Building Corporate Value: The Five Keys

By Charles J. Curto, Managing Principal of Tech Coast Equity Group.

 

At a meeting of the Technology Council’s Entrepreneur Society, David Knecht, Partner with the CPA and

management value consulting firm of Milam, Knecht & Warner, presented Building Corporate Value:

The Five Keys. Below are take-aways from his presentation.

David began by emphasizing that the basis for increasing company value is increasing transferable EBITDA (Earnings Before Interest Taxes Depreciation and Amortization). Based on his value-building research and experience in with hundreds of clients, the five keys to building company value are:

  • Having a written strategic plan,
  • Building diversified revenue,
  • Having engaged employees,
  • Increasing productivity, and
  • Employing a performance management system

A written strategic plan

  • Helps maintain management focus,
  • Establishes direction and provides the basis for filtering opportunities that fit the company’s strategy, and
  • Directs marketing toward implementing that strategy.

Research by PriceWaterhouseCoopers indicates that companies with a written strategic plan

have a written strategic plan enjoy a 68.6% greater growth rate than those that don’t.

Revenue diversification results in greater

  • Revenue and EBITDA stability and
  • Transferability of that EBITDA.

Revenue diversification results from revenue streams from multiple products and customers

with on one or few products or customers being dominant.

Based on research by Gallop, employee engagement results in a workforce that

  • Has greater retention,
  • Works safer,
  • Is more productive,
  • Enjoys greater success with customers, and
  • Is more profitable.

Although compensation is, of course, an important factor in employee engagement, employees

engaged, other factors may have equal or greater impact for a particular workforce or employee

in creating, increasing and maintaining employee engagement, including

  • Recognition,
  • Opportunity for advancement,
  • Quality of supervisor,
  • Flexible hours, and
  • Less pressure.

Increasing productivity results from

  • Increasing the EBITDA from a dollar of revenue or return on sales, which in turn is
  • Strongly influenced by process improvement.

Companies like WalMart and Southwest Airlines have made process improvement and thus

productivity improvement a core value which has been reflected in increases to their company

value.

Based on the research of authors Schiemann and Lingle, “companies with a performance

management system substantially outperformed companies without a system.” Performance

management systems are based on the principle that if you can’t measure it you can’t manage

it. Performance management systems in general and dashboards in particular have the

following characteristics:

  • Relevant (linkage to strategy)
  • Understandable
  • Drillable
  • Actionable
  • Track key indicators, including growth, profitability, productivity and value.

 

 

This summary is not meant to be a transcript of the session nor a primer on building company value.

Instead, its intent is briefly to share a few of the valuable take-aways from the session, take-aways

which are based on the experience of successful entrepreneurs and professionals who work with

entrepreneurs. Hopefully, these will encourage you to attend future Council programs where you can

meet and learn from the experience and wisdom of other thought-leaders.

David Knecht can be reached at (949) 861-4445 and DKnecht@WeAddValue.com .

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Post in Sales

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I have the opportunity to work with a large number of sales teams and to see what makes for highly successful ones and ones that struggle.  In my experience the #1 determining factor in sales team success is whether the company has the right sales people on board or not.  There are 10’s, if not 100’s, of different sales jobs in the market and like numbers of different types of sales people fit those jobs.

Clear Deliverables Are Crucial

A key element in getting the right person in the right sales job is getting very clear on what the sales person must deliver in order to be successful.  Most companies have job descriptions in place and may use them as part of their hiring process. The challenge with most job descriptions is that the documents are lengthy and list a large number of “deliverables.”  So, there is a lack of clarity about exactly what the company needs to look for when hiring and evaluating sales people.

Moving Beyond Job Descriptions

I was trained in a different approach termed “Performance Profiles.” A Performance Profiles does not attempt to address all of the HR and legal compliance issues that a full job description should. Rather it is a document that focuses on the top 3 – 5 key deliverables in the job. In other words the 3 ­5 goals a sales person must achieve in the job to meet and exceed target.

An example of the Performance Profile for the sales job at a client follows.

The client is a small company that provides software to school districts to manage the finances of school construction programs. The software sells for $50,000 to $400,000 per instance. The sale requires multiple sales calls on and presentations to key executives and working with committees to make a sale. Being an entrepreneurial company it does not have a lead generation system set up.

Here is what the CEO and I defined the key deliverables of the job to be:

 1) Prospecting: Since the company lacks a consistent lead generation effort the sales person has to prospect for new opportunities. Candidates had to have a track record of successfully cold calling using email, phone calls, etc. to create opportunities.

 2) Successful track record in sales: This should be one of the top two things in any Performance Profile for sales.  In this case candidates needed a track record of closing software sales in $100,000+ range.

3) Deals with complex accounts: As stated before the company is selling to larger school districts. So we were looking for a person that had track record of developing relationships with multiple people in the C­Suite and influencing them to adopt the company’s solution.

4) Team sales: The company’s product deals with a number of complex issues that most sales people are not able to address on their own. During the sales cycle the salesperson has to bring in technical resources at the appropriate time.   A background in team sales was seen as essential. In other words we were seeking someone who had “quarterbacked” deals by enlisting technical resources and orchestrating their efforts to close deals.

 5) Affiliation marketing/networking: The company sells to the K­12 education market.This is a highly interconnected market that expects a salesperson to know about school districts and their overall challenges, not just those challenges related to the product he is selling. This made a background in affiliation marketing and networking skills a key component of the job. The expectation is that the salesperson would join different “industry” associations and get active on the boards to build his knowledge of and connections in the industry.

We used the key points from the Performance Profile to:

  • Develop our job ads
  • Craft our interview questions to determine relevant experience in each key
  • performance metric
  • Set our key screening criteria for the search
  • Develop our 90 day and 1 year performance expectations for the job</li>

The clarity about what was needed in this sales job proved instrumental in “staying the course” during what proved a challenging, but ultimately successful search.

brad-leggett

Brad Leggett is CEO/Founder of The Leggett Group, Inc. His firm focuses on the issues and challenges associated with building, leading and retaining high performance sales teams. Brad speaks on the Keys to High Performance Sales teams and is a business radio show guest on the topic. You can read more of Brad’s writing on The Leggett Group blog or check out the company LinkedIn page.

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