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CEO Advisor® Newsletter
May 2020
The Right Growth Capital For Your Company

Accelerating the growth of your business is the best path to greater sales, profits and increasing the value of your business for an optimal exit and sale of your company in the future. The right type of growth capital is critical for each and every company. 

 

CEO Advisor, Inc. advises CEOs, presidents and business owners on the right growth capital for you, and then works with you as your trusted business advisor to plan, prepare and improve your business. We also work with you as an advisor to put this capital to work in your business to accelerate growth, increase sales and profits, as well as, increase the value of your business for the optimal exit.

 

The Optimal Exit for You

 

If you are not ready to sell your company, but have most of your net worth tied up in the business, then you need to evaluate your options to better secure your financial future. A serious market downturn or failing economy could be devastating to both you and your business. 

 

Bank financing is not always the best method to secure cash for your business given the many contingencies that come with bank loans, as well as, the monthly payments and the need to pay back the loan when that time to repay may be very untimely. If your personal or business credit is not great, it will also be extremely challenging to receive a bank loan for any reason in today's business environment.

 

Get Money Out of Your Business Now, Sell Later

 

For an established company with $5+ million in sales, or even for a much larger company, and some reasonable level of profits, growth capital can be very attractive from a Private Equity firm. CEO Advisor, Inc. has relationships with many Private Equity firms and can help you prepare for growth capital through an equity investment at very attractive terms. 

 

Private Equity investments can be a minority or a majority investment in your company, and in both cases you have the opportunity to take a larger "Second bite of the apple" when you ultimately sell the company to a large strategic buyer. And, most importantly, you can also take money out of the company personally now, at the time the investment is made, to further solidify your financial future in the near term.

 

Accelerating your growth is the key to staying ahead of your competition, increasing sales, margins and net profits, increasing the value of your business, and attracting a buyer down the road at a strong valuation. Without this accelerated growth, you are at risk of declining profits and you will certainly be the owner of your company for a very, very long time - in good health or bad, with a desire to sell the business or not.

 

Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. at (949) 629-2520, by mobile phone at (714) 697-3370 or by email at MHartsell@CEOAdvisor.com to discuss your growth capital options, valuation and exit strategy in a no cost, no obligation initial consultation.


With Changing Market Conditions, NOW May Be the Right Time to  RIGHTSIZE
When you evaluate the management practices of hundreds of technology companies, here are the primary reasons they fail. 
Evaluate your own management decisions and practices and seek help from a business consultant or business advisor to address your
specific needs.
1. Lack of Market Focus
Emerging technology companies often do anything possible to generate revenue and in the process try to be all things to all people. Worried about losing business they avoid segmenting the market and refuse to focus on one to three key vertical markets. As a result, the company is unable to effectively serve any market segments effectively and management is suddenly swamped with support problems and competitors.
2. Undifferentiated Products
Most technology products and services that fail do so because of a lack of differentiation. Successful companies differentiate their product from all other products on the market. Differentiation is possible on the bases of five fundamental factors: function, time utility, problem solved, price and positioning. These five elements are critical to uniquely positioning your products and services to achieve success and profits.
3. Poor Market Research
Many companies routinely perform the wrong type of market research. Statistical surveys of customers alone do not provide the qualitative information that is needed. Because your target audience often relies as much on perceptions as on facts, qualitative research intended to identify existing needs has equal or greater value in assessing, planning and executing a company's marketing strategy.
4. Excessive Product Improvement
Technology products and services are generally used over an extended period of time, are integrated with complementary products and impose learning costs on customers. Customers require time to implement and recover their investment in high-tech products. The rapid introduction of new and improved versions can make a customer regret a previous purchase, delay all new purchases, and agonize over similar purchases in the future. Additionally, the time and costs related to excessive product development can delay product launches and delay sales opportunities and revenues.
5. Incomplete Products
Customers view products very differently than the technology companies that create or supply them. Technology companies tend to try to sell products on the basis of price, special features and technical specifications. These technical factors are often favored by the engineers who typically run technology companies. The problem is that most customers consider factors such as product support and company reputation to be more important. 
6. Failure to Establish the Right Competitive Barriers
Traditional barriers to competition are of little value in the technology industry. Patents can be effective but are very expensive, divulge trade secrets and take years to come to fruition. Conventional techniques are mostly designed to prevent market entry and tend not to work in technology-based businesses. The most effective competitive barriers in high-tech are the perceptions held by customers and prospects of product differentiation and first to market with a specialization in a market segment.
7. Using Price Alone to Drive Market Transformation
It is easy to misinterpret the role price plays in the market. And it is a mistake to believe that a technology product or service would be widely used and purchased if its cost was low enough. Price is a function of value and utility, and products and services should be positioned and marketed accordingly.
8. Improper Marketing
Marketing is both an art and a science. Positioning, pricing, sales strategy, target vertical markets and other factors contribute to the success or failure of your products and services and the corresponding sales. A well-crafted marketing plan is critical to success. Improper marketing or lack of marketing can be a product killer or cripple your company as a whole.
9. Sales Mismanagement
There's more to sales management than most companies realize. Specific skills are required to effectively manage each type of sales channel and those skills must be developed internally starting with an effective direct sales force. Unique management challenges exist for each primary type of sales channel: direct selling, online sales, dealers, OEMs, alliance partners and value-added resellers (VARs). Seek a business consultant or business advisor to assist you in optimizing your sales strategy as a critical factor in your success.
10. Misinterpretation of the Technology Adoption Lifecycle Model
The primary technology adoption lifecycle model describes the market acceptance of new products in terms of Innovators, Early Adopters, Early Majority, Late Majority, and Laggards. The process of adoption over time is illustrated as a classic normal distribution or "bell curve".
Because the technology adoption model is expressed in terms of a standard bell curve, it means statistically, a random sample of any given market or population must contain: 2.5% Innovators, 13.5% Early Adopters, 34% Early Majority, 34% Late Majority, and 16.0% Laggards. So no matter what industry you tend to be in, there will always be a sequence of adoption by different types of buyers.
When you evaluate the management practices of hundreds of technology companies, here are the primary reasons they fail. 
Evaluate your own management decisions and practices and seek help from a business consultant or business advisor to address your
specific needs.
1. Lack of Market Focus
Emerging technology companies often do anything possible to generate revenue and in the process try to be all things to all people. Worried about losing business they avoid segmenting the market and refuse to focus on one to three key vertical markets. As a result, the company is unable to effectively serve any market segments effectively and management is suddenly swamped with support problems and competitors.
2. Undifferentiated Products
Most technology products and services that fail do so because of a lack of differentiation. Successful companies differentiate their product from all other products on the market. Differentiation is possible on the bases of five fundamental factors: function, time utility, problem solved, price and positioning. These five elements are critical to uniquely positioning your products and services to achieve success and profits.
3. Poor Market Research
Many companies routinely perform the wrong type of market research. Statistical surveys of customers alone do not provide the qualitative information that is needed. Because your target audience often relies as much on perceptions as on facts, qualitative research intended to identify existing needs has equal or greater value in assessing, planning and executing a company's marketing strategy.
4. Excessive Product Improvement
Technology products and services are generally used over an extended period of time, are integrated with complementary products and impose learning costs on customers. Customers require time to implement and recover their investment in high-tech products. The rapid introduction of new and improved versions can make a customer regret a previous purchase, delay all new purchases, and agonize over similar purchases in the future. Additionally, the time and costs related to excessive product development can delay product launches and delay sales opportunities and revenues.
5. Incomplete Products
Customers view products very differently than the technology companies that create or supply them. Technology companies tend to try to sell products on the basis of price, special features and technical specifications. These technical factors are often favored by the engineers who typically run technology companies. The problem is that most customers consider factors such as product support and company reputation to be more important. 
6. Failure to Establish the Right Competitive Barriers
Traditional barriers to competition are of little value in the technology industry. Patents can be effective but are very expensive, divulge trade secrets and take years to come to fruition. Conventional techniques are mostly designed to prevent market entry and tend not to work in technology-based businesses. The most effective competitive barriers in high-tech are the perceptions held by customers and prospects of product differentiation and first to market with a specialization in a market segment.
7. Using Price Alone to Drive Market Transformation
It is easy to misinterpret the role price plays in the market. And it is a mistake to believe that a technology product or service would be widely used and purchased if its cost was low enough. Price is a function of value and utility, and products and services should be positioned and marketed accordingly.
8. Improper Marketing
Marketing is both an art and a science. Positioning, pricing, sales strategy, target vertical markets and other factors contribute to the success or failure of your products and services and the corresponding sales. A well-crafted marketing plan is critical to success. Improper marketing or lack of marketing can be a product killer or cripple your company as a whole.
9. Sales Mismanagement
There's more to sales management than most companies realize. Specific skills are required to effectively manage each type of sales channel and those skills must be developed internally starting with an effective direct sales force. Unique management challenges exist for each primary type of sales channel: direct selling, online sales, dealers, OEMs, alliance partners and value-added resellers (VARs). Seek a business consultant or business advisor to assist you in optimizing your sales strategy as a critical factor in your success.
10. Misinterpretation of the Technology Adoption Lifecycle Model
The primary technology adoption lifecycle model describes the market acceptance of new products in terms of Innovators, Early Adopters, Early Majority, Late Majority, and Laggards. The process of adoption over time is illustrated as a classic normal distribution or "bell curve".
Because the technology adoption model is expressed in terms of a standard bell curve, it means statistically, a random sample of any given market or population must contain: 2.5% Innovators, 13.5% Early Adopters, 34% Early Majority, 34% Late Majority, and 16.0% Laggards. So no matter what industry you tend to be in, there will always be a sequence of adoption by different types of buyers.

During these very difficult and uncertain times, a proactive, trusted advisor with experience and expertise in rightsizing companies can be extremely valuable. To establish whether rightsizing is right for your business, it's important to objectively address your situation and your company.

Have internal and external factors caused your needs and objectives to change? Can you afford to wait for a check from the Payroll Protection Program, if you qualify at all, and will just 8 weeks of reimbursement of payroll and rent guarantee your success going forward? Is your managment team equipped with the right skills to address the many variables you must manage today? Answering these questions can help you determine if rightsizing will properly address your needs.

Rightsizing requires experience, expertise, planning and a sense of urgency. Rightsizing also requires companies to eliminate any duplication of work so that the company is running efficiently and without redundancies. It also enables the company to more effectively plan for the future and meet its strategic objectives both short-term and long-term.

Whether your need to reduce costs and expenses, reduce your workforce, reorganize certain aspects of your business or need help accessing your capital needs, CEO Advisor, Inc. can assist you in achieving your goals. The key is to quickly position the company to maintain profits and shareholder value.

CEO Advisor, Inc. provides affordable, hands-on, goal-driven, trackable business advisory services to CEOs, presidents and business owners of small and mid-size businesses to ensure results. We have access to capital, and will quickly implement best practices coupled with definitive planning and strong decision making to greatly improve your business.

This is the time to be proactive and gain the help you need. CEO Advisor, Inc. has helped hundreds of CEOs, presidents and business owners achieve their goals and change their lives dramatically over the past 16 years.

Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. for a no cost initial consultation at (949) 629-2520, by mobile phone at (714) 697-3370 or by email at 

MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.


Testimonial  


"Thank you Mark! And thank you for all your help over the years. It is truly appreciated and it was a great ride of accomplishment for all of us. Stay in touch!


Echoing Craig's statement of much thanks and appreciation for the many years in the trenches together with us and helping us achieve a successful exit."

CEO and President, Digital Agency Client
(After Their Successful Sale)

CEO/President, Engineering Services/Manufacturing Company


Whether it is growing a business to the next level, turning a distressed company around or preparing a company for an exit, Mark's firm, CEO Advisor, Inc, provides a broad range of services and Mark is there for the CEO every step of the way."

 


Partner

Haynes & Boone, LLP

Words of Wisdom


"Life is a series of near misses ... What we ascribe to as luck is not luck at all. It's seizing the day and accepting responsibility for your future."

Howard Schultz
American Entrepreneur, Chairman of Starbucks