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Bruce Fischer, MBA, CMC, Chairman Fischer Group Inc. 1 How to shift YOUR Company into High Gear! Chairman’s View

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: http://bit.ly/H1ZxbP

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Page 1: How to Shift Your Company into High Gear! - WelchGroup Consulting

Bruce Fischer, MBA, CMC, ChairmanFischer Group Inc.

1

How to shift YOUR Company into High Gear!

Chairman’s View

Page 2: How to Shift Your Company into High Gear! - WelchGroup Consulting

Agenda

2

• Top 5 Red Flags

5. Quantifiable Advantage

6. Financial Management

7. Talent Management

8. Strategic Direction

9. “Do it All” Business Owner• Panel Discussion

Page 3: How to Shift Your Company into High Gear! - WelchGroup Consulting

Chairman’s View

Value challengePerformance 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

Page 4: How to Shift Your Company into High Gear! - WelchGroup Consulting

Jeffrey Dale, ChairmanCEO, Odawa Group Inc.

4

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

Quantifiable Advantage

Page 5: How to Shift Your Company into High Gear! - WelchGroup Consulting

What sets you apart in the Marketplace?

5

Product/Service Differentiation Innovation Corporate Culture Cost/Operational Leadership

Page 6: How to Shift Your Company into High Gear! - WelchGroup Consulting

Business Books

Page 7: How to Shift Your Company into High Gear! - WelchGroup Consulting

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

Page 8: How to Shift Your Company into High Gear! - WelchGroup Consulting

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

Page 9: How to Shift Your Company into High Gear! - WelchGroup Consulting

Local Quantifiable Advantage

Page 10: How to Shift Your Company into High Gear! - WelchGroup Consulting

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

Page 11: How to Shift Your Company into High Gear! - WelchGroup Consulting

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

Page 12: How to Shift Your Company into High Gear! - WelchGroup Consulting

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

Page 13: How to Shift Your Company into High Gear! - WelchGroup Consulting

Advantage of Quantifiable Advantage

VALUE TO BUSINESS

• Attract new customers• Retain existing customers• Faster revenue growth• Maintain/improve

margins

VALUE TO OWNER

• Increase value of the business

• Options for owner– Grow the business– Transition or sell

business

Page 14: How to Shift Your Company into High Gear! - WelchGroup Consulting

Polling Question #1:

14

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

Page 15: How to Shift Your Company into High Gear! - WelchGroup Consulting

Candace Enman, CA, CPAPresident, WelchGroup Consulting

15

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

Financial Management

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16

1. Financial Statements

2. Operating Reports

3. Audits

4. Intellectual Property

5. Tangible Assets

6. Banking & Capital

7. Risk & Insurance

8. Tax

Financial Drivers

Page 17: How to Shift Your Company into High Gear! - WelchGroup Consulting

1st Gear

17

1st Gear: Financial Statements

1. Spreadsheets2. “Box Jobs”3. Computerized financial reporting package

• Balance sheet• Profit & loss

Doing compliance reporting alone will not add value to your business.

Page 18: How to Shift Your Company into High Gear! - WelchGroup Consulting

2nd Gear

18

“management reports that are routinely generated and used by management to review the company’s

performance and make operational decisions”

2nd Gear: Operational Reporting

1. Operational reporting• Do they tell the

company story?• Key Performance

Indicators (KPI’s)2. Transparency

Page 19: How to Shift Your Company into High Gear! - WelchGroup Consulting

2nd Gear

19

3. Forecasts/Projections4. Dashboard reporting

Real time reporting

Position yourself to make decisions proactively. Accelerate or put on the brakes when you need to.

2nd Gear: Operational Reporting

Page 20: How to Shift Your Company into High Gear! - WelchGroup Consulting

3rd Gear: Audit

20

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!

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21

Cruise Control

Page 22: How to Shift Your Company into High Gear! - WelchGroup Consulting

Polling Question #2:

22

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

Page 23: How to Shift Your Company into High Gear! - WelchGroup Consulting

Margo Crawford, PresidentBusiness Sherpa Group

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

Page 24: How to Shift Your Company into High Gear! - WelchGroup Consulting

Financial Measures

Revenue, EBITDA

3 Major HR Themes that can Depress Value

24

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 ensure sustainable and repeatable performance

Page 25: How to Shift Your Company into High Gear! - WelchGroup Consulting

Time

Corporate Leadership and OperationsBuild, deliver & support

Design & development

Marketing & Sales

Hea

dcou

nt

Product definition roles

Bus

ine

ss P

erfo

rman

ce

Hea

dcou

nt (

mix

/#s)

Formation Early Growth

Accelerated Growth

MaturingGrowth

Next StageGrowth

• 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

Do you have the right team at key business inflection points?

Page 26: How to Shift Your Company into High Gear! - WelchGroup Consulting

• 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

• No or exceptionally low turnover OR exceptionally high turnover

• 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

• Skills to achieve what the business needs

Value DepressorsIndicators of Workforce Weakness

Page 27: How to Shift Your Company into High Gear! - WelchGroup Consulting

Val

uatio

n

TimeCurrent Value

$50M

Future Value

$70M

$30M

$60M

$20M

$40M

$90M

$80M

$100M

How do you get the team driving this additional valuation?

• 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

Do you have a team that is performing at its full potential to drive business value?

Page 28: How to Shift Your Company into High Gear! - WelchGroup Consulting

• Expectations not articulated

• No communications around corporate goals

• Connection of corporate goals to individual goals and behaviours

• Lack of approaches to reward behaviours that drive value

• Missed milestones and key deliverables

• Star performers not identified and not locked into business

• Nothing in place to push performance – possible low caliber team

Value DepressorsIndicators of Low Performing Team

Page 29: How to Shift Your Company into High Gear! - WelchGroup Consulting

• Protect IP & assets• Retain or lock in key employees• Appropriate liabilities and obligations; mitigate risks

Contracts

Compensation

Sales Incentives

Policies

Workforce Planning &

Recruitment

Performance Management

• Appropriate compensation for market• Motivate and Reward performance

• Sales compensation plans that drive quota attainment• Models that make financial sense and are in line with market• Terms that create appropriate obligations

• Policies that ensure compliance with laws• Practices that align with business values; motivate the right behaviours;

and ensure sustainable business operations

• Exceptional recruitment process and selection practices – resourceful and diligent sourcing; hire for best fit

• Workforce plans that align with business goals

• Effective feedback tools; programs that build goals that align with business goals

Having the right structures & processes in place to ensure sustainable and repeatable performance.

Contracts

Compensation

Sales Incentives

Policies

Page 30: How to Shift Your Company into High Gear! - WelchGroup Consulting

Polling Question #3:

30

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

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Strategic Direction

Bron Vasic, CA, CMC, ChairmanPresident, B Vasic & Associates Inc.

31

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.

Page 32: How to Shift Your Company into High Gear! - WelchGroup Consulting

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

Page 33: How to Shift Your Company into High Gear! - WelchGroup Consulting

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Management Functional Areas

StrategicManagement

Financial

Operations/

Delivery

HumanResources

Need for Alignmen

t

Marketing

Information

Technology

Page 34: How to Shift Your Company into High Gear! - WelchGroup Consulting

Strategic Planning

34

1. Focus its energy2. 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

Strategic planning is a management tool

Page 35: How to Shift Your Company into High Gear! - WelchGroup Consulting

Excuses to Think or Act Strategically

35

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

Page 36: How to Shift Your Company into High Gear! - WelchGroup Consulting

5 Strategic Questions to Ask

36

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?

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Strategic Direction

37

• 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

Page 38: How to Shift Your Company into High Gear! - WelchGroup Consulting

Polling Question #4:

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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

Page 39: How to Shift Your Company into High Gear! - WelchGroup Consulting

Polling Question #5:

39

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

Page 40: How to Shift Your Company into High Gear! - WelchGroup Consulting

Chuck Richards, CEOChairman’s View/CoreValue

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

Page 41: How to Shift Your Company into High Gear! - WelchGroup Consulting

The fundamental responsibility

of the CEO is to build

enterprise value.

Owner’s Role

Page 42: How to Shift Your Company into High Gear! - WelchGroup Consulting

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?

Enterprise Value is:

Page 43: How to Shift Your Company into High Gear! - WelchGroup Consulting

Polling Question #6:

43

Do you know the value of your Company today?

1. Yes

2. I have a general idea

3. No

Page 44: How to Shift Your Company into High Gear! - WelchGroup Consulting

Polling Question #7:

44

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

Page 45: How to Shift Your Company into High Gear! - WelchGroup Consulting

Polling Question #8:

45

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

Page 46: How to Shift Your Company into High Gear! - WelchGroup Consulting

1. Profit

2. Revenue

3. Captured on the Balance Sheet

Enterprise Value is not:

Page 47: How to Shift Your Company into High Gear! - WelchGroup Consulting

A company’s ability to generate future revenue and profit,

without the current business owner(s) in charge

Enterprise Value is:

Page 48: How to Shift Your Company into High Gear! - WelchGroup Consulting

You Need to Know

Page 49: How to Shift Your Company into High Gear! - WelchGroup Consulting

43%

22%

19%

Red Flags – Negate all Value

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6,500,000+ private businesses with payrolls

• 50%+ North American job base

• 75%+ Owned by Boomers

• 80%+ Failure rate to transfer ownership

Why it Really, Really Matters

Page 51: How to Shift Your Company into High Gear! - WelchGroup Consulting

Business is An Engine

Page 52: How to Shift Your Company into High Gear! - WelchGroup Consulting

Finance Measures the Outputs of the EngineRevenue and Profit

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Value = Ability of the Engine to Dependably Generate Revenue and Profit into the Future

Page 54: How to Shift Your Company into High Gear! - WelchGroup Consulting

Need to Look “Under the Hood”

Page 55: How to Shift Your Company into High Gear! - WelchGroup Consulting

CoreValue Rating based on a framework of 18 Value Drivers

Page 56: How to Shift Your Company into High Gear! - WelchGroup Consulting

Define Success– Owner Interviews– Management Interviews

Core Value Software– Assess– Track

The Chairman’s View Process

Page 57: How to Shift Your Company into High Gear! - WelchGroup Consulting

• Transferable Enterprise Value• Potential Value• Value Gap• Red Flags• Pre Due Diligence• Roadmap to Improve Value

CoreValue “Assess”“Market View” of the Value of Your Company

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• Quantified list of Actions• Prioritize Actions by $$ / ROI• Regular CoreValue Rating reviews• Track how Enterprise Value increases• Complete Due Diligence as needed

CoreValue “Track”:Building real Transferable Enterprise Value

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Next Step: simpleENGAGE

Page 70: How to Shift Your Company into High Gear! - WelchGroup Consulting

• Structured Conversation• Strength of your Business Engine• Estimate of your Value Gap• Identify 5 Value Drivers that need your

time

CoreValue “Engage”:Begin the conversation of a Lifetime

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Panel Q&A

72

• Bruce Fischer

• Jeffrey Dale

• Candace Enman

• Margo Crawford

• Bron Vasic

• Chuck Richards

Page 73: How to Shift Your Company into High Gear! - WelchGroup Consulting

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Contact UsCandace EnmanPresident, WelchGroup [email protected]

Bruce FischerChairman, WelchGroup [email protected]

Jeffrey DaleChairman, CEO, Odawa Group [email protected]

Bron VasicChairman, WelchGroup [email protected]

Chuck RichardsCEO, Chairman’s View/[email protected] www.corevaluesoftware.com

Margo CrawfordPresident, Business Sherpa Group [email protected]