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CEO Advisor® Newsletter
October 2010

10 Critical Issues Facing CEOs

According to Inc. Magazine, only one in 10 companies make it to the fourth year in business. Most companies that survive this fourth year are eventually sold or liquidated. Only 1.5 percent of all companies survive into the third generation of management. Why? It is primarily due to a lack of strategy and business planning.

A successful business is built over time by a CEO or business owner who is able to assemble a cohesive, focused management team that produces quality products or services. Then, the business must create a sales and marketing machine coupled with operational processes that generate profits. This requires strategic planning and skilled execution. 

Why do most companies fail to survive the first generation of management? Usually something happens that causes the entrepreneur to leave the business or exit the business prematurely.

Here are the 10 key issues that typically lead a CEO or business owner to decide to exit the business, usually through a sale, at less than desirable financial results.

1. The company is overly dependent on short-term debt. No cash reserves have been established to meet short-term cash situations. Also, cash shortages preclude funding essential business growth strategies. Serious cash needs can cause short-sighted actions.

2. Management structure is too thin. The CEO is so tied to the business that there are no resources for the CEO to share management responsibilities. Thus decision-making, sales, marketing, operations and growth are restricted to the CEO's abilities and available time.

3. There is no succession planning. There is no training and grooming of a potential trusted successor. And, there is no active plan or resources to recruit from the outside if an internal candidate is not available.

4. Managers have no "ownership" in the business. Senior managers are vulnerable to outside offers when they have no real economic ties to the business. Equity incentives or bonus plans can support vested interest in business performance or solid, committed succession.

5. A specific business strategy is lacking. There is no strategic business plan to focus resources effectively toward goals and to increase profits. This is critical and rarely done consistently in small business today.

6. The CEO dies or is disabled. Being prepared for the calamities that can ruin a business is a responsibility a lot of business owners do not take seriously enough. Insufficient financial and management preparation for the death or disability of the CEO can create chaos for those left to sort out the issues.

7. There is disproportionate risk through personal guarantees. Because of personal financial guarantees required for the business, a major crisis could ruin the business owner. Overlooked are the opportunities to share the responsibility and liabilities of the business.

8. Family and other ownership issues exist. Family succession, majority shareholder issues including divorce, the death or departure of a shareholder, or even conflict between shareholders often precipitate non-economic exit decisions. More often than not, decisions are made with more emotion than reason. The opportunity most often neglected is to engage a business advisor to assist in sorting out the varied interests and prepare viable alternatives in advance.

9. The business is no longer enjoyable or CEO fatigue sets in. Many CEOs and business owners reach a point where they no longer wish to endure the pressures of the business. They have lost their enthusiasm and commitment. This condition is not only an impediment to growth, it often creates a lull that puts the business in a vulnerable position. An interim, part-time CEO/business advisor may be the alternative that works best outside of a sale of the

10. The assets of the CEO or business owner are unbalanced. Most personal assets are in the value of the business. Little independent retirement savings have been established for the CEO/major shareholders in the event of a business downturn. In the absence of a strategic exit, the sale of the business is required as a retirement alternative.

The presence of any of these issues may be critical to you and your business. Every business owner has his or her own tolerance for business pressures. However, the decision to sell a business should only be made after every consideration is given to proper business planning. Such a plan should include an assessment of the 10 critical issues above. It is crucial that the resolution of one critical issue not complicate another.


Contact CEO Advisor, Inc. today at (949) 759-8676 in So. California, or (301) 580-8071 in the DC Metro area, by email at or visit us at for more information.

Gain Bigger Returns From Your Sales Force

Old models for forecasting sales and profitability may be easy and precise, but those approaches are typically outdated. They're not going to help you maximize profitability or achieve short and long-term growth.

Let's look at sales, and first decide how many sales people you need to cover your target markets using a familiar formula. Divide your prospects and customers into A, B, and C level accounts. A's revenue is over X, B's is between X and Y, and C's is between Y and Z. The A's get called every two weeks, the B's get called once a month, and the C's get called once every three months. And then you add up how many A, B, and C accounts you have, and determine how many calls sales people need to make. The result is the size of the needed sales force to provide the proper sales coverage.

If you want to achieve your objectives, you need to be honest about their effectiveness and focus on a more sound approach. Most companies make decisions about the size and the ability of their sales force arbitrarily. They consider only the most basic parameters: what we did last year and what we can afford. What you need to do is consider how big your sales force should be, where they should be, and the focus and volume of the sales activities your sales force ought to be spending their time.

Best Practices Approach

First, divide your target markets into categories or verticals. For each, look at what you are doing now in terms of allocating sales, resources and dollars. Then, make estimates of three scenarios: what would happen if you allocated 50 percent more and 50 percent less sales dollars to each vertical or category, and also what would happen if you doubled the sales resources. Secondarily, incorporate a similar practice by building in your marketing plan and programs and your marketing budget.

This is just one aspect of your overall sales strategy, but very important in meeting your sales goals. To optimize sales, develop a comprehensive sales strategy that includes pricing, gross margins, targeted verticals that match your core competencies, evaluate your sales team members, focus on your sales channels - direct vs. indirect, review your sales compensation plan, sales coverage and more.

CEO Advisor, Inc specializes in growing your business to the next level. Our expertise and hands-on approach to funding, finance/accounting, operations, mergers and acquisitions, and particularly sales and marketing, will accelerate your growth and profits.

Contact us for a free initial consultation at (949) 759-8676 in CA or (301) 580-8071 in the DC Metro area, by email at or visit us today at


"I can't believe how much money I was leaving on the table before CEO Advisor, Inc. Mark showed me how to capture a lot more profit without expending more man-hours and capital. The most exciting part is that I now have a very specific plan and forecast of my company's future. It looks very bright indeed. Thank you, Mark!"


CEO, Web Application and Programming Company

"As a President of a mid-size technology company, I have been very pleased with the services provided by CEO Advisor®. He contributed in many areas, but identified marketing and sales as our primary need. His guidance and contributions have been invaluable in establishing and maintaining a meaningful marketing and sales program for the company. He is a knowledgeable business advisor and a pleasure to work with."
CEO/President, Engineering Services/Manufacturing Company

Whether it is growing a business to the next level, turning a distressed company around or preparing a company for an exit, Mark's firm, CEO Advisor, Inc, provides a broad range of services and Mark is there for the CEO every step of the way."



Haynes & Boone, LLP

Words of Wisdom

"I've missed more than 9000 shots in my career. I've lost almost 300 games. 26 times, I've been trusted to take the game winning shot and missed. I've failed over and over and over again in my life. And that is why I succeed."


Michael Jordan

Prime Minister of the U.K.