Stuck In Neutral
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Stuck In Neutral

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If your company’s revenues have been flat to declining over the past eight quarters you are probably ‘Stuck in Neutral.’ There are no magic bullets when it comes to reversing long term flat to ...

If your company’s revenues have been flat to declining over the past eight quarters you are probably ‘Stuck in Neutral.’ There are no magic bullets when it comes to reversing long term flat to declining revenue trends for tech companies. Companies get ‘stuck in neutral’ for a reason. Most of the time it is a market problem versus a ‘people’ problem. Breaking out of the rut, however, takes courage and decisive action. This presentation is an overview of three part strategy for getting your revenue growth back in gear. In the coming weeks we will explore each of the three strategies in depth.

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Stuck In Neutral Stuck In Neutral Presentation Transcript

  • problems – markets - responsible Are Your Revenues Stuck in Neutral? How to Get Out of the Flat Revenue Rut DevelopmentCorporate
  • problems – markets - responsible Are Your Revenues Stuck in Neutral? How to Get Out of the Flat Revenue Rut Does this chart look uncomfortably familiar?
  • Things You Have Triedresponsiblethe Trend . . problems – markets - to Change √ Hired and Fired 3 VPs of Sales √ Invested $750,000 in a Website Redesign √ Conducted 293 Email Campaigns to 1,329,865 Prospects √ Spent $1.5 Million Re-Branding & Re-Positioning the Company √ Got Rid of Field Sales and Went Entirely to Tele-Sales √ Spent $825,000 to Get Into a Gartner Magic Quadrant √ Built ‘Son of Fusion’ and Wondered Why Nobody Upgraded √ Got Rid of Tele-Sales and Hired Elephant Killers Are Your Revenues Stuck in Neutral? √ Opened an Office in London and Hong Kong √ Implemented SalesForce.com √ Channel ProgramHow to Get .Out ofNobody Came . . . Rut – You Built It . . But the Flat Revenue Does this chart look uncomfortably familiar? √ Hired Social Media Wonk & Launched on Twitter, Facebook . . . DevelopmentCorporate
  • The Results, Unfortunately Were All The Same
  • problemsThese Years - responsible Forgotten How to Win? After All – markets Has Your Team Pirates 1993-2008 Year Won Lost 2008 67 95 2007 68 94 2006 67 95 2005 67 95 2004 72 89 2003 75 87 2002 72 89 2001 62 100 2000 69 93 1999 78 83 1998 69 93 1997 79 83 1996 73 89 1995 58 86 1994 53 61 1993 75 87
  • problemsThese Years - responsible Forgotten How to Win? After All – markets Has Your Team There are no magic bullets when it comes to reversing long term flat to declining revenue trends for tech companies. Companies get ‘stuck in neutral’ for a reason. Most of the time it’s a market problem versus a ‘people’ problem. Breaking out of the rut, however, takes courage and decisive action. The balance of this presentation presents an overview of three strategies your company could consider. There will be follow on presentations that explore each strategy in significant detail.
  • After All – Time for Some Significant Change It’s markets Has Your Team problemsThese Years - responsible Forgotten How to Win? The dogmas of the quiet past are Technological change is like Change will not come if we wait inadequate to the stormy an axe in the hands of a for some other person or some present. The occasion is piled pathological criminal. other time. We are the ones high with difficulty, and we must we've been waiting for. We are rise with the occasion. As our the change that we seek case is new, so we must think anew and act anew
  • problemsThese YearsWay Out of Forgotten How 3 Steps After All – markets - responsible “Shift” Your Has Your Team Neutral in to Win? 1st Gear 2nd Gear 3rd Gear Optimize Buy a Invest in Existing Revenue Long Term Revenues Wedge Growth
  • problemsThese Optimize Existing Revenues Win? After All – markets - responsible Forgotten How to 1. Years Has Your Team • It’s never popular but it’s the easiest place to start. Optimization is a nice term for programs to maximize revenues out of existing customers • Some Classic Revenue Optimization Programs • Billing Audits – Are all of your customers setup for the correct billing plans? • Maintenance Price Increases – When was the last time you raised maintenance prices? • Price List Policy Enforcement – Do you sell add-on products? Do you require customers to keep maintenance on the base product to Properly executed get maintenance on the add-on product? revenue optimization • Test/Disaster Recovery Licenses – Do you programs can generate sell test/DR licenses 2% to 4% year over year • ‘Bottom Dweller’ Programs -- Convert low increases in revenues value month to month customers to prepaid annual subscriptions
  • problemsThese 2. Buy a Revenue Wedge to Win? After All – markets - responsible Forgotten How Years Has Your Team • Lowest risk, highest probability strategy to grow revenues year-over-year is to acquire a small, but complementary business. • Target companies that are about 3% to 7% of your total revenues • Small companies limit risk to your overall business • Can typically be financed from cash reserves, untapped credit lines, and earn outs • An acquisition of this size will ensure that your firm can post some year-over-year growth • Key requirements A ‘Wedge’ acquisition is • Target company’s customer base is a close not intended to solve match to your firm’s target market (High revenue growth potential to cross sell your offerings to them) problems. It buys time • Some opportunity for profit improvement and provides cash flow through consolidation of overhead functions for your true revenue (HR, Accounting, I.T., etc.) growth initiatives
  • problemsThese Years - responsible Growth How to Win? After All – markets Has Your Team Forgotten 3. Invest in • Using a portion of the profits generated from the incremental revenues from revenue optimization programs and a wedge acquisition to fund your company’s version of a Y-Combinator / SeedPhase / Startup Riot • Create a local/regional competition where entrepreneurs pitch product/service ideas to create products / services for your company’s existing / prospective customer base • Reach out to local entrepreneurs • Allow selected senior employees from your firm to participate Companies get ‘Stuck in • Focus on ‘capital-light’ solutions that leverage Neutral’ because Web 2.0 technologies / principles traditional product • Pick 3 opportunities to ‘invest in’ management doesn’t • $50K to $75K initial funding generate break through • 3 months to get to public beta stage ideas. A fundamentally • Host the teams in your facilities to reduce new approach is needed costs
  • problemsThese Years - responsible Growth How to Win? After All – markets Has Your Team Forgotten 3. Invest in • Give the founders attractive compensation • 15% of total revenues • 15% of operating profit • Equity in your overall company if revenues >$5 million in 18 months • That’s a better deal than they would ever get from VCs who would cram down their ownership to <15% in three rounds of funding •Huge benefits for your company: • Great publicity and traction with analysts, press, investors, existing and prospective customers Companies get ‘Stuck in • Re-establish the entrepreneurial passion that Neutral’ because built your company to begin with traditional product • Real chance to leverage modern Web 2.0 management doesn’t technologies in a capital-light manner to generate break through bring organic revenue growth back to your ideas. A fundamentally company new approach is needed
  • problemsThese Years - responsible Forgotten How to Win? After All – markets Has Your Team Cultural Resistance When a company is ‘Stuck In Neutral’ it is difficult for everyone – employees, managers, executives, investors, and even customers. Everyone tries hard, but at the end of the day revenues, profits, and valuations are flat to declining. Change is hard. People perceive admitting that the company is ‘Stuck in Neutral’ is a threat to reputations and their continued employment. Politics versus entrepreneurial passions rules the day. If you want to get out of the rut you are in you will have to lead your team on a journey they probably do not want to take.
  • problemsThese Years - responsibleGlass . . .How to Win? After All – markets Has Your Team Forgotten Break Some If your firm is ‘Stuck In Neutral’ it’s been there for a while. While the business climate is simply horrible now, eventually it will turn and the economy will recover. When the recovery begins organizations will have funds to invest in solutions to improve their business. If you start executing the three strategies of Optimizing Revenues, Buying a Wedge, and Investing in Growth you can get out of neutral and be positioned to participate in the revitalized economy