales team weekly in sales meetings, set goals and reward sales team members for achieving the goals with pre-determined bonuses. Hold the sales team members accountable for their goals and measure the goals annually, quarterly and monthly at a minimum. Motivation and a heightened focus on achieving goals will be the result of success. Other companies may say, "people first," but at its core, you can't just believe it, you have to act on it.
3. Track, Measurement, Metrics Companies that track, measure and review meaningful metrics and goals gain a distinct competitive advantage. This gives CEOs and presidents insight into the productivity of employees daily, weekly and monthly, and ultimately drives your employees to achieve goals and success. The leadership at high performance companies is empowered with up-to-date information on employees, sales, marketing, operations, accounting and customer issues. This enables CEOs, presidents and business owners and their managers to improve performance, motivate and empower employees, create more opportunities for employees resulting in less employee attrition, and increase the bottom line.
4. Service, Service, Service Focus on the customers' needs. This idea might be the most important. We all know happy customers are the best customers. Additionally, by focusing on the customers' needs, you will uncover many desired products and services that you can upsell and cross-sell to them. Businesses that go above and beyond to show the customer they have their best interests in mind are the companies that perform and grow at the highest level. Companies that not only track their own performance, but the satisfaction of their customers create long-term, loyal customer relationships.
5. Accountability A critical component of leadership is accountability. This includes holding yourself accountable, and holding your managers and employees accountable, as well. This takes discipline that so many entrepreneurs and business owners lack on a day-to-day basis. The consistency and discipline that is needed in your business is something that you may not possess in your daily life. Accountability is important in all aspects of every business and is extremely costly and time consuming when it does not occur. Create accountability as a core part of your business, and fulfillment, opportunity and success will follow for you and your team.
CEO Advisor, Inc. can help your company achieve these five critical traits and become a high performing company. We work with CEOs, presidents and business owners of small to mid-size companies to grow your business to the next level.
For a free initial consultation, contact Mark Hartsell, MBA, CEO at 949-629-2520 or email MHartsell@CEOAdvisor.com.
What does it mean to be a high performance company today? Most companies take a unique approach to the way they recruit talent, motivate employees, hold employees and vendors accountable, and create long-term customers. Many companies claim to be high performance companies, but few have the leadership or processes in place that actually allows them to do things the competition only dreams of. Here are five critical traits of high performance companies:
1. 100% Sales CultureIn a true sales culture, everyone is proactive and is accountable - the CEO, the sales team, marketing, operations, all the way to human resources. Making everyone proactive and accountable helps the company become all about customer success. When you hear about a company having a true sales culture, everybody talks to customers, everyone is a prospective or existing customer, and every action impacts the customer. This enables a singular focus on the customer's success in every single thing that the company does.
2. Insane Focus on Their People This is what I like to call Winning As a Team. Smart companies have developed a methodical and more predictable approach to whom and how they recruit, how they train, and how to keep people motivated and on goal. For example, train the sales team weekly in sales meetings, set goals and reward sales team members for achieving the goals with pre-determined bonuses. Hold the sales team members accountable for their goals and measure the goals annually, quarterly and monthly at a minimum. Motivation and a heightened focus on achieving goals will be the result of success. Other companies may say, "people first," but at its core, you can't just believe it, you have to act on it.
3. Track, Measurement, Metrics Companies that track, measure and review meaningful metrics and goals gain a distinct competitive advantage. This gives CEOs and presidents insight into the productivity of employees daily, weekly and monthly, and ultimately drives your employees to achieve goals and success. The leadership at high performance companies is empowered with up-to-date information on employees, sales, marketing, operations, accounting and customer issues. This enables CEOs, presidents and business owners and their managers to improve performance, motivate and empower employees, create more opportunities for employees resulting in less employee attrition, and increase the bottom line.
4. Service, Service, Service Focus on the customers' needs. This idea might be the most important. We all know happy customers are the best customers. Additionally, by focusing on the customers' needs, you will uncover many desired products and services that you can upsell and cross-sell to them. Businesses that go above and beyond to show the customer they have their best interests in mind are the companies that perform and grow at the highest level. Companies that not only track their own performance, but the satisfaction of their customers create long-term, loyal customer relationships.
5. Accountability A critical component of leadership is accountability. This includes holding yourself accountable, and holding your managers and employees accountable, as well. This takes discipline that so many entrepreneurs and business owners lack on a day-to-day basis. The consistency and discipline that is needed in your business is something that you may not possess in your daily life. Accountability is important in all aspects of every business and is extremely costly and time consuming when it does not occur. Create accountability as a core part of your business, and fulfillment, opportunity and success will follow for you and your team.
CEO Advisor, Inc. can help your company achieve these five critical traits and become a high performing company. We work with CEOs, presidents and business owners of small to mid-size companies to grow your business to the next level.
For a free initial consultation, contact Mark Hartsell, MBA, CEO at 949-629-2520 or email MHartsell@CEOAdvisor.com.
Making Your Company More Valuable and Attractive to Buyers
- How soon the market forgets. Five years ago you couldn't give away most real estate, and business valuations plummeted with minimal mergers and acquisitions (M&A) activity.
- Today, valuations are frothy again and M&A activity is strong. The primary limiting factor to deals getting done are overzealous CEOs and business owners that demand extremely high prices for companies that were not sellable just five years ago.
- Whether you decide to sell your company in today's hot market, or prefer to hold and grow your business further (and risk another drop in the market), there are certain key areas that you need to focus on to build value and make your business more attractive to current and future buyers.
- A strategy to make your business irresistible to prospective acquirers may generate the greatest return in your life time. After all, I tell our clients on a regular basis, you never know when the perfect buyer will knock on your door.
- Below are key factors that you must employ in your business to build value, make your company sellable and attractive to current and future buyers.
- * Growth Rate
- The growth rate of your business is critical to the value of your business and the attractiveness of an acquirer. Businesses that grow at 10% per year are not attractive to buyers given the many other options they have to acquire faster growing businesses. If your growth rate is slow or stagnant, there are issues that you need to address in your business if you expect to exit at some point in the future. This key factor applies to all types of businesses all the time.
- * Size of Your Company and the Markets You Serve
- Companies that are dedicating people and resources to acquiring other companies tend to focus on larger companies. It takes just as much (actually more) time to acquire a small company than it does to acquire a mid-size or large company.
- Acquirers are looking for revenue and profits that will move their needle on their business. They want strong management, large markets served for future growth and revenue that is substantial and predictable. Kick into growth mode to generate your golden opportunity to sell.
- * Recurring Revenue
- If you are only as good as your last project, you are in trouble today. Acquirers see value in recurring, contracted revenue. Not just loyal customers that buy semi-regularly, but a strategy and business model with long-term, contracted customers that is forecastable and predictable. Not all customers need to be this sure bet, but you need to have a business that has staying power to attract buyers and have them pay you handsomely for your many years of hard work.
- * Gross Profit and Gross Margins
- Your Gross Profit Margin (GPM), or Sales less Cost of Goods Sold divided by Sales, is the number one factor that points to the profitability of providing your product or service (before overhead/expenses). Acquirers are attracted to businesses with high GPM as this will typically result in high Net Profit, Net Profit Margin and Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA).
- Depending on your type of business (manufacturing vs. software have very different Gross Profit Margins), you need to have GPM that is at or higher than other companies in your industry to optimize your value. If your Gross Margins are low, seek advice from a business advisor as you are leaving a lot of profits on the table, as well as, penalizing your business value substantially.
- * Management
- Strong management is a key factor in running and growing a sustainable business that is attractive to buyers. Interim management (business advisors, CPAs, attorneys, etc.) work well for smaller companies until they reach a certain size where permanent management team members can be hired. If you are the lone senior executive in your company, you need to reposition things to enable growth and build value in your business.
- CEO Advisor, Inc. has decades of expertise in hands-on advising of small and mid-size business, including building value and buying and selling companies. Contact Mark Hartsell, MBA, CEO today for a no cost consultation by calling (949) 629-2520 or emailing MHartsell@CEOAdvisor.com.