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Critical Success Factors for Growth

Presented for YEO by Rich Russakoff Bottom Line Consultants. Critical Success Factors for Growth. BLC Mission Statement. Bottom Line Consultants is dedicated to nurturing and encouraging the entrepreneurial spirit in individuals and companies throughout the world.

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Critical Success Factors for Growth

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  1. Presented for YEO by Rich Russakoff Bottom Line Consultants Critical Success Factors for Growth

  2. BLC Mission Statement Bottom Line Consultants is dedicated to nurturing and encouraging the entrepreneurial spirit in individuals and companies throughout the world

  3. Facts and Figures • 28 million businesses in the U.S. • 96% under $1 million in gross sales • 76% less than three employees • 3.6% $1-3 million in gross sales • 0.4% $8-12 million in gross sales • Most employ less than 50 employees

  4. Facts and Figures 17,000 companies have $40-75 million in gross sales and up to 350 employees Only 2,500 companies gross more than $500 million 500 companies in the world do over $11 billion in annual sales

  5. Facts and Figures • Over 11,000 publicly traded companies • Only 800 large capitalized companies • 1500 mid-capitalized companies ($1-$5 billion) • Remaining 8,700 micro-capitalized companies (up to $1 billion) • INC consulting study 1989 of 87 and 96 reasons

  6. You Are In Control of Your Firms Destiny?

  7. Growth Cycles Ramp up Rapid growth Stability and maturity Gradual decline – must realign resources

  8. How Does GrowthL k? How is growth experienced?

  9. How Does Growth Look?

  10. Stage III Stage II Stage I How Is Growth Experienced?

  11. At What Stage of Growth is Your Company?STAGE 1 - Sales Driven • Focus on sales • Loose structure • Internal structures are underdeveloped • Accounting, quality and efficiency are low priority • Agile/Flexible • Creative • Trial and error approach • Family environment mantra “everyone does everything”

  12. At What Stage of Growth is Your Company? STAGE 2 - Operations Driven • Fine-tuning system • Focus on internal structures and controls • Functional departments emerge • CEO delegates tasks • First critical test • Supervisors are hired/promoted

  13. At What Stage of Growth is Your Company? STAGE 3 - Transforming: Recreating the Business • What used to work no longer does • Communication break down • Lose touch with clients • Systems become obsolete • Barriers emerge between departments • Incremental improvements are ineffective; acceleration-turbulence

  14. At What Stage of Growth is Your Company?STAGE 3 - Transforming: Recreating the Business • CEO lacks clarity of vision for future • Reactive instead of proactive • New mantra is specialization • Internal instead of external focus • Hinge between “mom & pop” and professional • Critical test 2 and 3 fire reinvent

  15. Possible Action Items Identify your firms current stage of growth Determine the current challenges you need to overcome; what is your mantra? How can you best prepare for the next stage of growth? Are two companies or divisions at different stages?

  16. The Chemistry of Sustained Growth • From “Mom & Pop” to a Professional Company • Who • Begins with You • Vision • Set the course • Focus • Rocks/Boulders • Create the Team • Hire the best/Fire the pests • Establish • Core values

  17. The Chemistry of Sustained Growth • Challenge • Assumptions with brutal facts • Determine then challenge • Business model • Identify value drivers • Create and sustain BIG MO

  18. Sustaining Growth • Every driver of growth is accompanied by some type of limiting process, such as: • Awakened competitors • Over-taxed suppliers • Internal capacity constraints (cash or talent)

  19. Sustaining Growth The growth mindset cultivates Carefully nurtured Experience-based Invest now for future return behavior Every business is successful until it’s not

  20. “Managing the status quo is more dangerous than launching into the unknown...”

  21. 8 Crucial, Constant, Continuing Tasks of the CEO who • Vision • Leadership • Empowerment • Relationships • Feedback • Entrepreneurship • Fiscal management • Personal style

  22. The CEO’s job is to shape the future of the firm by: • Creating a compelling sense of: • Vision • Purpose • Direction

  23. 8 Crucial, Constant, Continuing Tasks • Vision: • To clarify the general, overall goals of the company, defining where it is to go Paymaxx

  24. Action Items Clarity of Direction Through VisionProjecting 5-10 Years in the Future What is your market position and market share? What is your service mix? Who are your customers? How did you grow? Setting the vision.

  25. Action Items Clarity of Direction Through VisionProjecting 5-10 Years in the Future What kind of challenges did you face and overcome? What geographic areas is the firm operating in? What is it like to work for the firm at this time? Take your leadership team through this strategic exercise

  26. Rock On… Focus on your greatest priorities rather than trying to do too many things –who has the monkey SWOT analysis Make up a list of possible priorities for the next quarter (Rocks) identify key r&b Make up a list of goals and accomplishments for 2004 Create Big Mo

  27. Rock’s First Quarter 2002 Hire purchasing manager Create ongoing vital financial reports for bucket system Front office reconstruction Customer service basics and beyond Complete package for container customers

  28. 3rd Quarter Rock’s 2003 – Cash is King Profit Cash on hand $XXX,XXX Sales $X.XM

  29. Boulders 2002 No single account to be more than 25% of revenue (run rate) - J, sales team Add or grow an additional 2 major million dollar accounts - J, sales team Enhance and building the Four Hands brand - Mo,b,h Customer service company-wide - M,e,j,rr

  30. Boulders 2002 Training – follow up review process - LT,rr Manufacturing sources other than India - B,h Bucket system in force

  31. Possible Action Items Perform SWOT analysis Identify the four to five most important priorities Limit rocks to no more than five or create theme Assign appropriate ownership of each rock to a leadership team member

  32. Possible Action Items Determine who else will be involved in the “crushing” of the rock, as well as specific deadlines and time frames Monitor progress during weekly/monthly meetings Get rocks crushed each quarter to build momentum

  33. Possible Action Items Make up a list of goals and accomplishment for 2004 (Boulders) Determine goals for at least three years out

  34. 8 Crucial, Constant, Continuing Tasks • Leadership: • To focus the right resources on accomplishing these goals • people, technology, capital, strategic relationships, advisors

  35. 4 C’s of Leadership • Competence • Concern • Communication Skills • Consistency

  36. Face The Danger

  37. The World’s Greatest Management Principles • What gets measured, gets done • You get more of the behavior you reward

  38. 8 Crucial, Constant, Continuing Tasks • Empowerment: • To aggressively select and develop team members able and committed to achieving the vision (Establish core values)

  39. Hire the Right People, Put them in the Right Place First Priority - great is three times better than good – great time to find great people Profiling - Eclipse Build a bench - CEO and everyone’s job Hire great attitudes/values – fire bad ones - Emma/Mona

  40. Hidden Costs of Employee Turnover • Recruiting • Interviewing • Testing • Training • Lost knowledge • Organizational disruption • Ramp up time • Finding the right fit

  41. Possible Action Items Critically assess your staff’s skills and attitudes Let people go who are holding your firm back Consider a profiling system Start a rolodex for potential future hires xx

  42. Core Values This is how we do business This is our culture When your values are clear, your decisions are easy Maxon’s Establish core values

  43. Maxon’s Core Values Focus on the solution Strong sense of urgency Accountability for actions/results Seize new opportunities Professionalism and integrity

  44. Maxon’s Core Values Be a positive force Proactive attitude Constant improvement and learning Unselfish team orientation Exceed expectations

  45. 8 Crucial, Constant, Continuing Tasks • Relationships: • To forge coalitions with peers, subordinates, and important outside decision makers • Action item – identify today’s and tomorrow's most important relationships

  46. 8 Crucial, Constant, Continuing Tasks • Feedback: • To listen carefully to clients, staff and other relevant persons, as well as the public • Management by walking around (Internal) • Lew Gerstner at IBM (External) “Ask, don’t tell”

  47. 8 Crucial, Constant, Continuing Tasks • Entrepreneurship: • To enhance current and find future opportunities • How will/does your firm make money?

  48. Brutal Facts /Business Models • Problems/Solutions/ Change • Nothing stays the same – Growth may demand new models-different people, paradigms and perspectives – SW Air - EMA • Critical numbers – by profit center-region-employee customers one project • Constant search for brutal facts – Maxons nobody selling

  49. Four Hands: Brutal Facts 1999 • In order to grow Four Hands needed: • Timely financial information and analysis • More inventory • More people • More capital • Generating lower profit margins

  50. Four Hands: Brutal Facts January 2002 • Dependency on: • 1 Country • 2 Major Customers • 3 or 4 Vendors • Highly Leveraged

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