Tip of the Spear Ventures

A Family Office that behaves like Venture Capital | Private Equity | Business Consulting

sam palazzolo

The Tough Work of Turnaround Management – 4 Tips!

By

The Point: If you’re like me, you love CNBC’s “The Profit” staring Marcus Lemonis! Week after week Marcus seems to not only identify, but successfully partner with organizations looking to turn their business around. But does reality really work out this way off of television? The Profit makes turnaround management look so damn simple/profitable! So I started thinking, “What is the tough work of turnaround management?” So in this post, we’ll explore the tough work you’ll need to employ in order to achieve success in your turnaround endeavors… Enjoy!

The Tough Work of Turnaround Management!

Wait a Second… This is NOT so Easy!

Are you a businessman or a prospective businessman who is just curious to know how tough turnaround management can be? You may not want to feel too inquisitive, and therefore keep your curiosity to yourself (or as my old-boss used to say, “Kid, don’t quit your day job!”) If truly you belong to this category, then you are currently perusing the right post. Turnaround management and business change are important for new developments in an organization’s business strategy, and should be done with adequate seriousness, regardless of how tough they seem. Although I won’t say it is elusive to achieve success, it can require some special dedication and seriousness to achieve desired outcome (Value creation, profitability, etc.)

The Tough Work of Turnaround Management!

Here are four (4) tips to help keep you aligned for success in a turnaround based on the most common failures I’ve seen/experienced:

Tip #1 – The Toughness of Taking Charge: Factually, you have to learn to be a leader before you can finally lead. For an effective business change, you must be ready to take charge. Among the members of your business, there will be some that appear hard to control. However, know this much that you must do it! Having an excellent business strategy but zero leadership is like having a good car with no one willing to drive it (or no engine!) (If you’re looking for leadership development while encountering a turnaround scenario, I’ve established a new offering just for you. Drop me a line at selections@tipofthespearventures.com).

Tip #2 – The Power of Confrontation: Some people need confrontation before they can get things done. Confrontation is not really bad as people perceive it to be, and it can be highly effective! You have to apply pressure sometimes to get people to work. Some people always try to avoid confrontation so they don’t look cruel, but this notion should be erased when it comes to business change. Confrontations do not always mean lambasting a person, and if you are the kind that confront this way, you may have to change completely. Every statement uttered by you when confronting a team member should be positive, so as not to dispirit them.

Tip #3 – Building a Culture of Success: It takes more than a well-designed business strategy to metamorphose from a business that has gone sideways/down completely to a business that everyone wants to liaise with. If you do everything possible by you for turnaround management, but don’t get success, it is equivalent to you doing nothing. A business owner who has lost superfluously may even dash his hope in business change, and feel it is no longer possible to recuperate all that is gone and go back to normality. It is tough for you to lose too much, and still believe you will be successful, but it is paramount to believe so.

Tip #4 – Choosing the Right People: Choosing the right persons is also a challenge in going back to normality. Developing a new business strategy to bring back you company to normality may entail you dismissing wrong people, and retaining or recruiting the right people. This is a difficult task, compounded by the fact that it is difficult to differentiate between the right people and the wrong people.

SUMMARY

It may not be stress-free for to turnaround a company, but I’ve found degrees of success can be achieved if you take charge, are willing to confront, looking to build a culture of success, and choosing the right people. Remember, real-life isn’t like a made to order television show! You’ll have to put in a great degree of dedication and seriousness in order to achieve the best outcome within a short period of time as possible.

 

Sam Palazzolo

PS – If you/your organization has challenges as a result of Turnaround Management activity, please don’t hesitate to drop me a line and request future post titles! Here are a few other titles that are currently in the works:

 

 

The Importance of a Mergers & Acquisitions Strategic Plan – 3 Tips!

By

The Point: The thought of acquiring another company can be a very seductive strategic plan when CEOs wish to improve corporate performance and overall growth. Companies spend a huge amount of money every year on acquisitions – yet studies have confirmed that the rate of failure among mergers & acquisitions is at an all time high (peak!). What exactly are the causes of these failures (and more importantly successes)? In this post, we’ll discuss the importance of a Mergers & Acquisitions Strategic Plan and provide 3 Tips… Enjoy!

The Importance of a Mergers & Acquisitions Strategic Plan – 3 Tips!

What Leadership Does Wrong?

A large number of acquisitions miss the mark in regards to expectations since organizational leadership mistakenly attempts to coordinate candidates with the strategic aim behind the arrangement, neglecting to recognize bargains that may enhance current operations and those that could drastically change growth prospects of the company. These often make organizations pay the wrong price (i.e., overvalued) and integrate the acquisition wrongly.

There are two motivations behind acquiring a company, which most executives frequently befuddle. The first, and the most widely recognized one, is to increase your organization’s present performance – That is, to hold a superior position, while cutting expenses. The second, and less-known reason for acquiring a company, is to re-evaluate the mode of business operations through expense reduction – This is most likely to confound investors with spectacular pay off (especially when labor costs are slashed).

Integration often determines whether the acquisition will succeed or fail. You should be able to describe exactly what you are buying to foresee the way integration will play out.

One powerful way forecast effectively is to view the established targets/goals in its business model. Additionally, value is created and delivered through 4 interdependent elements of a business model:

– The customer value proposition is the first element

– The profit formula

– Available resources (such as technology, employees and cash)

– Lastly processes (including budget, R&D, manufacturing, and sales)

Three Tips of Having a Good Mergers & Acquisition Strategic Plan

Tip #1: Helps in Acquiring Resources That Command Premium Prices

Having plans to improve a new product or service is no guarantee to command a price premium. Buying improved components (compatible with their products) is a strategy that is routinely done by some companies to command premium prices.

Tip #2: It Helps to Lower Company Costs

Leadership often promise that an acquisition will lower costs, where in reality, it’s only possible in few scenarios, such as, and acquiring company with high fixed costs can expect higher profit potential. Most deals succeed using almost the same strategy.

The parent plugs some particular assets from the procurement into its current model, ejecting whatever is left of the acquired model and closing down, laying-off or offering redundant assets for sale. The execution help comes about because of utilizing the objective’s assets such that scale financial matters can drive down expenses. The strategic use of resources from the target will help in boosting performance and drive down costs 

Tip #3: A Disruptive Business Model can be Acquired

Disruptive business models and products have been proven to be the most reliable sources of massive growth in both margins and revenues. Disruptive companies typically offer simpler and more affordable products than what bigger players offer. Their footholds are well secured in the low-end of a market and gradually step up to products with higher margin and performance.

SUMMARY

In Mergers & Acquisitions, we all believe that success will be the end result. However, wrong companies are being purchased daily for the erroneous motive, wrong elements are integrated into the wrong business models, and wrong measures of value used when pricing deals (This is a mess that shouldn’t be!) You must be able to predict accurately if a company under acquisition consideration is a great deal, or just a debacle in the waiting!

 

Sam Palazzolo

PS – If you or your organization are challenged as a result of M&A activity, please don’t hesitate to drop me a line and request future post titles! Here are a few of the other M&A titles previously published/in the works:

– Will Your M&A be a Success of Failure? (CLICK HERE)

– How to Successfully Survive Mergers & Acquisitions

– M&A: Creating Shareholder Value

– M&A: Should You Go For Stock or Cash?

What Role Does Technology Play in Turnaround Management?

By

The Point: When a company is on the brink of financial havoc (or already facing financial havoc!), we tend to look for ways to turnaround the operation. Technology has been looked to as an answer to the financial havoc problem. The role technology plays in turnaround management has been a great one to explore (Keep in mind, there are other areas of a business to explore… But those are for a later blog post!). Companies can not only explore business technology, but now rely on it heavily whenever they identify a turnaround condition. Technology is filled with the means to improve the positive effects of your business strategy. In this blog post, you will get to know how technology has been able to be leveraged so as to help turnaround management, and why you should put it into consideration when you next face a turnaround opportunity… Enjoy!

What Role Does Technology Play in Turnaround Management?

Roles Technology Plays in Turnaround Management

ROLE #1: SURVEILLANCE – One of the reasons a company may be failing is the devoid of effort produced by members of the company. If your company happens to be failing because of this reason, and you finally detect that, it will still be difficult to make necessary amendments without business technology. However, with the help of technology, you can check out the efforts each member of your company is putting to work. This can be done at anytime, and it has even been made advance that you can check this out right from your home or even when you are outside the country. This can direct you in turnaround management and even in the designing of a new business strategy if needed.

For example, let’s explore the surveillance camera. If you do not have a surveillance camera in your company, you can do it at anytime and it is very easy to install. Surveillance camera has made it possible for business owners to detect a lot of unknown and obscure things that happen in the place of work when he or she is away. This is a major role technology plays in turnaround management.

ROLE #2: COMMUNICATION – Apart from the fact that surveillance can be very helpful in detecting useful information, there are also communication tools that can make the management of a company get to know information from both business members and outsiders. The internet has also been helpful in making anonymous individuals share reviews about the company (Think Yelp!, Google+, etc.) This can help business owners have insight of what the company is lacking, and more importantly what is needed to be done for an effective turnaround management. Business technology that enables communication between business owners and employees should be reviewed/mined for input in further modifications (Products/Services, Processes, and People). It is a shrewd business strategy to survey employees so as to get information from them, rather than approaching them personally, as they may not feel too comfortable divulging some information without fear of retribution.

SUMMARY

In this blog post we’ve explored the question “What Role Does Technology Play in Turnaround Management?” and provided 2 roles to assist turnaround management. Keep in mind, technology has gained wide acceptance by majority, and there is rarely a company that will say no to business technology adoption. What might be questioned is the timeline for installation.

 

Sam Palazzolo

PS – If you/your organization has challenges as a result of Turnaround Management activity, please don’t hesitate to drop me a line and request future post titles! Here are a few other titles that are currently in the works:

  • Why Companies Fail or Enter a Declining Period
  • The Stages of Corporate Turnaround
  • The Stages of People Turnaround Process

 

 

What Makes M&A so Difficult to Execute Successfully? Top 3 Reasons!

By

The Point: Visualize a scenario where you buy a used car… There were test-drives available, you could examine both interior/exterior, even seek assistance from a trained mechanic to help assess the performance/stability of the car. Now, irrespective of all due diligence, the real fact is, whether you made a good purchase or otherwise, you will get real evidence after the purchase is made once you start riding around in it over time. Mergers &acquisition deals also have the same route and challenges – you can examine the existing business based on visible financial numbers, assumptions of potential fitness and advisory assistance from M&A advisors. With all these though, it’s only when all deals are made and the business needs to be moved forward that reality sets in – the dreaded difficulties and challenges may arise. In this post we’ll talk about what makes most mergers and acquisitions difficult to operate successfully… Enjoy!

What Makes M&A so Difficult to Execute Successfully?

Why Most Mergers & Acquisition Fail

Most people have read studies reporting the failure of most acquisitions to provide shareholder value – yet there have been an increasing M&A market with frothy valuations, not lacking willing buyers to venture.

A purchase with a high price often increases the task of creating a higher value. For the last decade, it has come to the understanding of many buyers that value is created from building real business value and NOT just from mere clever financial engineering and opportunistic buying.

Acquiring growth from new markets, customers and products are the major purpose for most mergers & acquisition – for profit maximization through the strategic potential of a deal. But are most firms really getting all of these? Statistics have confirmed it not to be the case. Discussed below are the reasons why executing M&A successfully can be difficult.

Top 3 Reasons Why Successfully Executing M&A is so Difficult

Reason #1: Not Executing the Integration Process

The post-merger integration has been a major challenge for many mergers & acquisitions deals. In order to identify crucial projects or products, key employees and all sensitive matters, there must be a well structured appraisal process in place. With this in place, there should also be a design for efficient integration/adoption of processes that will be supported with automation, consulting and possible outsourcing alternatives (so as to avoid deal complexity).

Reason #2: When Owners are NOT Involved

Most of the time, a limited role is assigned to advisors until a deal is completed. With this being made known, newly acquired entities are onus of their owners (or without). There should be involvement from owners starting from the establishment of the deal, to how the business will run and should allow advisors to play a role assisting (if need be). This will have a lifelong benefit to the organization as the owner will benefit from the experience of gaining tremendous key knowledge/insight and the all too important ability to execute.

Reason #3: Assuming Optimism Blindly

It is very common for buyers to assume that a targeted company operates just as the way they do things themselves. It must be noted that there are a lot of different approaches of operational functions by which companies operate by. The integration team should account for these differences when plans are being made. They should consciously make the right assumptions rather than aggressive ones.

We’ve worked with a large client for several years now… While each has the same corporate logo hanging out in front of their business, each operates dramatically different from one another on the inside!

SUMMARY

In this post we’ve discussed the topic of mergers & acquisition, and more indepth what makes M&A so difficult to execute successfully. From an outsiders seat there appears to be a need to enhance deal-making skills for acquiring a new business if lasting success is desired. A potential great company will learn from the three reasons given of mistakes made by rookies and improve, integrate the right process where owners will be involved, and consistently build capabilities needed for future growth.

 

Sam Palazzolo

PS – If you/your organization has challenges as a result of Mergers and Acquisition activity, please don’t hesitate to drop me a line and request future post titles! Here are a few other titles that are currently in the works:

  • Will Your M&A be a Success or Failure? 3 Tips!
  • Disrupting Your Industry with Exponential Growth: How Amazon’s Purchase of Whole Foods Upended Retailer’s Strategic Plan
  • Mergers & Acquisition: Should You Go for Stock or Cash?
  • The Importance of an M&A Strategic Plan
  • Mergers & Acquisition: Creating Shareholder Value
  • Mergers & Acquisition – Six Diversification Questions
  • Mergers & Acquisitions: The Future in the Old/New Economy
  • How to Successfully Survive Mergers & Acquisition
  • Mergers & Acquisitions: The Problem with Acquisitions

 

Is the Art of Business Development Prospecting Overrated? 3 Tips!

By

Many sales guru’s think that the Art of Business Development Prospecting is overrated, but this aspect of business can never be sidelined. Many make blunders because they mistake the art for “something else” by committing one or more of the under listed blunders:

  1. Not listening. No salesperson has ever heard of a sale. However, when asked a simple question, many sellers take it as a license to deliver a monologue. Here are three tips for better listening.
  2. Using sales of snapshots. People often start to lose interest when they feel they are being sold. Usually they begin to feel this way when they hear phrases like “This is a great question” or “What is needed to get your business today?” People need to feel like individuals, not like parts on an assembly line.
  3. Failure to adapt to the situation. The problem with using a rigid sales script is that it assumes buying motivations, prospects pain points, and supposed similar situations in life.
  4. Distinguish features from benefits. Often focus on sellers telling someone what a product or service to the detriment of this problem solves or what pain takes away. Once I observed a commercial leasing agent from the prospective client’s office. When he met in the hall of the building, he commented on the large outdoor car park. It was a declaration of characteristics. A benefit statement would have focused on how customers would never find a parking lot or that people could always park near the building in bad weather. Was it a necessary conversation point to make? Probably not!

Below are three tips that can assist in the art of business development prospecting, taking you from overrated to actual sales/business development activity:

Tip #3 – Prospecting is Not Networking.

Prospecting requires thoughtful analysis. Networking is improvisational and immediate. Prospecting requires equal measure of looking out into the marketplace assessing the need or demand, and introspection to look within yourself and determine, with clarity and confidence, what opportunities you are well positioned to pursue that will elevate your scene to ever-higher levels.

Prospecting requires discernment. It’s not a numbers game all the time. Whatever your business, you will not be good for all potential prospects. There should be a mutually perceived adjustment between you and your prospective client – where the best to serve them well is in a way that is highly valued by them (NOT you the salesperson!) Believe me, this dilutes the pile of pressed mud. Once you are able to define what a “good fit” is for the prospect, and why they should care, you are able to focus all your energy and resources on the opportunities that feed the most promising of prospects. When you are highly specialized, prospecting is often though of as “easy.” If you are a specialized expert, known in the market to solve specialized types of problems you may be thinking that you do not need to prospect for customers (or those customers who need this kind of problem solved). It is much easier to determine which prospects place a high value on your solution. Chances are good that these prospective clients will be looking for you too, and you will be much easier to find as a result.

Tip #2 – What Defines a Perspective?

A prospect is a known buyer at an early stage in search of a solution to a major problem that cannot be solved now or in the near future. All the others are suspect. Converting suspects into prospects is a tough job and takes time. In my consulting firm, it takes three months or more of careful “in-touch” strategies to transform a prospect from a suspect.

Tip #1 – Always Be Prospecting (ABP)!

Prospecting is not an activity you do when you need business. If you need business next week, the prospecting of evil cannot correct. Always be prospecting (ABP), no matter how busy you are. It is the only way to create a sustainable sales pipeline to grow your business. Whatever your current business book, plant and tend a garden for abundant future prospects ripening every day.

SUMMARY

In this post we’ve set out to identify is the art of business development prospecting overrated, along with three tips to assist you in implementing the prospecting pipeline-fill needed to be successful in sales.

 

Sam Palazzolo

PS – If you or your organization is challenged as a result of Sales / Business Development activity, please don’t hesitate to drop me a line and request future post titles! Here are a few other titles that are currently in the works:

  • Rеѕроndіng tо Emergencies
  • Identifying thе Strеngthѕ and Weaknesses in Representatives
  • Dеvеlоріng Strаtеgіеѕ fоr Rеvеnuе Grоwth
  • Developing Effесtіvе Cоmреnѕаtіоn Pans
  • Hоldіng Sales Rерrеѕеntаtіvеѕ Accountable fоr Pооr Pеrfоrmаnсе
  • Learning tо Motivate and Inѕріrе Sales Representatives