NSS is co-sponsoring four CEO Seminars around the theme of “Moving Forward: A Roadmap to Growth and Best Practices in 2010” . The first one was successfully held March 23 at Furman Gregory Deptula. Our next seminar is scheduled to be on Tuesday, June 15 and we are currently formulating the agenda based on the feedback from the CEOs in attendance at the March meeting.
NSS provided this hand out:
Keep your company nimble, lean and focused. Just as large companies have divested non-core competencies, carefully consider which aspects of your business should remain fixed costs and which should become variable. This keeps your business capital efficient and brings greater flexibility in moving your business forward. Consider outsourcing non-core functions such as HR, finance, legal, sales and marketing.
Take a look at your lines of business in product/services and analyze closely which lines are using what resources. If you have a product that takes 70% of your resources and represents 20% of your revenue, you have a problem. Evaluate your customer/client revenue streams and determine what portion of total revenue each contributes. Customers/clients that make up more than 30% of total revenue may in fact be a danger to your long term stability. Stay diversified and avoid relying on one or two big clients.
Cash is always King. In this recession, keeping cash flow positive has been harder and harder to achieve, especially for small businesses. Where once monthly cash flow checks were adequate, today a daily/weekly Financial Dashboard is a necessity. Financial Dashboards give you key financial indicators such as accounts receivable and inventory turnovers, working capital and current account ratios. Know at all time what your 6-month cash flow looks like and what action you may need to take. Look beyond the ratios to get a regular pulse of industry trends and changes in technology. Keep an eye on what the competition is doing, and check their press releases, stock prices and other activities that could impact your business negatively.
Equity investors are still in flux. With the financial meltdown, they have become somewhat more risk averse, leaving a bigger capital gap. However, many are also making continuous investments and new, smaller funds are being created. Bootstrap as long as feasible and build your revenue streams or user base. This will enhance your business valuation over time. Once you decide to raise funds from equity investors, take the time for due diligence and investigate what type of equity funder would be the right fit, understand the investor’s needs and interests in terms of size of funds needed, industry expertise and support.
On the debt side of financing, try to diversify your banking relationships, the old ‘do-it-all’ approach is no longer an optimal solution. Many local banks are starting to lend again, but mostly to businesses with strong balance sheets. There are various financing solutions to consider such as Accounts Receivable, equipment and real estate financing. Consider carefully all details in the term sheets and other agreements and evaluate the different options with extensive cost/benefit analyses.
Opportunities for Growth
With robust financial planning, a recession can provide opportunities. Growth may not be achieved the same way as before, as direct sales may be impacted by the economy. Consider the option to grow via merger or acquisition of a:
- technology that brings greater efficiencies
- business with additional products diversifying your product line
- business with different distribution channels
Even a small company can gain greater market share, but this is only accomplished with a strong financial strategy and a solid understanding of managing and balancing risks. If you are too risk averse you might miss a valuable opportunity and if you are too risky you may compromise the business.
Now more than ever you want to revisit your long term strategy. In this current economic climate it is essential to have multiple roadmaps and be ready to take detours. Being a productive CEO or business owner gives you a competitive edge. Every downturn or recession brings opportunities; know what they are and plan accordingly by developing cost/benefit analyses of your options and revisit them regularly.
2010 will still bring some uncertainties and having the best team of experts will make it a better ride. Have a 6-month, 18-month and 36-month strategy with milestones and execution points you want to accomplish. Share your short-term and long-term goals and objectives with your employees and create a culture where problem solving, networking and business development are everyone’s business.
We can help!
We thank you for attending this first of four seminars. If you have any questions or specific issues around best practices in finance and growth for your business, we would be delighted to provide you with a consultation free of charge. Please contact Rudi Scheiber-Kurtz, CEO of Next Stage Solutions, Inc. at 617-449-7728 ext 704 or email at firstname.lastname@example.org to set up an appointment.