Category Archives: Finance Matters

Posts in this category are related to the financial side of strategy and operations

At Your Service

Service business ideas are a dime-a-dozen. The question is: Which ones will be successful?” One way to find out is to implement the idea. Another is to do the math before taking even the first step.

Watch this comic scene from Opportunity Knocks in which a businessman uses careful logic as he stumbles into a business venture.

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Click to see a short motivational scene from Opportunity Knocks.

Your service may not be what you think.

Consider, for example, how much would someone be willing to pay to listen to Beethoven’s Ninth symphony? Would it be:

  • $1 for an MP3 on iTunes?
  • $20 for the CD?
  • $200 to hear the NY Philharmonic live?

Continue reading At Your Service

Equity Rules

One of the hardest things for an owner/founder/operator to do is motivate others to perform and grow to their full potential. Watch how the  pride and endurance of a race horse transforms a struggling team into winners in this inspiring scene from Seabiscuit.

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Click to see a short inspiring clip from Seabiscuit.

Equity models are strategic because: Who gets What” defines “Who You Are!”  That is, the way owners share value with those who create it has a profound impact on the firm and the owners’ ability to attract, retain, and reward senior talent.

In his white paper, Equity Rules: Shaping powerful equity models via Sell.Pay.Convey, Mark Bronfman outlines the rules for using equity to secure a strategic advantage. His points are especially relevant to talent-driven ventures.

Private companies often use a variety of innovative tools, individually or in combination, to navigate and conquer major changes brought on by the urgent concerns of affordability, competency, and succession or “equity inflection points”. Continue reading Equity Rules

Profits Interest vs Options

Do you wonder what is the easiest, least expensive, and most flexible approach an owner/founder/operator can use to attract and motivate top talent? This post introduces Mark C Bronfman’s article on using Profits Interests vs Options to install simple, flexible, and highly effective executive incentive plans.

Profits Interest and why we need it

Founders who still own and run their businesses may bring on executives to get to the next level and/or to free themselves from being a slave to their success. The challenge is how to provide incoming executives with attractive upside at low cost, risk, and complexity to the owner, founder.

Profits Interests, an ownership and incentive planning solution under current US tax law, are often the right and best approach.  This powerful equity incentive plan requires no buy-inis not taxable at grant or vesting; and, its capital liquidations are taxed as capital gains

In his article: The Profits Interest, now available as an IntelliVen InsightMark C. Bronfman, Founder of Bold Value and affiliated with Sagemark Consulting, describes how Profits Interest can convey a true ownership interest without the friction of paying for the capital of the past. Continue reading Profits Interest vs Options

How top MBA students should choose between Operations vs Finance.

Business school students have to decide their course of study from day-1 … and the choice makes all the difference. The first decision almost always comes down to: operations vs finance:

  • 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, financing, or public offering.

Finance looks like the fast track to great wealth and has attracted top MBA students students for decades.  Operations looks like a long, hard road with a massive payday only for the few with enough dedication, talent, time, and luck to pull off a successful start-up from scratch.

While the economy needs both financiers and operators, the promise of quick and large returns has left the world short of the talent it needs to drive growth and scale of quality organizations.

Continue reading How top MBA students should choose between Operations vs Finance.