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Quick Links
Channel Strategy
The primary objective of any channel to market is to distribute products and services to customers. Channel structure and design have a considerable effect on the growth and profitability of every business and tend to evolve in cycles of 5-6 years. Channel strategy is the focus on structure, form, depth, breadth, product range, pricing, branding and overall reach and performance of a channel in achieving the identified objectives. There are many different channel types across both business to business and business to consumer relationships. These include: agency, license, employee, broker, commission models, cooperatives, dealerships, franchise, and reseller relationships.
Issues
- Depth vs. breadth and its consequent impact on profitability
- The age of the channel structure and its ability to support current needs
- The number of layers between head office and the customer
- The quality of service and product representation rather than simply pushing product to a customer
- The product mix and how a multi channel strategy can increase breadth or reach in the market
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Succession Planning
The ability to scale a business beyond the current owners is a process of structuring for the involvement of other people in the future leadership of the organisation and building an infrastructure that is capable of further growth. Succession planning is more than people selling or buying a business. The challenge is the quality of preparation for an exit and the ability to identify a growth path which ensures a better return on investment and increased asset value when the business changes hands.
Issues
- Family generational changes place pressure on business governance and the ability to fund the succession
- Governance and growth are the two primary enemies of succession planning
- A structure for transition needs to be developed early and worked towards over a period of 2-3 years
- The asset value is impacted considerably by the role of the founder/ owner
- Proper planning facilitates significantly broader growth options on a national or international scale
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Corporate Governance
Governance is the back bone of a strong performing business as it creates the opportunity for practical and focused decision making. The process of working 'on' the business rather than 'in' the business can be drawn out at every level of an organisation. The ability to structure decision making is the balance of entrepreneurialism and structure and it should be defined and flexible all the way to the customer. Governance extends well beyond the board room and the factors of people, skill sets, frequency of communication, KPIs, focus, open culture and number of people are all relevant and need to be evolved constantly.
Issues
- The lack of governance in small and medium business is a constant challenge
- Customers are lost every day due to a lack of governance which impacts the provision of goods or services to the customer
- The composition of a management team and board are often overlooked in the face of day to day challenges
- The inability to formulate and execute a decisive course of action has brought about the end of many strong businesses
- Focus needs to remain on decision-making, not a process that produces an irrelevant agenda, discussion and documentation
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The majority of mergers and acquisitions fail to create the identified value for the seller. Mergers and acquisitions are complicated processes which require strong planning, deal execution and a clear integration and growth plan. The interaction of business models, culture, people, finance, IT, legal compliance, brands, sales techniques and governance structures is a process that requires a series of considered decisions. The quality of the foundation is critical and the capital base to deliver on a strong integration plan can create a more valuable asset.
Issues
- The entire process can be compromised with poor target selection and planning from the outset
- Park the ego, balance the role of the advisor and clearly understand the ability to create shareholder value
- There is not always a requirement that two businesses need to be completely integrated to operate effectively
- The process of selling a business is maximised with a clear plan and preparation over a period of time
- Any expansion requires resources to be scaled in a manner that is comparative to the opportunity
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Remuneration Incentives
An incentive is based on the basic concept of 'skin in the game' and creating a better outcome for the business and the employee than would otherwise have been achieved. The incentivisation of employees is an underdeveloped area in most businesses and the majority of incentive systems fail to drive or change behaviour. However, by making employees think more like business owners, and rewarding them as such, the benefits to the business are twofold: an increase in profitability and employee engagement. The process of committing to a remuneration structure which delivers the intended outcome requires a solid foundation of understanding, analysis and identification of what drives results in the business.
Issues
- The lack of identification and alignment with what actually drives business performance
- The size of the incentive is insignificant in proportion to the fixed component of remuneration
- Any incentive must be equitable and provided in a timely manner to be truly motivational
- People can achieve considerably more than most businesses realise or cater for
- The intent of an incentive structure needs to reflect and be reflected by the entire environment of a business
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Operations and Training Structure
The operations and training practices in a business are focused on improving performance by institutionalising best practice to achieve a consistency and depth of understanding. The underlying structure extends beyond simple documentation and sporadic bursts of updates or additions to existing material or ideas. A world class operations and training foundation requires a continual commitment to develop and enhance the practices which make a business relevant and enable people to function in the most efficient and effective nature.
Issues
- Operations practices often do not keep pace with change in a business particularly during fast growth
- Training requires a strategy that intertwines its outcomes with the every day practices of individuals on a consistent basis
- Training material continues to be documentation based with heavy reliance on delivery methods that fail to benefit the user
- The use of online and mp3 based technology can create outcomes that reach well beyond normal boundaries for training people
- Any operations structure needs to be established in such a way that balances the need for structure with entrepreneurialism
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Profit Improvement
Profit improvement is achieved through an analysis of the interaction between an organisation's existing practices and the realities of its internal and external environment. This requires a multi dimensional approach, that includes the basic elements of gross revenue, margin, and costs. There is considerable growth potential within every business, which can be realised by focusing on the things that can be controlled, and improving their execution at every level of the business. Critical areas such as core activities, channel structures, pricing, customer mix, channel reach, capital structure, people structure, and product and service offering possess ample opportunities to significantly improve profit in most businesses.
Issues
- Analysis that fails to consider costs, revenue and margins lacks a depth of context for the impact of any single decision
- A 30% increase in profit can be achieved with a simple approach of three 1% adjustments rather than radical changes
- Most businesses fail to sell enough to existing customers and spend too much time losing customers
- There is a significant difference between revenue growth and profit growth
- The interaction of short, medium and long term profit performance need to be understood with asset value
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Growth Strategy
The businesses which achieve serious growth on a national and international scale have a core focus on the value proposition, target customer and a sustainable business model. Growth is a fundamental desire of most businesses but few achieve serious growth on a scale the business deserves. Growth management is critical to the continuing success of a business. Growth requires a detailed level of understanding of people, processes, structure, focus and priority. The foundation for growth is critical, and short cuts taken by small and large businesses often have a negative legacy that is difficult to unwind.
Issues
- The development of theoretical and detailed plans that lack practicality, front line support and an ability to execute
- At some point the founder simultaneously operates as the strongest asset and liability of a business
- Effort will not overcome a lack of understanding and respect for the core growth issues
- Initial success can create stagnation without a focus on the underlying structure of the business
- Growth of profit and asset value are not a guaranteed outcome of revenue growth or scaling the business
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Channel Effectiveness
The effectiveness of any channel to market is heavily dependent on the interaction and touch point between a business and the customer. The majority of channels leave sales as an art rather than a defined and understood process, with the consequence that new business results are left to chance or the 'exceptional sales person'. Selling is defined as the willing exchange of a mutual benefit and the sales process combines a number of people, processes and specific skills to create an outcome. The effectiveness of any channel is heavily influenced by the quality of the sales process and its implementation and reinforcement amongst people.
Issues
- The majority of channels could double their results by improving the understanding of the sales process
- The measurement of channel effectiveness is critical to adopt the appropriate corrective measures to address financial results
- Sales are an output and lag indicator of the sales activities which must be managed to increase output
- The chance of losing a sale increases with the failure to understand the customer's decision making process during the sale
- The most effective channels place little dependence on continuing to source the exceptional sales person
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