Resultsman’s Blog


Steps are Being Taken- Progress is Being Made

Posted in Uncategorized by resultsman on February 1, 2010
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Progress in the nations and global economic recovery is happening, slowly, but the economy is righting itself. One might not believe that real strides are being made in light of the recent correction in the stock markets. The 300 point drop was brought on by a combination of political and economic forces working in tandem.
On the political side, the market’s, continue to be reacting to the restriction that has been placed on a bank’s ability to trade on their own accounts behalf. (Watch what happens to bank sponsored money market accounts- performance of this type of vehicle could change.) What has occurred is a partial reinstating of the Glass Steagall Act which I wrote about last year. Paul Volker, the Reagan era FED chairman who tamed inflation and laid the groundwork for the economic expansion of the 1990’s was a major backer of this move.
To understand this move towards further regulation, one must understand historic context. Through the second half of the 1990’s US banks became less competitive in the global merger and acquisition market place because commercial banking activities were separated from those of M&A banking activities. US banks could not muster the critical mass to put together mega deals. Congress responded with the repeal of the Glass Steagall Act which allowed them to grow and prosper. The unfortunate side consequence of the repeal is that financial institutions grew to a size where they became “too big to fail” without doing major damage to our economy. This is only one of many contributing factors (like lending money to individuals with no ability to repay loans taken) that helped to create conditions that lead to the crisis we find ourselves.
A second political event helped to initiate the correction which we are experiencing. Rumors were circulating that the now serving FED Chairman Ben Vernacke would not be reconfirmed to serve a second term. Yes, the Ben Vernacke who had the foresight to take steps to prevent a complete financial meltdown, throwing the economy into a deep depression. Last week confirmation came, but by that time, investors were spooked and the correction was underway.
Politics had combined with mixed economic results to set the correction in motion. (Corrections are not necessarily bad, they serve a purpose of correcting market price and values.)
So, what is the message behind this posting? Corrections take time to happen. Political pendants are complaining that we have not seen the net benefits of the Economic Stimulus Act that was passed by congress, (and they are correct). So what has happened? Accounting rules require banks to value the assets carried on their balance sheets to market value. By law this is a required event that has not been executed. Banks are being cautious and using the credit and access to cash provided by the stimulus to prop up their balance sheets and methodically cleaning their books up. If banks took the full write downs in the value of the toxic assets on their books, we would have witnessed many more bank failures than we saw in 2009! Fed policy has been loose, more than 1000 banks are being closely monitored, expect more failures in 2010.
In summary, recovery is a slow process that is taking place, just not as fast as a public that is used to instantaneous gratification would like to see. It hurts to say, but time is indeed healing. The right steps are being taken. We have to continue riding out this storm.

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Opportunity is Knocking!

Posted in Uncategorized by resultsman on October 6, 2009

Opportunity is knocking for those who are bold enough to hear its call. Bold business leaders will recognize this fact and create their own opportunities. Followers wait for them to occur. It appears as though we have now experienced the worst of the recession of 2008/2009. Business conditions as expressed by economic indicators and the stock exchange indexes are improving.  

I recently read a blog posting in which the author wrote that a restructuring will take place among private equity firms due to the fundamental changes in financial markets.  The private equity business model will remain as an important part of the innovation cycle, but the opportunities will come from different places and be exploited by executives with a different set of skills.  During the last business cycle, many firms in the private equity sector enjoyed unprecedented growth and increases in return on invested capital as a result of financial engineering skills.  The days of easy credit and extreme leverage are behind us.  The mediocrity of executive leadership is being exposed!  In the future successful executive leadership will come from those people who have the capability to create wealth from (1) the reorganization of stressed assets and (2) to create wealth from the growth of new businesses. 

Opportunities will abound in the new business cycle. Corporate values are suppressed. For a while now, deals of necessity (bankruptcy or cost-cutting capacity elimination/consolidation) have been the only type of transactions that are taking place. This situation seems to be changing. Prudent risk is the part of any investment. Those who can identify the growth opportunities and implement plans to exploit them will be successful. Calculated risks taken now will be rewarded as we progress through the growth of the next economic cycle.

We are experiencing an evolution in the innovative growth model for businesses.   Large companies have a reduced willingness to make the investment in R&D than they once did. Growth in many large firms is coming by way of merger and cost reduction through consolidation.  The pharmaceutical and chemical industries offer two examples of this.  Pfizer is acquiring Wyeth, and Dow has completed the purchase of Rohm and Haas which it entered into before the financial collapse. In both cases cost reductions and consolidation will follow the transactions.

The period of consolidation is a challenging time for the new organizations.  Eliminating organizational redundancies can create an environment of fear and uncertainty for the remaining employees.  Once the work of eliminating organizational redundancies has been completed, organizations must quickly turn their focus to establishing a positive re-enforcing sales culture.  The sales culture will be the engine that drives the “organic” growth of a business.  A true sales culture is systematic, supportive, trains, motivates and energizes the sales force, recognizes that everyone in the whole company is in sales and finally creates the conditions to be the difference between average and astounding results.

 Small companies are being relied on to a greater extent to be the engine of innovative growth.  Many small pharmaceutical companies are being created as a result of entrepreneurial activity or as spin-offs from larger firms. Universities have been an ongoing source of basic research which is often followed by licensing and entrepreneurial commercialization in small startup firms. These small firms help the innovation process by mitigating the developmental risk and cost of guiding promising pharmaceutical compounds through the development and commercialization maze. The larger firms are then purchasing these small companies late in the regulatory process.   

The job of the leaders of small to mid-cap public companies to enhance the wealth of its shareholders by creating value (1) equity from “organic” growth and (2) payment of dividends. More often they are now taking on the second step of the commercialization process by making targeted acquisitions of these startups and small-cap companies from their founders as they enter into the rapid growth phase of the life cycle. 

It will be the ability of managers to create value by organic growth that will differentiate the stellar businesses from the average performers.   Those with the capability to assemble management teams that will create value from the assets being acquired will prosper in the long run. This is certainly going to be the mantra of the next business cycle. The time to move is at hand.

Time to Move On!

Posted in Uncategorized by resultsman on October 2, 2009
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For people in transition, perhaps that hardest thing is to know when to move on. For some, it might be facing the challenge of dissociating themselves from a previous employer. I did not understand the concept of moving on until I experienced the challenge associated with giving up this dream of buying and running a company that I had identified.
I wanted to make something exciting and real happen. All of the coaching and guidance tells you to look for that right opportunity that you really want. I thought I found it in a small chemical company that is focused in a business segment that I was familiar with. The business was for sale and everything seemed to be falling into place to make a serious run at buying the firm.
Here was this great little company based on a business and technical model that I am familiar with. Sales into a growing market, low market share with an opportunity to grow, a good manufacturing cost position and strong supply chain; what could be more perfect?
I spent a considerable amount of time researching the competitive trends, market potential, supply chain, earnings, and potential for growth. On the surface, everything appeared to be in order. There were a few warning signals here and there, but nothing that could not easily be explained away. Certainly, nothing that could deter this unemployed executive who was intent on creating his own American Dream.
There is a moral to this tale. Do your home work and most importantly, trust your instincts. If little warning bells are ringing, listen to them. Make certain that you are comfortable with everything. As hard as it was to accept, as much as I wanted this to be the right company and situation, it wasn’t! Do not act in haste or on emotion. Make sound business decisions based on fact, but trust your instincts. They were probably right in the past and helped to make you a success in the past. For me, it is time to move on.
So, What Is Next?
Perhaps you have considered moving on and diversifying into new areas.
My answer, carry on. Plant the seeds for growth just as you would in making a sales call. Continue to establish the network contacts. Make your sales calls on target companies as you would on a prospective account that you want to do business with. Implement the marketing programs that promote yourself and will create a demand for your products. In general run the business of “Me Inc.” with the full expectation that conditions will recover. Opportunities abound, either to create a business or to find a position within a company.
Repeat this message at company after company just as you would at any target account in a territory. Work to sell at all levels in the organization. That is, don’t rely on any single person like an HR manager. Learn to cultivate them just as you would a purchasing manager. Couple this with organizational networking. Things will work out.
Show Strong Leadership and Persevere-
Times will recover and business conditions will improve. This is a time to show strong, positive leadership. Don’t be reckless. Businesses and people have to persevere. They need leaders to encourage them to do this. Stay positive. As a nation we can (and will) work our way out of this present situation. Recessions, while they hurt, can be good for the economy as a whole. They create the platforms for future growth. Remember, it took almost 9 years to really get into this recession. It will take time to recover.

Everybody is Selling Something

Posted in Uncategorized by resultsman on March 17, 2009
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Almost everybody is or will be responsible for selling something at some point in their life, whether it is a physical product to customers, service to business or organization or perhaps your personal skills or services to a new employer. Do you have the total package necessary to influence and persuade and convince someone to make a buying decision? The key to tipping the scales in your favor is to create value through the marketing process.
Marketing
Marketing is the process of creating the conditions that will make someone want to buy a product or service. Quality and service are critical components that a product must have if it is going to generate sustainable profits. One of tools used in the marketing process is branding. The use of a brand, whether it is personal brand as one differentiates their own personal identity or a product brand in the competitive world of consumer marketing is a useful tool in the value creation process of marketing.
Product-
First and foremost, you must have a product to sell. A mousetrap of some sort is necessary. This could be most anything, a car, a family or families of chemicals, a service that reduces costs or brings value to a company or this could be yourself – the knowledge and personal skill sets, god given talents and drive that you would bring to a company, value.
In order to be successful the products value or professional contribution must be presented in a manner that is compelling enough to make a person want to purchase it.
Great sales professionals have a total understanding of the value that their company brings to the market. In a similar manner a job applicant must have a similar understanding of their own self worth that they bring to a company.
Promotion-
This is an essential part of marketing. Every product has features, characteristics and benefits that make it unique. The key to the promotion is being able to know and really understand the product. What are the features or specifications of the product? Are these specifications the industry standard? Or, do they product meet and exceed the standards in some way to make the product truly unique?
Can these indentifying features and characteristics be associated with the product in a way that makes them unique. Or perhaps, they can be associated with a business or maybe a person in the form of a personal brand. Once the association is created there are a many ways in which potential customers can then be educated or made aware of the branded product.
Promotional literature, trade show promotion, technical presentations, B2B web based marketing are just a few methods that can be used to spread the word about a product. The job aspirants have their own promotional literature in the form of resumes, bios and 1 page promotional pieces and web based promotion in the form of social networking like LinkedIn to use.
Finally, in many settings whether it is industrial or retail, there is good old fashioned selling. Sales calls or networking. All are similar tools that can be used to make a sale.

Distribution-
Service and Distribution are also a critical element of the marketing process. A marketing and sales department can do the most effective job of demand creation and selling in the world, if distribution or delivery of goods or service falls short of expectation all of that work and good will could be lost. A sound, functioning supply chain is a critical component of the marketing process.

In short, if you make a commitment to do something or a sale, honor it. A good reputation or brand is hard to establish and keep.
Price-
Pricing a product can be a complex undertaking. Many strategies can become involved. First and foremost is profitability. One must ensure that they are making a profit. Is the situation competitive?
Strategy- Will the sale be a onetime discrete event? Or are recurring sales with the goal of sustainable profits part of the objective. What about ensuring reinvestment economics? Price escalators, de-escalators pegged to actual costs or indexes can be considered.
To summarize, the highest price that the market will bear and still support the strategy being adopted is the price that the product should be sold at.
Finally, once sales begin, the elasticity of the market should be regularly tested. If selling opportunities are not being lost to aggressive pricing on occasion, even when a sales force has positioned a business in a spot to make a final price offering, the price policy might not be aggressive enough.

The Job Search is Selling-
There is an equivalent part to the selling process in a career transition job search. Organizing and using an effective marketing and sales strategy should shorten the career transition process.

10 Years to Get Here; What’s Next?

Posted in Uncategorized by resultsman on February 6, 2009

10 Years To Get Here; What’s Next?

It has been nearly 10 years since the Glass Steagall Act was repealed. This removed safeguards that had been in place since 1933 and allowed commercial banks to acquire brokerage firms. During the intervening time we all enjoyed some wonderful business conditions. Unfortunately, excesses and abuses of sound business judgment created a bubble that has led to the deep recession that we now find ourselves. Nothing new in that statement! 

Here you are running a business that is mired down in these tough times. The important issue is, “what actions should be taken in the here and now to protect for the future?”

So, What Is Next?

You have done the obvious things to take care of the business.  Costs have been cut to the bone. Maybe, you have released good people from service.  Your product line has been rationalized and streamlined to focus on the businesses core competencies.  You have analyzed the customer base and segmented them into profitability groups. You’ve increased the service that you provide to your most profitable customers. At this point you really can’t afford to lose any customers. You have considered and perhaps diversified into new areas.

 

My answer, carry on.   Plant the seeds for growth. Make your sales calls on customers and prospective accounts that you want to do business with.  Implement the marketing programs (to your financial limits) that will create a demand for your products. In general run the business with the full expectation that conditions will recover.

I’d like to relate a story from the 1980’s that occurred in the Louisiana Oil patch following the crash in the price of oil.  Times were grim in Texas, Louisiana, Arkansas and Oklahoma. The region experienced a downturn in economic conditions that were remarkably similar to what we as a nation are experiencing now. The demand for crude oil and refined gasoline products had dropped dramatically. Businesses were failing. The price of real estate through the region crashed falling upwards of 40% in some areas.

One of the nations’ largest refineries in Lake Charles laid- off over 1000 workers and shutdown the majority of their operation.  I had an appointment with operations management set up for the day after the lay-offs occurred at this refinery. When I got into my appointments office, the first question that I was asked was “Do you know what happened here yesterday?  Why are you even here?” My reply was “yes I do know, and I believe in this site and its people. You will recover and come back.”                  

I repeated this message at account after account through the Gulf Coast.  I acknowledged the situation and that accounts were not in a position to make immediate purchases, but I also expressed confidence in the people and the organizations that I did want to conduct business with. We were in this together.  I told them so.  To make a long story short, I was rewarded when conditions did improve.  Sales tripled in a 3 year time frame. 

 

 

 

 

Diversify if Applicable-

If diversification is in your plans, now might be the time to do it. Do what you have to in order to survive.

This might mean getting into areas of your mainstream business that you had never considered. I recently spoke with a contractor who specializes in designing and installing custom kitchens. He told me that people just are not spending the money to customize kitchens right now.   He is diversifying into refurbishment and refinishing in existing kitchens just to keep his business on operation. 

There are opportunities out there to purchase good sound business that will be valued reasonably from a Price to EBIDTA perspective because of the downturn in the economy. Keep your eyes open, inquirer. As the adage states,“ Nothing ventured, nothing gained.”

 

Show Strong Leadership and Persevere-

Times will recover and business conditions will improve. This is a time to show strong, positive leadership. Don’t be reckless. Businesses and people have to persevere. They need leaders to encourage them to do this.  Stay positive.  As a nation we can (and will) work our way out of this present situation. Recessions, while they hurt, can be good for the economy as a whole. They create the platforms for future growth.  Remember, it took almost 9 years to really get into this recession. It will take time to recover.

Hello world!

Posted in Uncategorized by resultsman on January 22, 2009

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