Everything changes from concept to release! (And another story…)

Posted on March 3, 2010 by Dave Berkus

                  You can take “everything changes” as a rule, not an exception.  You’ll recognize the truism, “No battle plan ever survives contact with the enemy” first stated by German Field Marshall von Moltke in the 19th century.  This variant of the “battle plan” truism is important to internalize.  A product at the concept stage contains feature-functionality that customers may not want or be willing to pay for, or which just might not work well enough for release to the public. 

                You may recall that Microsoft planned a new file system for Vista, but pulled the file system from the product before release, and has not released the WinFS file system yet as of this writing, years later.  It is interesting to note that not many of us even remember this “feature” let alone miss it.

[Email readers continue here…]  Plan for change; sometimes at the last minute.  Allow for the cost and extra time for tweaks to the product or service.  Make the first release a limited, controlled one, so that changes and corrections can be made much more easily than if a general release all at once. 

                And how do we protect ourselves against surprises that relate to feature-functionality as opposed to product quality upon release?  Early contact exposing friendly close customers to the product are critical to the development staff, marketing and even to the customer that feels closer to your enterprise as a result of the special treatment.  This is not to state that the customer tests a new product before we do internally, although many of us are surely guilty of that error. 

                 Back when I was developing early systems for the hotel industry, with the full cooperation of the owner and managers of a hotel in Tulsa, Oklahoma, I would fly in from Los Angeles on Friday evenings, install new releases that night and make fixes on the fly in a real 24 hour environment.  Sunday afternoon, just about departure time for my scheduled flight, the hotel manager would drive me to the airport barely in time to make the returning flight.  My excitement in having developed so many new and “somewhat tested” features over a sleepless weekend was exceeded only by the enthusiasm of the entire hotel staff for the new and wonderful capabilities left behind after the magic weekend of non-stop programming.  

                  These trips were so common and their aftermath so predictable (a late night emergency repair call waiting for me at home upon return Sunday evening) that the hotel owner created a mantra that stuck with me and caused quite a laugh at my expense for years.  He would be sure to remind his staff, shaking my hand goodbye as I left in a hurry to catch that Sunday evening flight: “Wheels up, system down.”  I am not advocating such brazen behavior today.  “Cowboy coding” is no longer common or permissible in the computer software industry, especially for enterprise systems.  But those were the days.

Posted in Finding your ideal niche, Growth!, Ignition! Starting up, Positioning | Leave a comment

New idea or product? Don’t rest until you test!

Posted on February 23, 2010 by Dave Berkus

     So you have a great new product or service that you and your associates love.  Early adopters should climb all over each other for a look.  But what have you done to test the concept against the realities of the marketplace?   Have you developed a prototype, alternate pricing schemes, even a PowerPoint mockup to show to potential buyers?  I would be very, very nervous without testing the product in the market as early as possible, ready to make changes and enhancements before committing to production and release. 

     Even with a perfect product, is the market ready for this?  Will you have to be both the evangelist for the product and for its marketplace as well?  Few early stage companies have the resources to do both. 

[Email readers continue here:] There are formal focus group organizations to help you, or you can attempt to test the market yourself by calling together a variety of potential users and asking a third party to facilitate a meeting where the product is exposed to the group and a conversation freely formed allowing the participants to agree with the premise or reject the product as useless to them, all without personalities getting in the way.

     No matter how you plan to test, make that plan an integral part of the development cycle, as early as possible so changes will not be costly.  Do NOT rest until you test.

Posted in Finding your ideal niche, Positioning | 1 Comment

What I learned from losing a million…Market knowledge comes FIRST.

Posted on February 17, 2010 by Dave Berkus

Know your market and competition, or don’t spend a dime on anything else.

                I have stated previously that I love absolutes – statements with no wiggle room for gray-area responses.  Well, here is one of those, and it deals with market research first and foremost. 

                Let me tell you a short story at my own expense.  In 1994, (I know a long time ago), I invested over a million dollars into a company whose entrepreneurs had a vision that I bought into for many reasons, not the least of which was that I had industry experience and understood the need.  The first of a number of advanced products was a unique cell phone for hotel rooms, connected through a special “switch” in the hotel’s telephone room that was able to detect when a call was coming to the guest room phone and simultaneously ring the cell phone assigned to that room, no matter where it was at the moment.  A tent card beside the fully-charged phone greeted the guest entering the room for the first time, inviting the guest to pocket the cell phone for the duration of his stay.  The phone could be used for receiving incoming calls when in the restaurant, on the golf course or anywhere.  The guest could even make room-to-room or concierge calls as if dialing from the room itself.  These systems were not cheap as you might guess.  But four and five star hotels loved the concept, which included redirecting outgoing calls from the cell phone by the guest to be sent through the hotel’s land line switch, making the hotel a miniature phone company with its attendant profits.

                Here’s where some intelligent market research might have saved the company and my investment.  Fast forward several years to 1996…  [Email readers continue here…]Hotels were installing the system; guests were satisfied and the company was growing. There was even talk of some phone companies using the patented system for serving communities of guests, not just from a single hotel.  Back to 1996. That year, some of you will recall, the first digital cell phones were released to the market, smaller, cheaper and priced with roaming plans that made it no premium cost to carry these digital phones to cities far from home.  Overnight, guest use of the room cell phones dried up and hotels were left with expensive switches, phones and chargers unused.  Soon the company was drifting toward bankruptcy as the leases for the systems expired, one by one. 

                I guarantee that there were tens of thousands of people in the country who knew long beforehand of the imminent arrival of the digital cell phone and could predict its effect upon usage, especially roaming use.  And yet the company was blindsided as it continued to invest in switch and specialized analog phone hardware, soon to be instantly obsolete.  Merely adapting the switches to new digital phones would not work, since guests no longer needed the service itself, being instantly self-sufficient.  People no longer called guests in their rooms but directly to their cell phones, even when the guests were on the road.

                In this case, the competition was not from a company but a new technology.  In most cases, it is the competitor with a better product, lower price, faster service, better reputation that is the threat.

                When I listen to a pitch from an enthusiastic entrepreneur or read the summary of a business plan, one of the first questions I ask is about the strength of the competition.  Surprisingly, many entrepreneurs immediately respond. “There is no competition.”  Now, there is a statement even Alexander Graham Bell could not make about the telephone (which he pitched to his investors as a device to aid the deaf).  Bell’s competition was the written message, doing nothing, the telegraph and old fashioned word of mouth.  To say “there is no competition” is always the most red of all flags to an investor.  For most brilliant new ideas and business plans, the competition is merely to do nothing. That response is quite different than one where competitors have paved the way and existing customers prove through use that the product or service is valued.

                So I lost over a million for lack of market research.  Bell was lucky, but the pace of technology was so much slower then.  Just to make a well-earned point now that you have heard my story, know your market and competition or don’t spend a dime on anything else.  Oh, how I wish I had taken my own advice.

Posted in Finding your ideal niche, Growth!, Positioning | 3 Comments

Money comes smart or dumb. Find smart.

Posted on February 9, 2010 by Dave Berkus

This statement could be considered controversial.  We have previously made the case that professional investors demand more in the form of restrictive covenants and lower valuations.  Now we explore the other side of that coin.  Professional investors usually bring “smart money” to the table, defined as money that comes along with good advice and great relationships for corporate growth.  Often, that money is worth more than the cash invested, because the investors who often become members of the board, bring a wealth of experience, insight, relationships and deeper pockets to the table. 

                I serve on the boards of several companies with just such VC talent at the table, partners in firms that made subsequent investments in companies where I either made early investments or led a group of fellow investors in early rounds of finance.  Each of these companies needed more cash than professional angel investors were willing or able to provide, and we turned to the venture community for larger investments. 

[Email readers continue here…] Attracting a VC investment means finding a partner in a VC firm who is willing to champion your opportunity before his partnership and then represent his firm with a seat on the board once the investment is made.  In a number of cases, these VC partners have made the difference between success and failure or at least growth vs. stagnation.  These VC partners have relationships with later stage investors further up the food chain, with service providers, with potential “C” level senior managers, and with other CEO’s with great timely advice or partnering opportunities.  In one such recent case, the angels were tapped out at $6 million invested, an amount far above their usual taste, but for a company with a billion dollar potential.  The VC’s that subsequently invested $18 million to date are looking for the billion dollar valuation someday, well beyond what angel investors usually are able to project from their own resources.  Whether this business and entrepreneur make it to the rare billion dollar club or not, without the VC guidance there would have been little opportunity to even dream of such a goal.  There is no question that the company took smart money and leveraged it for maximum growth, using the money, guidance, contacts and more from these large VC investors.

                So now we have explored the early stages of formation and finance.  It is time in the next posts to fine-tune the business and its strategic plan to exploit its maximum potential, finding the ideal niche for a company and its core competency…

Posted in Growth!, Raising money, Surrounding yourself with talent | Leave a comment

Raise cash from trusted, close resources first.

Posted on February 3, 2010 by Dave Berkus

This insight follows closely the conclusions from the previous declaration, that professional investors negotiate tough terms, from provisions of control over asset acquisition, eventual sale of the company, future investments, forced co-sale when others attempt to sell their shares and more.  And yet, in an earlier insight, we spoke of the problems that come when taking unstructured investments from friends and family.  So how does the statement above fit into this sandwich of alternatives?

                Trusted, close resources include sophisticated relatives, friends and business associates who know how to structure a deal as a win-win for you and for them, while allowing you to retain control over your vision and execution.  Their investment should be structured with the help of a good attorney who understands the mutual goal of maximum leverage of funds with minimum interference in your business decisions. 

                Remember the admonition that investment from such close sources carries an additional burden for you – to protect your investors and their investment as if they were your alter egos, offering money as if from your own pocket.  Such money should never be taken without clear understanding of the terms, whether a loan with a reasonable interest rate and strict repayment terms, or an investment valuing the company at an amount considered reasonable by a third party professional, even if as a sanity check as opposed to an appraisal.  This money is personal, an investment in you as much or more than in your company.  The degree of care you take increases with the reduced distance between you and your investor. 

                [Email readers continue here…] My very first investment as a professional angel was in a small startup where the entrepreneur’s vision fueled my imagination in the audio market niche where I had run a business in an earlier life.  I was so enthusiastic that I coached the entrepreneur to approach his mother, who invested $50,000 under the same terms as my investment.   A small venture firm and a few more angels rounded out the total investment.  As the company grew and became profitable, it became more visible to others in the market niche.  Two of us who invested served on the board of the company, advising the first-time entrepreneur with our business and industry experience.  Several years later, with the approval of the board and entrepreneur, I was able to engage a very well-known potential acquirer of the business who offered an attractive price for the still-young but successful enterprise.  After weeks of negotiation, the entrepreneur suddenly disengaged, claiming that he was no longer interested in a sale of his company.  The rest of us were shocked and disappointed that after weeks of work and a fair price, we were left with nothing but to follow his lead and disengage.  Shortly thereafter, in a board meeting, I brought up the issue of starting to pay board members for service in cash or in stock options, typical for outside board members but rarely for investors.  The entrepreneur was angry, abusive, in his negative reaction to even bringing the issue to the board for a discussion.  Five years had passed from my original investment in what I now clearly perceived as investment into a lifestyle business, one where the entrepreneur had no interest in selling or sharing.  I resigned from the board on the spot and negotiated a sale of my stock to the entrepreneur at five times the earlier investment, a fair return for both, since the company was by then worth much more.  It is now years later, and his mother along with other early investors are still in the passive game, not likely to see liquidity from this mistaken investment in an entrepreneur unwilling to take money in exchange for the eventual promise of liquidity.

                Why tell this story at all?  Mother is surely satisfied as a passive investor who probably would have given her son the money without structure.  The other investors are probably in the unhappy never land of not being able to see liquidity after a decade and unable to write off the investment as a loss for tax purposes.   This story would probably have ended in a lawsuit if a larger professional investor had been involved, since the entrepreneur did not follow the rules and seems to have no desire to do so.

                Trust works both ways.  Take money from close resources, but treat it as if the responsibility is even greater to protect the investors and their money than from a professional.   These investors trust that you will do the right thing for them if at all able.

Posted in Ignition! Starting up, Raising money | 9 Comments

Outside investors want liquidity, not love.

Posted on January 27, 2010 by Dave Berkus

Taking in angel or venture money requires a setting of an entrepreneur’s expectations that may come as a shock at least at first.  From the moment such an investor looks seriously at your company, the investor or VC partner is thinking of the end game, the ultimate sale of the company or even of an eventual initial public offering.  There is no middle ground.  Taking money from these sources involves resetting priorities over time.  There is no such thing as a lifestyle business with outside investors. To protect against such an event, almost every professional investor includes a clause in the investment documents which allow the investor to “put” the stock back to the company after five years, requiring the company to pay back the investment plus dividends accrued during the term of the investment.  This sword hanging over the company is not often used, but is a constant reminder that an outside investor is serious about getting out, hopefully in less than five years, at a profit, usually from the sale of the company.  Many companies find themselves at the five year point completely unprepared for a sale and without the cash resources to carry out such a repurchase of investor stock, making the clause moot.

[Email readers continue here…]  There are also clauses in many such investor documents that allow the investor to override the founder and force a sale of the company if a proposed sale is attractive to an investor for liquidity, even if the founder feels that there is much more potential if the business is not sold at the present time.

Finally, it is an unfortunate fact that when a company needs money and has not met its original planned targets, the newest investor prices the round at a level below the last or last several rounds of financing, angering and frustrating previous investors who took what they perceive as the greatest risks by investing before the business proved itself.  The last money has the first say – in valuation and in sometimes forcing draconian terms that require prior investors to contribute a proportional new investment to retain a semblance of their original rights and avoid dilution or worse yet, involuntary conversion to a lower class of stock.  As the years progress with typical VC firms seeing lower returns than expected by their limited partner investors, such terms are more common in secondary rounds of financing, causing a real riff between angel investors and their former close allies, the VCs, with whom they had once coexisted as suppliers of deals at expectedly higher valuations at each state of investment.

So be aware that professional investors are in your company for the eventual large profits at the liquidity event.  They are your friends only as long as you meet or exceed planned growth and value.  They tolerate you and your management when the numbers are a bit murky but with an explanation that is believable and correctable.  They act in their own best interests when things go south. That’s just the facts.

Posted in Raising money | 2 Comments

Raising money for your business: What are the options?

Posted on January 20, 2010 by Dave Berkus

This post will be perhaps a bit longer than usual, but certainly of great interest for those with interest in or have need for more capital…

This stage is critical to many businesses and a passing option to others, depending upon the capital efficiency of the enterprise.  Some businesses require very little capital and the founder is able to self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale).  For you who fit that description, nice work.  For the rest of us desiring to build large, valuable enterprises quickly, the need for outside capital is high on our list of requirements and even the source for some sleepless nights as we worry over the availability and cost of capital.  It is for this group that we explore the implications implicit in raising money for growth.            

Before we explore the next insight, it might be useful to list some of the ways in which you can raise money for growth with and without outside investors. [Email readers continue here…]

                Bootstrapping:  This term describes your ability to start a business with little investment and grow it using internally-generated funds.  Certainly bootstrapping is a preferred method of funding growth if it does not hold back the speed of growth or hobble the quality of product or service to the extent that better-funded competitors can overtake the business.  There is a lot to say about retaining control.  You will realize much more from the ultimate sale of your business even if at a considerably lower price than if splitting the proceeds with investors.  You will have more control over strategy and execution than with an outside board overseeing planning and performance.  But few businesses grow into the sweet spot of $20 million to $30 million in worth to an ultimate buyer without the injection of outside capital.

                Friends, family and fools:  This term, although pejorative, describes the typical mix of early investors in a small, young growing business.  Money from these sources is relatively easy to come by, and most often comes with no strings as to oversight by a formal board composed of these investors and management.  However, most often, these funds are solicited by a well-meaning entrepreneur from investors who are not qualified as accredited investors under the law (currently requiring a proved income of $200,000 a year or $1 million in net worth for an individual investor).  I’ve arrived at a significant number of companies that were looking for additional growth capital after a “friends and family” round, and had to “clean up” the cap table more than a few times over the years.  Taking this kind of money has a number of pitfalls you should be aware of.  It is most common to greatly overprice such a round of financing, valuing the enterprise well above what it may be worth at the moment for friend or related investors who do not have the sophistication or willingness to challenge the valuation.  When professional investors look at such overvalued prior investments, they may refuse to become involved with a company, knowing that there will be, at the very least, universal disappointment and anger from prior investors when a new round is priced lower than the earlier friends and family round.   Sometimes this money is just too available and the risks seem so far away; so an entrepreneur will take the money and put off the worry over the eventual consequences, all in the hope that no more investment will ever be needed and everyone will be richer for the effort.

                Using your bank credit line and credit cards:  Even with the credit crunch signaled by the recent recession, many banks will issue business credit cards with a $50,000 limit if the entrepreneur is willing to personally guarantee the balance, and has the net worth to do so.   And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.  It’s an option, even though an expensive one.

                “Strategic partner” investors: If you can find a strategic partner willing to invest in your enterprise, consider it a blessing. Whether the partner is a supplier looking to gain a lock on your business as it grows or a customer looking to create a competitive barrier through use of your product, such an investment typically carries fewer restrictions than from a professional investor and less oversight.  Better yet, the valuation of your enterprise is often higher than if the same investment were taken from a professional investor.  Strategic investors validate a business, by their presence creating the very value they pay for with increased price per share purchased.  It is most often a win-win for both you and the strategic partner.

                Professional angels:  This is the arena where I work and play.  This class of investor, once quite disorganized, has become much like the venture capital community, creating a process including due diligence (careful examination of a business before investment), terms of investment that match those of venture capitalists, and a process that often takes months from introduction to investment.  Yet, professional angels are usually willing to take active board seats in a young enterprise and act as cost-free consultants to the CEO-entrepreneur, giving freely of their individual and collective years of experience, often in the same industry as the investment target.  Do not expect grand valuations of your enterprise from these professional angels. They have been burned too badly during the last decade by overvaluing businesses and finding themselves like friends and family, “stuffed” into a down round of lower valuation when a company takes its next round of financing from the next step, venture capitalists.  Professional angels, often organized into groups, usually invest from $100,000 to $1 million in a young enterprise.

                Venture, private equity and more:  Here we lump a large number investor classes into one.  Venture capital comes with a cost, and there are no bargains for the company when taking such an investment.  VC’s value an enterprise lower than others might at the same stage of investment, always aware of the need to create opportunities for “home run” profits at exit, since over fifty percent of their investments typically are lost when companies die before an opportunity to sell to others.  Further, as a class, VC’s have not done well for their own investors over the past decade since the bubble burst, making it doubly important to fight for low valuations and high profits at exit.  VC’s do not even engage in discussion with most of those entrepreneurs seeking capital. By some estimates, 95% of contacts are ignored unless they come as referrals from trusted sources such as known lawyers, accountants or fellow VC’s.  And just for measure, VC’s fund less than 2% of all deals they do investigate.  Typical VC investments begin at $2 million and quickly rise to $5 million and above, depending upon the size of the fund and stage of investment.  Terms are much more restrictive than from strategic or angel investors, often requiring the entrepreneur to escrow his or her founder stock for a number of years to prevent the founder leaving, and restricting the sale of prior stock without the VC also being allowed to offer a share of its holdings in the same sale. 

                Private equity investments are available from firms created for this later stage opportunity, but typically are available only for businesses that have achieved revenues well above $50 million.  Often private equity investors will want control of the business as well.

                Bank lines of credit are often available to businesses that are profitable, most often personally guaranteed by the entrepreneur, but available at a cost in interest less than most any other source.  Small Business Association (SBA) federally-guaranteed bank loans are becoming available again after years of limited activity.  With some restrictive provisions, these loans are favored by many banks as carrying much less risk than loans without the guarantee.

                But it is the outside investor that validates a business, often influencing growth with shared relationships, experienced guidance and providing a gateway to needed resources.  There are a few insights that relate to this money resource, and you should know and respect these.  We will cover these insights in the next several posts. So stay tuned…   

Posted in Growth!, Raising money | 4 Comments

Use metrics and a dashboard. ACT upon variances.

Posted on January 13, 2010 by Dave Berkus

                 Have you ever driven a car that had no speedometer?  I had that thrill when a student at the Richard Petty Stockcar School of Driving recently at a motor speedway in California.  With a wide track, angled aggressively at the curves, and being told to hug the wall on the straightaways, there was little reference available to a novice driver as to speed.  I followed my instructor’s car closely, but still could not tell anything about my speed, so that I could either compensate for lags behind the leader or a test my comfort zone at various points that matched the expectation of my instructor and my own increasing capabilities as a driver.  Upon conclusion of eight laps of this, after pulling into the alley and climbing through the window on the driver side (there are no doors in these cars), I was handed a sheet with my timings for each of the eight laps.  Only then, after when the information might have been useful, could I see how well I did.

                That’s how you would feel if you ran your company without a dashboard containing relevant metrics that drive your company.  If you cannot relate to this, then you probably have been driving without a speedometer from the start and need to pay particular attention. 

                [Email readers continue here…] Metrics should be created by you and your managers to measure near real time progress for your enterprise.  A number of these deemed critical to you and your managers should be combined into a single page on your desktop screen or in printed form and available or circulated as often as daily.  These measures of progress must be fresh and meaningful.  Yesterday’s sales and returns compared to same day last week and last year for retail businesses;  Units produced and units shipped compared to plan and same period last month for manufacturers;  Yesterday’s overtime hours by department;  Ratio of hours worked to units produced;  Backorders unshipped;  Customer service calls in cue or unresolved.

                You can think of numerous critical measures for your business that must not be ignored, but often are neglected by senior management. It is not bad to manage by walking around, a term that became popular as a result of another of the many business advice books of the ‘90’s.  But that method, although good for employee morale, is imprecise as a tool of measurement and should be relegated to a supporting role.  Financial information for last month compared to plan and same month last year is certainly relevant, but not part of a dashboard, since there is nothing you can do to fix a problem when numbers are as old as a week, let alone the typical several weeks required to prepare financial statements for review.

                Finally, what good is the information contained in a great dashboard if you ignore it?  Show that you value the information by acting immediately upon variances, even if only to question the numbers.  Everyone down the line will become aware of your attention to their work, your interest in the outcomes and care for their success.  And you will drive revenue and better control costs and the customer experience with quick reaction to the variances within critical metrics the best describe your immediate situation.

Posted in Growth!, Positioning | 1 Comment

Your budget and forecast light your goal.

Posted on January 6, 2010 by Dave Berkus

               Let’s spend a few moments defining a sometimes confusing set of terms.  A budget should be created each year as a result of a series of negotiations between departmental managers and their superiors through to the CEO, all in support of the next year’s tactics previously agreed upon (which in turn support the longer term strategies leading to the next goal beyond).  

                So a budget sets the limits upon spending for the next year that are negotiated between the players.  An important part of the budget is the expected revenue for the coming year, a critical factor in setting hiring and resource expectations for the year.  During the year, if the forecast revenues fall short or are greatly exceeded, it is fair to revise the budget and rethink hiring and resources.  Otherwise, it is the expectation of the board of directors of a company that each year’s budget be approved in advance and adhered to as long as revenue goals are met.

               [Email readers continue here…]   Note that I used the term “forecast” for revenues for the next year.  The term is also used when projecting revenues for succeeding years. The term “forecast” is a bit confusing, because it is also used by some as a measure of expected revenue and expenses to the end of the current year, found by taking actual performance year-to-date and adding best estimates of remaining revenues and expenses for the rest of the year to obtain an expected or “forecast” outcome at yearend.  Both uses of the term are common.  Just be sure all who participate understand which use of the word is the current one.

                The real point here is to create a financial plan to support the strategic plan, marrying them in harmony one with another.  Many entrepreneurs are impatient by nature, not the best of detailed planners.  Yet, with the assistance of those in support such as the CFO, everyone in management must be aligned in a single direction, reviewed and updated annually as accomplishments, the marketplace, and even the competitive landscape change.

Posted in Growth!, Ignition! Starting up | Leave a comment

Strategic planning: Strategies and tactics

Posted on December 30, 2009 by Dave Berkus

                In past insights, we explored the need for a tangible goal and strategies that are measurable as steps toward achievement of the goal.  This insight calls to account tactics to accompany each strategy, and even suggests a number for each. 

                Tactics support strategies and allow your individual managers and departments to contribute to strategies in measurable ways that are more short term and procedural than are the strategies they support.  Tactics change frequently as achieved and may be updated or replaced during a year when achieved, unlike strategies which often span a number of years.

                Five tactics to support each strategy seem a fair, even if arbitrary number.  Tactics direct each department in very specific ways.  Here are several examples of tactics from my recent experience with companies where I serve as board member. 

[Email readers continue here…] 

Strategy Three: Expand into at least three new continents through new distribution channels.

  1. Sign one distributor by June of this year in each of three major geographic areas. EMEA, Asia, Latin America.  Each distributor to be capable of generating $1 million in business by year two.
  2. Assign development manager to localize design and oversee needed enhancements to product and support materials for each new territory.
  3. Train and transfer technology to each new distributor within 90 days of signing.
  4. Assign one corporate employee to support sales and installation efforts by all distributors.
  5. Seed demand in each new territory with at least two corporate marketing events in partnership with each distributor.

Note that each of these tactics directly support the strategy, are measurable and assumed to be achievable, bought into by each department effected by the tactic.  Note that the strategy calls for cooperation between business development, sales, marketing, product development, installation and support.   This is a great way to unify departments that once may have competed for resources toward individual ends, now pointed toward a common goal supported by all levels of management up to the CEO.

        In planning, the matrix, “5×5=1” is a good memory tool for management to keep from overreaching with too many strategies and too many tactics.  But it is not written in stone.  And development of these important elements of the plan should be made using all the resources available, from your board of directors to your senior management to departmental management. Getting all to buy into each step may not be easy, but when accomplished, is a powerful and invigorating opportunity to celebrate, then to get to work as a functional unit of the whole.

Posted in Finding your ideal niche, Positioning | 2 Comments