More often than not, the problem underlying valuation issues for small businesses is lack of strategic clarity. That’s not surprising, since one of the major challenges during Stage 2 is the need for more defined strategy coupled with deliberate planning processes that engage the entire organization — a big change from what was needed during Stage 1.

1. Building Business ValueStage 2 Education Series WorkshopSponsored by Fifth Third Bank November 9, 2010 Dave Haviland dave@phimation.com 734 717-4955 Randy Albert randy@phimation.com 734 255-2747

2. Phimation – The Natural Force of Evolution 2 phi is the ratio of spirals Phimation is the force that organizes systems for function and creativity

4. Marketing

5. Operations

6. Innovation

8. Worked with about 4 dozen companies since 2001

9. On the Boards of 4 companies

10. Raised $30MM in private and public capital

11. Managed radical-improvement initiatives for dozens of companies© Phimation Strategy Group 3

12. Table Introductions Your name and what business you’re in What caught your eye about this workshop and made you decide to come? If you had a magic wand and could change any one thing about your company, what would it be and why? What do you need out of this workshop to make it worthwhile for you? 4

13. A Primer on Stage 2 management

14. Stage 3 Stage 2 Stage 1 Stage 0 Organizational Growth © Phimation Strategy Group 5/3 S2ES Workshop 6

15. Complexity Grows Significantly Interdependencies # of components (staff, customers, suppliers) © Phimation Strategy Group 5/3 S2ES Workshop 7

16. The Stage 2 Leadership Playbook 8 Stage 2 Leadership Direction Management Ownership Focus Attention Provide the Right Frame Define & Ensure Decision-Making Lead Creation of Vision Manage Owners Define & Ensure Culture Define & Ensure Governance Ensure Performance

17. Stage 1 Stage 2 Transition © Phimation Strategy Group 5/3 S2ES Workshop 9

18. Stage 1 Stage 2 Transition © Phimation Strategy Group 5/3 S2ES Workshop 10

19. = = Stage 1 Stage 2 Transition © Phimation Strategy Group 5/3 S2ES Workshop 11

20. Stage 1 Stage 2 Transition © Phimation Strategy Group 5/3 S2ES Workshop 12

21. Stage 1 Stage 2 Transition 1. 2. 3. 1. 2. 3. © Phimation Strategy Group 5/3 S2ES Workshop 13

22. Stage 1 Stage 2 Transition © Phimation Strategy Group 5/3 S2ES Workshop 14

23. Stage 1 Stage 2 Transition AaAbbbBCccDdDd AB CD bbb aaa ddd ccc © Phimation Strategy Group 5/3 S2ES Workshop 15

24. Key Takeaways Things are more complicated Your job as a leader is to frame and focus ROI is more important than cost Reacting in the moment is not good enough There are several things you should do: Lead your staff in creating a vision for the company Manage your investments Get better at serving customers Clarify your priorities 16

25. Table Discussion What did we hear? What are our reactions? What questions do we have? 17

26. Driving revenue 18

27. The Revenue Generation Funnel 19 1:Many Education 1:1 Listening & Responding Marketing Sales

28. The Customer Experience 20 Services Product Intangibles 20% of customer focus 80% of company focus 80% of customer focus 20% of company focus

29. Improving your sales 21

30. Improved Sales Management Drives Results in Stage 2 22 More value with each customer Improved customer dialogue More value with all customers Improved resource allocation More productivity in sales team Improved structure & systems

31. Value that your customer creates (or avoids) using your solution Focusing on Value 23 How much of this do you help to create? Cost of your solution How much of this do you keep?

32. The Buyer’s Process 24 Challenge Need Solution Assessment

33. Playing in the Value Game 25 Challenge Need Solution Assessment When Value Is Determined When Many Sales Discussions Begin

34. Communicating with Customers 26 How does it work? What does it do? Why is this competitively better? Who will benefit from this? Where can this take us? Courtesy Jim Pancero Inc. www.pancero.com

35. Communicating with Customers 27 How does it work? What does it do? X Why is this competitively better? Who will benefit from this? Where can this take us? Courtesy Jim Pancero Inc. www.pancero.com

36. Better Customers Yield Better Profits 28 Great Customer Profitability Customer Quality / Fit Poor

37. Better Customers Yield Better Profits 29

38. Better Customers Yield Better Profits 30

39. Finding the Right Buyers 31 Challenge Need Solution Assessment “I know the problem well” Customer Perception of Complexity & Value “I had no idea that was the problem” “Oh, that’s all there is to the problem?”

40. Scope and Complexity of Responsibility 32 75 5 20 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5

41. Segmenting Your Customer Base 33 Top 20% Middle 40% Profit Bottom 40%

42. Segmenting Your Customer Base 34 Key Account Management 1:1 Programs Top 20% Middle 40% Profit Account Management 1:Many Programs Bottom 40% Account Service

43. Stage 1 Sales Ecosystem 35 Your Company

44. Stage 2 Sales Ecosystem 36 Your Company Sales

45. Manage the complexity with a plan 37 Sales Plan What to Do How to Do It Situation Objectives Tactics Channels / Staffing Budget Timing Campaigns & Initiatives Customer Segments Sales Process

46. Key Takeaways Think value, not cost Talk about need, not solution Start where your customers’ hearts and minds are Focus on great customers Segment your customer base Be proactive with your best customers Plan your sales activities 38

47. Table Discussion How does this fit with how you’re managing sales now? What are 1-2 things you could begin doing differently this afternoon to improve the way you manage sales? What do you need to do to follow up on this session? 39

48. Improving your marketing 40

49. Your Marketing Activities 41 Brochures Trade Shows Advertising Web site SEO/SEM Social Media

50. The Stages of a Decision 42 Unaware Aware Interest Desire Commitment Purchase Marketing 1:Many Sales 1:1

51. The Marketing Plan 43 Marketing Plan What to Do How to Do It Objectives Tactics Staffing Budget Timing Campaigns & Initiatives

52. Marketing Strategy 44 Business Strategy Marketing Strategy Marketing Plan

53. The Basic Strategy Components 45 Vision & Goals Business Strategy Resources Value Marketing Strategy Marketing Plan Targets Offerings Positioning

54. 46 Marketing Strategy What to Offer How to Engage How to Do It Value Communication Sales Management Offerings Marketing Plan What to Do How to Do It Objectives Tactics Staffing Budget Timing Campaigns & Initiatives

55. Your Value – Engaging The Hedgehog Principle The fox does many things, but the hedgehog does one important thing. 47 Passionate about Best at HH Economic engine

56. Key Takeaways Handle the top of your funnel with 1:many activities Plan your activities Only do activities that serve a clearly-defined objective Clarify what you offer, how you engage prospects and customers, and how you handle marketing – before you start planning your activities Use the hedgehog principle to clarify your value For marketing to really be effective, you need to clarify your business strategy 48

57. Case Study Walk through marketing challenges with volunteer(s) 49

58. Wrap up 50

59. Additional Stage 2 Resources Phimation Products & Services Stage 2 Owner’s Manual Stage 2 Education Series Stage 2 Coaching Program Stage 2 Consulting 51

61. Management Training Course

63. Managing Change

64. Leadership

65. Strategic Planning

66. Marketing

67. Sales

68. Talent Management

69. Hiring

70. Compensation

71. Innovation

72. Productivity

74. 55