As we scale our portfolio companies the thought of Simplicity vs Complexity came to mind this week. Entrepreneurs, private company owners, and C-Suite execs, however you see yourself, I’m seeing the same mistakes over and over again. You are making life way too complicated. Let me illustrate.
SALES: There are only two reasons someone is not buying your products and services. They do not have the problem you claim your solution solves. Or you are not credible/not the best fit to solve their problem. Once you’ve worked out where that prospect sits it so much easier to build an engagement strategy to win business.
SALES: The purpose of being a professional sales executive is NOT to sell product and services! it is to improve someone’s life. If you are selling productivity AI related solutions to an SME, it’s probably better to focus on the CEO. That’s the person who will appreciate the ROI that you are proposing.
OPERATIONAL CHALLENGES: All problems must be defined in one of three buckets. It’s either a Strategy issue, an Execution issue, or a Governance issue. Confusing which type of challenge you have will lead to failure to resolve.
FINANCE: There are only two reasons behind every financial variance compared to last year or budget. Volume and yield. If your revenue is below budget it is because you sold less volume than you assumed in the budget or your sales price or gross margin is less than you assumed or both. Same with any cost line. Salaries higher than last year – more bodies and or higher pay. Volume and yield. Start there and every ratio flows from that.
HIRING: The hiring of the right people for roles is all about three things – fit with the job, fit with your culture and the ability to nail the performance metrics in the Performance Profile.
STAFF MORALE: Be guided by the social science. Assuming a fair pay package is being offered, ask yourself why do folk come to work? The answer – Autonomy, Mastery, Purpose. Explained as Autonomy – don’t micromanage but don’t leave your employee alone. Mastery – people want to get better at what they do, help them, teach them. Purpose – give people a reason to be proud of working for your business.
M&A: The valuation of a target follows a simple psychology – Buyers PERCEIVE value. Sellers ASPIRE to price. If you are acquiring another company, you need to justify the investment based on the strategic rationale and an ROI%. That benefit to you is personal and so is the value. The seller on the other hand just needs to aspire to an after-tax number that makes sense for them.
Look for the big reasons behind the issue before over complicating matters.
Ian@TPPBoston.com
