How to Shift Your Company into High Gear! - WelchGroup Consulting


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On October 2nd, 2013, WelchGroup Consulting presented the top 5 red flags that business owners and senior executives face today.

To watch the full presentation and walk away with fantastic strategies & tactics to shift your company into high gear, visit our event page:

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How to Shift Your Company into High Gear! - WelchGroup Consulting

  1. 1. Chairman’s View How to shift YOUR Company into High Gear! Bruce Fischer, MBA, CMC, Chairman Fischer Group Inc. 1
  2. 2. Agenda • • Top 5 Red Flags 5. Quantifiable Advantage 4. Financial Management 3. Talent Management 2. Strategic Direction 1. “Do it All” Business Owner Panel Discussion 2
  3. 3. Chairman’s View Value challenge Performance challenge Get Owners to: • View their businesses as assets • Think like an Owner • Build your business to last decades, but prepare to sell it tomorrow 3
  4. 4. Quantifiable Advantage Margins that are very low, or lower than average in your industry means your operating business doesn't efficiently make money and may not be well positioned in the market Jeffrey Dale, Chairman CEO, Odawa Group Inc. 4
  5. 5. What sets you apart in the Marketplace?     Product/Service Differentiation Innovation Corporate Culture Cost/Operational Leadership 5
  6. 6. Business Books
  7. 7. Blue Ocean - Framework • What needs to be eliminated • What needs to be reduced below industry standards • What should be raised well above industry standards • What should be created that the industry has never offered
  8. 8. Blue Ocean of Cirque du Soleil • Eliminate – Star Performers – Animal Shows – Aisle Concessions • Reduce – Thrill and Danger • Improve – Unique Venue • Create – Theme – Artistic Music and Dance – Multiple Productions
  9. 9. Local Quantifiable Advantage
  10. 10. The Works: Product Differentiation • Started 2001 – Sold 2010 – 6 Locations in Ottawa • Improve - Its all about Burgers • Eliminate - No Bar, No TV • Reduce - Close at 10 • Owner had health issues • Large expansion opportunities – (30 GTA requests alone) • Right time to sell at a premium
  11. 11. Bridgehead: Corporate Culture • Opened 2000 – 16 Locations – 2004 Bakery 2012 Roastery • Improve - fair trade + organic food & sustainable environment • Create - unique feel in every store (employees and décor) • Low employee turnover • Customer loyalty
  12. 12. Med-Eng: Innovation • Founded in 1981 • Bomb Disposal Suits and equipment – Founder tested 19 times • Growth - Electronic Counter Measures (Bomb Jammers) • Improve - Helmets and Suits • Create - Electronic Products – success in Afghanistan & Iraq • 2001 – Revenue ~$50M • 2007 – Revenues ~$400M • 2007 Sold - $650M
  13. 13. Advantage of Quantifiable Advantage VALUE TO BUSINESS • • • • VALUE TO OWNER Attract new customers • Increase value of the business Retain existing customers • Options for owner Faster revenue growth – Grow the business Maintain/improve – Transition or sell margins business
  14. 14. Polling Question #1: How well do you know your company’s quantifiable advantage? 1. Very well 2. Better than your competitors 3. Have a solid understanding 4. Somewhat 5. Don’t know it 14
  15. 15. Financial Management Strong governance, transparency and financial & operational reports will strengthen the business and its ability to make effective decisions, AND make it bullet proof for a due diligence Candace Enman, CA, CPA President, WelchGroup Consulting 15
  16. 16. Financial Drivers 1. Financial Statements 2. Operating Reports 3. Audits 4. Intellectual Property 5. Tangible Assets 6. Banking & Capital 7. Risk & Insurance 8. Tax 16
  17. 17. 1st Gear 1st Gear: Financial Statements 1. Spreadsheets 2. “Box Jobs” 3. Computerized financial reporting package • Balance sheet • Profit & loss Doing compliance reporting alone will not add value to your business. 17
  18. 18. 2nd Gear 2nd Gear: Operational Reporting “management reports that are routinely generated and used by management to review the company’s performance and make operational decisions” 1. Operational reporting • Do they tell the company story? • Key Performance Indicators (KPI’s) 2. Transparency 18
  19. 19. 2nd Gear 2nd Gear: Operational Reporting 3. Forecasts/Projections 4. Dashboard reporting  Real time reporting Position yourself to make decisions proactively. Accelerate or put on the brakes when you need to. 19
  20. 20. 3rd Gear: Audit 1. Numbers are audit-ready & “bulletproof” • Clean records, business processes, internal controls If you performed a due diligence on yourself would you like the results? 2. Documentation • Business continuity Greater Confidence = Lower Risk for Buyer = More Value! 20
  21. 21. Cruise Control 21
  22. 22. Polling Question #2: Do your Operational Reports identify the activities & health of your business to help with “proactive” management decisions? 1. Yes – very helpful 2. Yes – but needs improvement 3. No – I don’t think we’re focused on the right things 4. Don’t have operational reports 22
  23. 23. Talent Management A company that has the ability to find, develop and retain quality individuals in the right positions, at the right time, will enable success in all aspects of the business Margo Crawford, President Business Sherpa Group 23
  24. 24. 3 Major HR Themes that can Depress Value 1. Having the right team at the right time through business changes and for long term success 2. Having a team that is performing at its full potential to drive business value. 3. Having the right structures and processes in place to Financial Measures sustainable and repeatable performance ensure Revenue, EBITDA 24
  25. 25. Do you have the right team at key business inflection points? Headcount (mix/#s) Headcount Business Performance • Natural business inflection points require different skills & sometimes different people • Common response to business challenges is to add people • Over time it becomes more difficult to change the trajectory of business performance with a given team • Strong tendency to not change up the team that built the business at an early stage Formation Early Growth Accelerated Growth Maturing Growth Time Next Stage Growth
  26. 26. Indicators of Workforce Weakness • Has there been any additions or changes to your leadership team? • Does your organization achieve relatively less with more people? • Pressure on margins despite revenue growth Value Depressors • Confidence around leadership team • Succession plans – single points of failure • Productivity & performance – a team that can achieve results (revenue/head) • Cost of over loaded team • No or exceptionally low turnover OR exceptionally high turnover • Skills to achieve what the business needs
  27. 27. Do you have a team that is performing at its full potential to drive business value? • Important to set a course and let the team know what needs to be accomplished • Develop programs to drive value – performance management; total rewards/incentives; set expectations and measure performance $100M $90M Valuation $80M $70M How do you get the team driving this additional valuation? $60M $50M $40M $30M $20M Time Current Value Future Value
  28. 28. Indicators of Low Performing Team Value Depressors • Expectations not articulated • Missed milestones and key deliverables • No communications around corporate goals • Connection of corporate goals to individual goals and behaviours • Lack of approaches to reward behaviours that drive value • Star performers not identified and not locked into business • Nothing in place to push performance – possible low caliber team
  29. 29. Having the right structures & processes in place to ensure sustainable and repeatable performance. Contracts • Protect IP & assets • Retain or lock in key employees • Appropriate liabilities and obligations; mitigate risks Compensation • Appropriate compensation for market • Motivate and Reward performance Sales Incentives • Sales compensation plans that drive quota attainment • Models that make financial sense and are in line with market • Terms that create appropriate obligations Policies • Policies that ensure compliance with laws • Practices that align with business values; motivate the right behaviours; and ensure sustainable business operations Workforce Planning & Recruitment • Exceptional recruitment process and selection practices – resourceful and diligent sourcing; hire for best fit • Workforce plans that align with business goals Performance Management • Effective feedback tools; programs that build goals that align with business goals
  30. 30. Polling Question #3: What type of goals does your company measure & reward senior management on? 1. Corporate, functional & individual goals 2. Corporate & functional goals 3. Functional area goals only 4. Individual goals only 5. No specific measures/rewards given 30
  31. 31. Strategic Direction A business without a strategic plan is like a ship without a compass. Your business may float just fine today, but chances are it will eventually get lost. Valuable businesses have a strong sense of direction. Bron Vasic, CA, CMC, Chairman President, B Vasic & Associates Inc. 31
  32. 32. Shift your Company into High Gear  Valuable businesses have a strong sense of direction  They make the time to Think & Act Strategically  Strategy: A plan or method for achieving something, especially over a long period of time
  33. 33. Management Functional Areas Financial Information Technology Operations /Delivery Strategic Management Human Resources Marketing Need for Alignment 33
  34. 34. Strategic Planning Strategic planning is a management tool 1. Focus its energy 2. Ensure that all staff are working toward the same goal 3. Assist in assessing and adjusting the organizations direction in response to a changing environment 4. Prioritize Financial Needs 34
  35. 35. Excuses to Think or Act Strategically 1. Lack of understanding and focus in the process of planning 2. Mentally fatigued 3. Partial commitment 4. Lack of understanding 5. Lack of accountability. 6. Lack of follow-up 7. Lack of flexibility 35
  36. 36. 5 Strategic Questions to Ask 1. What business are we in and how are we doing now? 2. What’s happening around us? • Are there any serious dangers in staying where we are – i.e. sticking with the same business and strategy? 3. If so, is there a better place for us to be? 4. How do we get there? 5. How will we know we have arrived? 36
  37. 37. Strategic Direction • Run at peak performance • Make sure that the business is in the right gear • Bigger is not better • Running leaner has many advantages and efficiencies • Get out of crisis mode, get aligned, get things meshing well • People are starved for leadership – take charge, be proud of what you have and make decisions based on what you know • Procrastination for a day can be good, even a couple of days but beyond a week you are in analysis paralysis • Don’t grind your gears • Have the necessary tune ups that will allow for a smooth ride (perform better, save gas) • Getting all on the same page and not doing business alone • Simplicity in planning and words that everyone will understand 37
  38. 38. Polling Question #4: Does your company have a strategic plan? 1. Yes we have a plan 2. We have a plan, but it’s not updated 3. No plan on paper, but we meet regularly about it 4. No plan on paper, but we have a common vision 5. No plan 38
  39. 39. Polling Question #5: We have a private jet waiting for you at the airport that can take you anywhere you want to go. You only have 1 hour to prepare. Would you be able to pack up and leave your company and have it continue to operate smoothly without you? 1. Yes 2. Yes, but only for a month 3. Yes, but only for a week 4. Yes, but I would need my smartphone 5. No 39
  40. 40. Do it All Business Owner A "do it all" business owner means the value of the business is in the business owner versus the actual operating business Chuck Richards, CEO Chairman’s View/CoreValue 40
  41. 41. Owner’s Role The fundamental responsibility of the CEO is to build enterprise value.
  42. 42. Enterprise Value is: If Enterprise Value is the measure of business success, questions every CEO needs to ask and answer: What is my business really worth? Why? How do I make it more valuable?
  43. 43. Polling Question #6: Do you know the value of your Company today? 1. Yes 2. I have a general idea 3. No 43
  44. 44. Polling Question #7: If your business sold today, could your business survive due diligence (i.e. is the value transferable)? 1. 100% confident 2. Greater than 75% confident 3. Greater than 50% confident 4. There’s some work I’d have to do to get it ready 44
  45. 45. Polling Question #8: Do you know how to improve the performance and value of your business? 1. Yes and I have a plan that will help me execute it 2. Yes but I don’t have a plan 3. I’m not sure where to start 45
  46. 46. Enterprise Value is not: 1. Profit 2. Revenue 3. Captured on the Balance Sheet
  47. 47. Enterprise Value is: A company’s ability to generate future revenue and profit, without the current business owner(s) in charge
  48. 48. You Need to Know
  49. 49. Red Flags – Negate all Value 43% 22% 19%
  50. 50. Why it Really, Really Matters 6,500,000+ private businesses with payrolls • 50%+ North American job base • 75%+ Owned by Boomers • 80%+ Failure rate to transfer ownership
  51. 51. Business is An Engine
  52. 52. Finance Measures the Outputs of the Engine Revenue and Profit
  53. 53. Value = Ability of the Engine to Dependably Generate Revenue and Profit into the Future
  54. 54. Need to Look “Under the Hood”
  55. 55. CoreValue Rating based on a framework of 18 Value Drivers
  56. 56. The Chairman’s View Process Define Success – Owner Interviews – Management Interviews Core Value Software – Assess – Track
  57. 57. CoreValue “Assess” “Market View” of the Value of Your Company • • • • • • Transferable Enterprise Value Potential Value Value Gap Red Flags Pre Due Diligence Roadmap to Improve Value
  58. 58. CoreValue “Track”: Building real Transferable Enterprise Value • • • • • Quantified list of Actions Prioritize Actions by $$ / ROI Regular CoreValue Rating reviews Track how Enterprise Value increases Complete Due Diligence as needed
  59. 59. Next Step: simple ENGAGE
  60. 60. CoreValue “Engage”: Begin the conversation of a Lifetime • • • • Structured Conversation Strength of your Business Engine Estimate of your Value Gap Identify 5 Value Drivers that need your time
  61. 61. Panel Q&A • Bruce Fischer • Jeffrey Dale • Candace Enman • Margo Crawford • Bron Vasic • Chuck Richards 72
  62. 62. Contact Us Candace Enman President, WelchGroup Consulting Bron Vasic Chairman, WelchGroup Consulting Bruce Fischer Chairman, WelchGroup Consulting Chuck Richards CEO, Chairman’s View/CoreValue Jeffrey Dale Chairman, CEO, Odawa Group Inc. Margo Crawford President, Business Sherpa Group Inc. 73