Leadership teams that are on track to reach their potential to perform and growhave:
A written, board-approved financial plan that shows revenue, direct costs, gross margin, indirect costs by function (e.g., marketing, sales, HR, R&D, etc.), and operating profit (i.e., EBITDA), by month and quarter for the year. Approved financial plans tend to have the following characteristics:
Smooth (or otherwise rational) ramp-up (or down) of revenue and costs from the prior year closing month and quarter.
Generally upward-trending scale (i.e., ever bigger and better).
A 75% chance of being achieved by the in-place team with roughly 2/3 of planned revenue either booked or highly-probable (B&HP) and a highly-qualified pipeline of prospective, current year, revenue equal to three times the gap between B&HP and Plan (and not all in the last quarter or two!).
Identified upside-downside potential with mitigation strategies on the downside and what will be done to take full advantage of any upside.
Assumptions and triggers that explain what has to happen for planned results to occur and for planned expenses to be made.
You have a vision of what you want your organization to be but you do not know how to make it happen. The problem may be lack of capital, or you are consumed with the “every day”, or your team is not stepping up. The challenge is to find your organization’s constraint to growth and then to relieve that constraint.
Sometimes the solution is right in front of you but you need a fresh perspective from an experienced hand to see it, just as did Professor Nash in this scene from A Beautiful Mind:
An organization is a system of systems: the system of doing what it does (DO), the system of creating demand for what it does (SELL), and the system to get big (GROW). Odds are that one of these three systems holds your organization back from achieving its potential to perform and grow. Which system constrains your organization?
IntelliVen can help. We work best with organizations who sell products or services into the enterprise and government markets. You should be bigger than a startup and a small fraction of the size you will be when you get to the goal you are after.
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.
Public company equity-based pay practices, such as stock, restricted stock, and employee stock options are often a poor fit for private companies committed to reward leaders for performance and growth and to motivate leadership and capital succession.
Equity based programs that make sense and work well in a public company come with many ills for private companies: they can be costly, tax-inefficient, static, ineffective, and sometimes downright unfair. In the worst case, equity pay practices can derail the owners’ plans for growth and succession.
Dynamic synthetic equity presents a more tailored solution for private companies interested in leadership and capital succession. Restricted stock and employee stock options often distort outcomes for private companies. Consider that:
The underlying stock price in a private company gyrates as owners enter and exit from, for example, a living or a death buyout or even a recapitalization. Stock price can jump 50% – unjustly rewarding the owners of true equity awards.