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Posts Tagged ‘CEO’
Most people answer this question with an immediate "YES", until they actually sit down and try to write a script. It appears easy to write a script… when you first think about it. However, when it comes down to developing the actual strategy, positioning, subtleties, interaction, closing, and formatting (not to mention the objections and rebuttals), the ease of scriptwriting turns more complex than first anticipated.
Here are some things to ask yourself before you definitively answer the question: Can I write a telemarketing script?
- Do you have the marketing "know-how" to keep people on the phone from the outset of the call?
Do you know how to incorporate "interaction" into the script so that it doesn’t sound forced and prospects will provide an honest response? And will this interaction lead them to a "yes"? - Can you "close" the prospect with such subtlety that they know they’re buying a product or service (or setting up an appointment) and yet you haven’t broken the flow of the call?
- Can you format the script so that it reads easily (hyperlinks, correct succession of Presentation, Explanations, QTC, etc) and flow is not broken?
- Do you know how to position your product or service so that prospects see it differently from all similar products and services?
These are only a few of the questions to ask yourself before trying to write your own script. There are many others, but if you answered yes to at least 3 of these, you’re on your way to a great script.
After you have decided that you can write a telemarketing script you need to put yourself in the mindset of your customer and focus on their needs not your product. Your product will come naturally after they believe that you can solve their problem. The most important thing out of the gate it to get their attention so that you can release the distraction, or anger or whatever they might feel when you call. I have been calling on CEO’s for a couple of months because of some partnership deals I am working on for a client and right from the beginning I stress that we are looking for a mutually beneficial relationship. I have had not one hang-up or angry "who are you?". They have all said "tell me more about what you mean" or "what exactly do you mean."
I then educate them on how I think we can help each other do what we do best and be more successful while making higher profits at the same time. If you are calling on a customer it is the same way. Instead of saying, "I am mike selling car wash equipment." you would say something like "How would you like to wash your car once a month and have it look showroom clean the whole month?" That gives you a way in to give more information about how your product is going to fulfill their need.
They may ask "how that would work", or "are you kidding"…anything that gives you an opportunity to get a step closer to allowing them to buy your product is what you want. I was in a business group that we go to each month where a a sales guy in the group said he started saying, "This is a sales call do you want to hang up?" At first we all laughed, but then he started talking about having a very high success rate. Why it may sound crazy it is another way to snap the person out of their daze long enough to listen. He would always follow that up with fulfilling their need. How would you like to make more money next week or whatever that may be. Below I have provided a simple telemarketing script to show you how it works.
This is an example of Cold Calling For Partnership
Gate Keeper
Hello ABC Company, Lynn Speaking
Yes my name is Jim Wilson President of Jim Wilson Enterprises, I was wondering who I would speak to in your company about your products, services, and partnership opportunities.
Hmmm. What type of business are you again?
Lynn, we specialize in software control systems for ABC. I believe our products would enhance your product offering and increase your profit.
You Know I think the best person to speak to would be our CEO his name is Big Bob. Let me put your call through. He may be out of the office.
Thank you so much Lynn for your time. I appreciate your help, have a wonderful afternoon.
CEO
This is Bob
Good Afternoon Bob my name is Jim Wilson President of Wilson Enterprises. Lynn thought I should speak to you about how my products may enhance your service offering and increase your profits.
So what does your company do exactly?
Bob we specialize in software control systems for ABC that your product directly connects to.
Well we are in the hardware business, we don’t do software.
That is correct Bob, but there are companies out their that make millions of dollars connecting to your system. Wouldn’t you like to have part of that money in your pocket for not much more work.
Hmmm. well how do you fit into that picture.
Well Bob, we have been in the software business for a long time and want to continue to specialize in what we do. We believe that being successful requires focus and finding partners that do the parts of our business that we don’t love. We love what we do but don’t love what you are great at. From our research you already have a very successful sales team and support staff. They are considered world class in our industry. We are considered world class in the control systems we develop but are heavily leveraged with engineers. This causes us to waste valuable research and implementation time calling on the same customers that you call on for different products that connect together. Imagine how much money can be made when you control the hardware and software of a system.
You know, what you are saying makes a little sense. You want to focus on software and R&D which is your expertise. We currently are researching ways to grow as well and how to utilize or sales and support staff more.
The benefit we get by working together is being able to both do what we are good at while at the same time decreasing our turnaround times and sales cycles. This will allow both of us to increase our profits and utilize our resources better. We will also be able to act faster than our competition who has to manage two full companies. I know of one of your competitors looking to build an enterprise system like I am talking about right now.
Let me get some time on my schedule so we can meet and discus the possible revenue from a partnership. We are in the acquisition process right now to grow our business. Are you only looking for partnerships or acquisition as well?
We are looking for a mutually beneficial relationship with a company that has the same values that we do and eye for success. We are always open to all discussions. I will work with your assistant to schedule a date.
Ok, look forward to speaking with you in person.
The main idea is to get in person for this example. When you meet you want to be to the point, have all of your facts together, including the numbers you expect the partnership to generate. Always talk about partnership and mutually beneficial and mean it. Never come from only I need this or I only care about this. It will put people off and ruin a quick in that you got from your call. Please remember that in small business you have a chance to get the CEO or president much easier than you do in Fortune 500. You may have several gatekeepers in Fortune 500. Remember to be nice and respectful of each one you meet whether
they are a manager or an admin.
Ready, fire, aim. Wait, the sequence is wrong! But, does this sequence describe the way you do business? Unfortunately, many of today’s businesses “fire” first and “aim” later in an effort to seize an opportunity in the marketplace. While this particular strategy may yield some positive results in the short term, it may have a different effect in the long term. So, what can you do to avoid this? Strategic planning offers options!
Strategic planning may best be summed up by the words of one of the country’s most prominent business authorities, Peter Drucker. According to Mr. Drucker, “Strategic planning does not deal with future decisions. It deals with the futurity of present decisions. What we have to do today is to be ready for an uncertain tomorrow.” The idea sounds simple enough. In fact, in the 1960s the popularity of corporate strategy sky-rocketed and nearly every CEO earned his keep by categorizing, analyzing, quantifying and predicting. Through these exercises, it was believed that one could plot a strategy that would safely steer a company to the threshold of success and beyond. By the 1980s, however, U.S. companies found themselves fighting for market share with their global competitors. In the struggle to catch up, corporate America began the infamous trend of reengineering. While reengineering may help squeeze a little more profit out of operations, it does little to generate a distinctive competitive advantage. That is where strategic planning comes in!
No longer a top-down, internalized process, today’s strategic planning process brushes with a broad stroke and encompasses a variety of perspectives, models and approaches. Goals-based planning is the most popular approach. Goals-based strategic planning offers some striking benefits. By focusing on the organization’s mission and vision, it offers a mechanism to establish goals, strategies to achieve those goals and realistic action plans – all while ensuring consistency with the company’s core values. Documenting this provides a basis from which progress can be measured.
The real benefit of strategic planning is in the process itself, however, and not the resulting documents. Working through the process ensures that all the organization’s leaders are “on the same page” which means that valuable resources are focused on the same priorities. By establishing the process, companies can also react quickly and methodically to changes in the marketplace rather than firing first and aiming second. Finally, resulting from direct involvement in the process, strategic planning may give employees a sense of ownership. Many times, this leads to more efficiency, effectiveness and even greater innovation.
Wondering how to start the process? Companies typically have the most success with outside consultants or facilitators. This is especially true when the process has not been conducted before or previous planning was not deemed successful. Despite the obvious savings of using an internal facilitator, outside consultants offer objectivity and will most likely increase, rather than inhibit, open participation.
Who should be involved and how long will it take? Assembly of the right team is critical and it should always include the CEO and Chairman. Some representation from the other end of the spectrum is a must as well, so that upper management can get a better grasp on day-to-day issues and junior staffers can grasp top-level issues. Most importantly, those individuals who will actually implement the plan must be included. The process, itself, can take several months to complete though numerous factors can impact it including the size of the organization and whether the organization has done this sort of planning before. In general, it is important to have the meetings fairly close together to keep the momentum going and, remember, no plan is perfect so the object is to learn from the process and not to belabor the process until the plan is perfect.
Implementation and Follow-up. A frequent complaint about strategic plans is that they produce a document that ends up on the shelf collecting dust. To succeed, the support of top management is essential from the onset. Before the planning process begins, however, a strategic analysis must be conducted. Conducting a thorough SWOT Analysis (Strengths, Weaknesses, Opportunities and Threats) is a good start. Relying on what planners perceive about the business environment they operate in nullifies the entire process. Finally, realistic and specific action plans must be established followed by regularly scheduled status checks.
Ready, aim, fire. Now that sounds better and when it comes to business, it’s the magic formula. As skilled strategic planners, we can facilitate your next strategic planning session. Give us a call to fire toward your future target.
If you own a small business, have you looked closely at the depth of your management team? Do you have a management succession plan in place? If the answer is no, you are not alone. Most small business owners look at one thing – the company’s management ability. It may be worth your time to look at both.
Unlike most major corporations with diverse management responsibilities, the success of many small businesses is largely dependent on a single, key person. This key person could be the CEO, who makes strategic decisions based on his business experience, or a salesperson, who has established great relationships with the company’s largest customers. No matter which scenario, this person has shown great success when it comes to growing the business, and as a result, stores a vast amount of intellectual capital. The loss of such a person, for any reason, could have a devastating effect on the ongoing cash flow potential of the business. This loss is also likely to reduce the company’s value in the eyes of investors or potential investors. As a result, most business appraisers or valuation professionals apply what is called a key person discount when placing a going-concern value on such a business for investment, taxation and/or other purposes.
Key person discounts may have an extremely negative effect on the value of any business. Valuation professionals often apply hefty discounts based on experience factors with little or no other supporting documentation. The Tax Court allowed a twenty-five percent (25%) key person discount in the settlement of one estate tax case. Recent studies indicate a range of discounts between 5% and 10%.
According to Revenue Ruling 59-60, the loss of a key person “may have a depressing effect on the value of the [company’s] stock.” In addition, this ruling instructs valuators to consider what effect losing a key person would have on “the future expectancy of the business,” and “the absence of management-succession potentialities.” Key person discounts may or may not apply to small and midsized businesses depending on a number of factors, including:
- Management Composition: Discounts become less likely as management becomes more diversified in that both strategic and tactical decision making authority is spread to additional persons. Comprehensive management succession plans coupled with appropriate training programs can also reduce the key person discount.
- Specializations or Operational Complexity: Some businesses may require a professional designation to conduct business while others may necessitate a great deal of technical know-how to operate efficiently. If a single person possesses such expertise, a key person discount may be applicable if a suitable replacement is unavailable.
- Sensitivity to Change: Businesses in cyclical and highly competitive industries have historically been more sensitive to operational changes and more likely to incur financial declines with the loss of a key person. A business that has a high degree of sensitivity to change requires a higher key person discount.
- Offsetting factors which may reduce or eliminate the need for the key person discount in valuing a business include:
- Insurance: Proceeds from a company-owned life or disability policy on the key person could serve to offset any projected decrease in future cash flows resulting from the loss of the key person.
- Net Cost Savings: As a general rule of thumb, the key person’s compensation and benefits are commensurate with his/her value and tenure with the business. In all likelihood, any replacement would require less compensation.
- Non-compete Agreements: This type of agreement is designed to protect the small business in the event that the key person submits his/her resignation. By implementing a non-compete agreement, the key person may not go into direct competition with the business he or she left.
Is your small business prepared to handle the unexpected? Are you thinking of stepping aside and relinquishing control to someone else? Are you contemplating the sale of your business? In any case, watch out for the consequences of the key person discount. A lack of planning on this important issue may result in severe consequences not only for you, but for your investors, or worst of all, your heirs.
We can help them avoid this issue. Companies can make intelligent decisions, which make them systems dependent rather than people dependent. Give us a call today to talk about your unique situation.
Written by Byron Lund
Discretionary spending is spending that must be done for the long-term profitability of a company, but may be postponed from the current period (s). This includes equipment replacement, equipment upkeep (often referred to as repairs and maintenance), marketing, research and development and training.
Discretionary spending may be expensed in the current period (as in the standard practices for equipment upkeep, marketing and training), or capitalized and allocated to costs based on their expected life (such as depreciation of equipment replacement or amortization of leasehold improvements). The research and development costs may have been expensed in the current period or capitalized and amortized.
Because the value of most businesses is based on discounting, or a multiple of, future anticipated profits, analysis of the discretionary spending may have a significant impact on the valuation of the company.
On capitalized discretionary costs, the spending has already been “normalized” in the calculation of the business earnings or profits. However, if the amount of current spending has been less than the amount depreciated or amortized, the valuation should include some provision for additional capital spending required soon. This may be done by subtracting the previous capital spending shortages from the purchase price based on multiples of earnings
Discretionary costs that are expensed in the current period have an even greater impact in that, in addition to the expenditure required for previous deficiencies, they affect the current reported earnings and estimate of future earnings.
An illustration of the effect on business valuation is shown by examining the valuation of 4 companies identical in every way but their discretionary spending policy. Each shows the effect on the valuation of the business.
Company A – discretionary spending based on a percent of sales
Year 1 Year 2 Year 3 Projected.
Sales $100 $110 $120 $130
Direct Costs $50 $55 $60 $65
Indirect Costs
Fixed $25 $25 $25 $25
Discretionary $20 22 $24 $26
Profits $5 $8 $11 $14
Valuation based on 4 x expected profits
= 4 x $14 = $56
This is an example of a company, which realizes that discretionary spending is a function of doing business in the long term and allocates a percent of their sales towards discretionary spending.
We will use this as the model company
Company B – straight line discretionary spending
Year 1 Year 2 Year 3 Projected.
Sales $100 $110 $120 $130
Direct Costs $50 $55 $60 $65
Indirect Costs
Fixed $25 $25 $25 $25
Discretionary $20 $20 $20 $20
Profits $5 $10 $15 $20
Valuation based on 4 x expected profits
= 4 x $20 = $80
This company was likely overvalued by $30.
It is less likely that the company will reach the $130 sales figure, and the spending on discretionary costs will likely be higher. The valuation should reflect a normalized expected profit of $14, as in Company A, and the value should be reduced by the discretionary expenditure increase required to make up for the shortfall ($6) of the past 2 years.
Compared to Company A, this should be worth less than $50 ($56 – $6).
Company C – spend when there’s money to spend
Year 1 Year 2 Year 3 Projected.
Sales $100 $110 $120 $130
Direct Costs $50 $55 $60 $65
Indirect Costs
Fixed $25 $25 $25 $25
Discretionary $18 $22 $26 $30
Profits $7 $8 $9 $10
Valuation based on 4 x expected profits
= 4 x $10 = $40
This business is likely undervalued by more than $16.
The $130 projected sales may be surpassed because of discretionary spending spent on research and development, marketing or training. Based on $130 sales and “normalized” discretionary spending, the profits should be projected as $14.
Compared to Company A, this company should be worth more than $56, because of recent discretionary spending.
Company D – declining discretionary spending
Year 1 Year 2 Year 3 Projected.
Sales $100 $110 $120 $130
Direct Costs $50 $55 $60 $65
Indirect Costs
Fixed $25 $25 $25 $25
Discretionary $20 $18 $16 $26
Profits $5 $12 $19 $26
Valuation based on 4 x expected profits
= 4 x $26 = $104
This company is likely overvalued by over $60.
It has been gutted of future revenue generators and dressed up. This may be dressed up for sale of the company, inflated stock prices (often used in conjunction with stock options) or to dress up the value of the CEO.
Similar to, but worse than, Company B, it should be valued at less than $44 ($56 – $12 discretionary expenditure increase required to make up for the previous two year shortfall in discretionary spending).
The above examples show how discretionary spending can affect reported and projected profits and the effects that they may have in the valuation, and sales price, of a business.
When purchasing a company, investors should analyze its previous discretionary spending. This discretionary cost analysis can have a significant impact on the sales price and variance between likely and projected future earnings.
From billion-dollar corporations to small businesses, open book management (OBM) delivers results that take companies that are struggling or merely surviving … to thriving. In theory, OBM sounds like a business owner’s worst nightmare because the thought of sharing the financials can leave them feeling a little, well, exposed. Beyond vulnerability, however, is a road populated with incredible numbers of courageous companies who opened the details of the company to employees.
Perhaps the most well-known OBM success story is Springfield Remanufacturing Corporation (SRC), a division of Navistar. Before OBM, the company was a long-standing, money-losing division. After the OBM injection, company revenues exploded to $100 million. Small companies reap the rewards, too. Accounting firms report increases of 60 percent or more the year following OBM implementation. Some staffing firms have shown a sales gain of almost 80 percent in just one year. In short, OBM works.
But how does it work?
Simply stated, open book management places the responsibility of the company’s success on every person in the organization. From the janitor to the president, all are focused on increasing profits. The company’s goals become each employee’s goals, who realize that building a better system, maximizing productivity, reducing defects, cutting costs and increasing efficiency not only is good for business, but also good for them.
The basics of OBM include:
Financial literacy – If employees don’t understand the way their behaviors affect the bottom line, they can’t make smarter choices for the company. The first step to OBM is to “open the books” to all employees. Some companies choose to post scoreboards in the break room, others post financial information on the company intranet, and both meet at “all-hands” meetings to ensure everyone is on the same page.
Accountability – OBM makes every employee accountable for the company’s success. Whether an employee is a forklift operator, administrative assistant or CEO, each person is expected to first be a business person looking out for the financial well-being of the company. Owners and executives build in accountability by teaching employees how they can increase the bottom line.
Incentive – The ‘What’s in it for me factor?’ is strong in most business settings, but in OBM it is a critical element of success. Employees learn very quickly they get a piece of the pie when the company meets or exceeds set goals. More often than not, OBM offers higher-than-expected results. Company owners are only too happy to share the increased profits.
Paradigm Shift
Skilled business performance consultants realize it is not enough to show people how OBM works. The key to lasting success is developing the desire to make it work. Employee motivation comes from understanding that each person has a chance to make a difference. It’s a shift to empowerment instead of management. Owners and managers move from telling employees what not to do or how to do a task, to actually sharing with employees what they want the outcome to be. This empowers employees to be part of the solution. And all too often, those working closest to the process offer insights that lead to greater efficiency, increased cost savings and/or profitability.
Sign Me Up
So, you want to try OBM? You may be wondering how to actually implement open book management. There are four major steps:
Share Company Information – This goes back to unveiling the critical data needed to improve the bottom line. For a manufacturer, you may want to take a look at pieces manufactured per hour and explain how a small increase impacts the bottom line. If you are in a business where your returns are higher than industry average, discuss the reason with employees. Remember: it’s not enough to simply say what needs to be improved, and ask employees to do it or find ways to do it. Employees need to understand how their division or group’s numbers impact the company’s profitability. The more they understand their personal contribution, the more likely they will stick with the program.
Business 101 – Entrepreneurs seem to be born with a business gene. They tend to have a knack for company basics. On the other hand, most employees have no idea how the business operates or what matters affect profits. Today, many college graduates don’t understand how a business works. What if you could teach every employee to think like an owner? You can. Teaching employees the “game” of business brings company issues to life, and ignites the entrepreneurial spark inherent in all of us. Employees go from thinking the owner is taking home all the dough, to questioning wasteful practices and implementing efficient systems.
E-M-P-O-W-E-R Your People – If you think business owners squirm at the thought of turning over the financials, they get equally as nervous at the idea of turning over power to employees. Many management philosophies went the way of the dinosaur because they didn’t work when applied. OBM isn’t lip service. Company leaders must enable people to make decisions that affect their group or department, and be willing to accept the consequences of those employees’ decisions. Experience shows us that people learn quickly and often make smart decisions. To do otherwise would adversely affect their personal pocketbook. Now who would do that?
Make it Personal – Profit sharing plans have been around for years, but they aren’t like true open book management since employees know very little about how their actual actions impacted the bottom line. Just like any astute business owner, employees start the year with a goal or target. They can monitor their group’s or department’s success – or failure – on a weekly, monthly, quarterly or annual basis, and know right where they stand at any given moment. Knowing the bonus ahead of time has an incredible effect on motivation. If employees know their share of the pie is 10 percent of profits and they can see profits steadily increasing all year, they know the payoff is worth the extra effort.
OBM makes your business your employees’ business. The results can be awe inspiring, but it takes courage to try something new. Those who have done it say it has transformed their businesses. Those who haven’t don’t know what they are missing.