Sadly, today’s marginal performing companies have a high probability of being tomorrow’s bankruptcies. Ten CEO Entrepreneur Challenges article

1. Solving the Value Equation
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So you have a great idea, and you assembled a team, launched your business, and now
are fulfilling your vision. But will your dream create wealth?
For entrepreneurs to create wealth from their business, that is to turn their idea and vision into a
profitable company and then maturate it to a sector leader, takes significant commitment,
patience, and smarts. It is rare to create wealth crossing from startup to enterprise because it's
difficult to retain control of your vision while capturing the market demands.
Solving the Value Equation
After years of advising companies, intermediaries, and investors, we at Ephor Group, have come
to the realization that the creation of wealth requires a perform business coupled with a "CEO
Entrepreneur".
 We believe that the CEO Entrepreneur is the single biggest, and most important
contributor to wealth creation.
 We believe that the key employees should be the primary equity beneficiaries and we
believe in preserving the equity for these key contributors to the business.
Small businesses are small because founders do not get the guidance and resources they need.
Combine the founders’ passion and commitment, with Ephor operating principles and you've got
a formula for success.
 Did you know that more than 300,000 new businesses are created every year in the
United States, but less than 1% make it ten years, and less than one percent reach $10M
in annual revenues?
Avoid making the wrong investments, management decisions, and management errors.
Entrepreneur
Early Warning
Signs
Entrepreneur
Early Warning
Signs

2. Entrepreneur Early Warnings Signs
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Ask yourself a question: Is your business in the same financial position it was 2 years ago?
Most founders have a great idea. And the American Dream gives us hope that with a lot of hard
work and a little luck, we'll make it big one day. But it's human nature to avoid getting decisive
help we need when we need it.
Sadly, today’s marginal performing companies have a high probability of being tomorrow’s
bankruptcies. To create wealth by 2020 requires not only a superb business model, but proven
day-to-day operating performance which outperforms the competition. Unique value-
propositions are simply not enough.
Success in 2020 requires businesses which are the most productive and economically efficient,
promote and excel at CHANGE management, invest in their people, process excellence, and
application of technology systems while focusing on being REALLY GOOD at customer
satisfaction.
Being a CEO Entrepreneur is almost an impossible job. There literally are not enough hours to
work on everything. Consider that an ideal CEO Entrepreneur needs to:
 Have a knack for motivating employees and customers to optin
 Run the management team
 Oversee budgeting, planning, and strategic finance
 Be a great evaluator of talent
 Formulate the right messaging and communicate effectively
 Build a high performance workforce
 Understand employees’ strengths and weaknesses
 Be abreast of industry trends and changes
 Be aware of the operating and financial performance at all times and have plans in place
for any potential gap, bottleneck or setback
 Be respected and admired.
No one is perfect, and certainly understanding ones’ limitations is key.

3. Entrepreneur Early Warnings Signs
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10 Early Warning Signs of Barriers to Wealth Creation
CEO Challenge Problem Outcome
Management Science
& Governance
#1. Annual budget deficits
for 2 consecutive years.
Illustrates poor planning capability,
ineffective workforce management,
and severe leadership failures.
Product Leadership #2. Single digit revenue
growth for a 2-year period.
Illustrates product deficient
differentiation challenges: or sales
personnel productivity issue.
Operating Execution #3. Gross margins are not
increasing relative to revenue
increase.
Illustrates lack of scalability of cost of
goods sold, and inefficient processes
which are a barrier to scaling.
Revenue Execution #3. Cost of customer
acquisition expense as a %
of revenue is NOT
decreasing year over year.
Illustrates Sales and Marketing
Expense inefficiency.
Product Leadership #4. Lack of ability to raise
prices gradually.
Every 2 years pricing policy should
call for an increase.
Operating Leadership #5. Lack of scalability of
general and administration
expenses.
Illustrates that management “throw a
new body at every issue" and lack of
scalable processes.
Corporate
Governance
#6. Outsourcing or
professional advisors are
not being utilized for critical
functions such as:
governance: corporate
development: strategic finance:
HCM; nor IT audit services.
Illustrates that management is too
control oriented and not willing to
surrender control.
Culture & Leadership #8. Leadership only utilizes
outside help, advisors or
consultants, on a functional
project basis only.
Results in lack of franchise effect for
the business and the “holistic”
business model is not being
developed synergistically.
Culture & Leadership #9. Involuntary turnover of
>15% of the workforce on
an annual basis for 2 years.
Results in an unattractive place to
work.
Culture & Leadership
#10. EBITDA % and
revenue growth % do NOT
trend with each other.
Illustrates lack of scalability,
fragmented business model and
processes and “event orientation”
leadership.

4. Entrepreneur Early Warnings Signs
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Please contact Ephor Group at 214.702.6427 or ephor@ephorgroup.com for further
information and discussions relating to:
 Wealth strategy
 Strategic Clarity
 Market comparables analysis & forecast
 Financial engienering advisory for M&A, succession, or recapitlization
 Expansion corporate development options
 Equity Structures, Compensation Planning, Capital Markets Investment
 Board presentations for corporate development &/or strategic planning
Contact Ephor Group to discuss your needs in confidence.

5. Entrepreneur Early Warnings Signs
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When considering expansion, this is what you need to know:
Structural Reporting Changes
Key Personnel Hires, Changes
Compensation Changes, Equity Participation
By Functional Area: Key Contributor Review
GoToMarket Program, Goals, Budget Factors
New Customer Logos
Distribution Partners, Sources
Technology Application
Product/Service Delivery
Operating Measurables & Reporting
WFM / HCM Productivity & Metrics
Financing Activities
Financing Spend Analysis
For a detailed review of your sector options and comparables, contact:
Solving the Value Equation
ephor@ephorgroup.com
214-702-6427
24 E. Greenway Plaza, Ste. 400
Houston, TX 77046
www.ephorgroup.com
Does Your
Strategy Create
Wealth?
What Do I Need
To Know To
Expand & Why?