Being part of a start-up organization can be a most invigorating experience. Even for those with no equity stake, the energy and excitement is contagious and makes it easy to work hard for the good of the whole.
In the face of growth and strong performance, some may begin to wonder if the good times will soon end as founders, owners, and investors look to pocket the value that has been created through a sale of the organization to larger firm. Leaders sometimes struggle to keep up employee morale in such circumstances.
It can help for leaders to remind everyone in such circumstances that the best thing, in all scenarios, is to build the best possible business because doing so leads to:
Making the most positive impact in the market served,
Creating the most value for owners, and
Creating the most opportunity for employees to assume new responsibilities, earn increased compensation, learn new skills, and be in position to take on attractive roles upon an acquisition. Continue reading →
It is impossible to control what you cannot, and what you do not, measure. For every important thing that the organization does, decide what is most important to monitor and then watch carefully to know how things are going.
If what to monitor is not known then:
Watch everything and whittle away what turns out to not be useful and keep watching what turns out to be useful.
Study similar organizations to learn what they track.
Look up industry analysts and market researchers to find out what they watch.
Governance – i.e., provide a consistent point of accountability for us to report on: what we said we would do, what we did, what happened, what we learned, and what we plan to do next; ask good questions to push up our thinking and give us your best advice.
A Revenue Forecast asserts that a certain amount of revenue will be earned in a certain period of time with a certain probability that the actual revenue earned in the period will be within a certain tolerance of the forecast. For example, management may forecast that there is a 90% chance of actual revenue being not more than 10% less than a forecasted amount.
Generally speaking, the percent probability of revenue from a source is assigned by management based on their judgement in light of their collective past experience with similar revenue generating opportunities in similar circumstances.
Some managers set forecasts equal Expected Value; that is, their revenue forecast equals the sum of potential revenue generating opportunities each multiplied by an assigned probability of occurring. There are several potential problems with this approach that should be considered carefully before proceeding:
Summing expected values allows fractional results when there may actually be little to no chance of fractional results. For example, an opportunity to generate revenue of $100,000 with a 50% probability of occuring would contribute $50,000 to a forecast computed as a weighted sum even though the actual result is more likely to either be $0 or $100,000. Continue reading →
Leaders who are in control of their operations compare their organization’s actual performance results to:
Past results to know whether their organization is trending up, down or sideways.
The results other organizations that are doing things similar to theirs achieve in order to know how well they are doing relative to industry benchmarks, especially relative to those who do best what they are doing. Continue reading →
Follow the three steps in this note to arrange a contract to provide professional services work for a client. Buyers of professional services work provided by outside contractors should also pay attention to these points. Continue reading →
Business school students generally head in one of two directions from day-one: finance or operations. The allure of finance is working with money to buy and sell companies. Success is when a small stake in a large transaction generates a healthy payday in a short time. The attraction of operations is working with people to build and run something of value that is eventually realized through a sale or refinancing. Continue reading →
Selling a company is a heady experience. Many things can go wrong along the way and it pays to study what makes some transactions go well and others fall apart. Here are ten tips from experience on both sides of many deals over the years: Continue reading →