CEO Advisor Newsletter September 2016
What is Growth Capital and
When Do You Need It?
Surviving the perils of a start-up/early stage company is a major accomplishment, but the journey is just beginning at this point. Building a company in its growth stages requires a completely different set of skills than the ones that got you this far.
Now you have to develop national and worldwide sales and distribution, a solid marketing strategy, hire hundreds of employees, and most painfully upgrade your team. It's all part of the great journey of building a major company of substantial value.
Prior to the dot-com blow-up, venture capital and initial public offerings (IPOs) were the primary source of growth capital for start-ups and early stage companies. When the markets were favorable, a company with a $25 million run-rate and a flashy story could go public and ride the wave to glory. Today, companies are staying private longer and for the right reasons.
Everything changed after the dot-com bust. Sarbanes-Oxley emerged as a set of regulations that have resulted in a much higher bar for companies that want to go public. Today, the financial markets want to see $75 to $100 million in annual revenues plus a solid, predictable business model (even though profits are not always required).
Growing a company to $25 million in revenue has one set of challenges. Getting to $100 million or $200 million is exponentially more difficult.The bottom line: Young companies are staying private much longer. They are raising a lot more capital in order to achieve their needed growth necessary to realize a solid exit strategy by selling to a strategic buyer (vs. the elusive IPO).
What is a growth-stage company? Generally, it has its first product or service in the market and is getting traction with 30%+ growth per year in a large market that is scalable and predictable to a great degree. At this stage, investors like to say that the "Dogs are eating the dog food."
Product development continues to be very important but sales, marketing and customer service are now the critical aspect of scaling the company and making it a success. The founding management team is still in place, but new management and skill sets are needed.
The amount of money needed to maximize the company's opportunity outstrips the company's ability to generate free cash. In many cases, these companies need tens of millions of dollars to scale their business.
Growth capital (private equity) investors bring cash, expertise, experience and management help. Many growth-stage investors prefer the early stage of expansion. These investors tend to be active and more hands-on. You may want seasoned growth capital investors as board members or advisors, as they will be able to open doors and help you solve problems that may be new to you but that they've seen repeatedly.
Most private equity funds with growth capital only invest in companies that are already profitable. There are those who specialize in being the first institutional capital and look for companies that have bootstrapped to critical mass without prior institutional investment.
Growing to greater scale as a private company with growth capital provides the opportunity to greatly increase your sales, profits and values of your business. Understanding the many varieties of growth capital will help you achieve a great outcome for yourself, your employees, your customers and your shareholders.
CEO Advisor, Inc. has many relationships with private equity firms, and experience raising growth capital for its clients at very attractive valuations and terms. Contact Mark Hartsell, MBA, CEO today at (949) 629-2520 or email MHartsell@CEOAdvisor.com for a no cost, initial consultation.
12 Ways to Increase Sales Now
Below are 12 ways to address sales performance and increase sales now:
1. Sales Goals / Sales CompensationAs the CEO, you are the only one that truly understands your company's needs for sales and your Sales Goals and Sales Compensation Plan are critical. Review your Sales Goals at least monthly at your weekly sales meetings, and motivate your sales team at least quarterly by highlighting the upside of your Sales Comp Plan as a key factor in improving sales performance. Also, review your Sales Compensation Plan every six months to ensure it provides the maximum motivaion and return on your investment.
2. Sales TrainingIf your sales training is inconsistent or non-existant, simply ask your salespeople to describe the steps in your sales process or perform a discovery meeting effectively in a role play. If they are inconsistent in their responses you need to provide more sales training. Sales process and closing skills must be at the center of your sales team's culture and training. Document and review your sales process in sales meetings and role play to improve your sales techniques.
3. Sales PipelineYou gained higher sales activity through effective use of your CRM and daily goals, and now your sales pipeline is packed with unqualified prospects that will never buy. Train your sales team to seek out qualified prospects with a decision maker, need, urgency and a budget. By focusing on qualified prospects only, you will increase your sales pipeline and sales substantially.
4. Effective Use of CRMAll salespeople need to properly and consistently use your sales CRM prospecting database and track sales opportunities. Otherwise, they slip through the cracks due to reduced tracking, reporting and accountability. Train your sales team to properly use your CRM effectively to improve sales, profits and shoreholder value.
5. Post MortemTake the time to learn how to improve sales when you lose out on a sale. Also, take time to learn something when you win a sale. That knowledge is power. You need that information if you expect to improve your sales performance across your sales team. Input this information into your CRM and take ten minutes at sales meetings to recap lost and won sales opportunities.
6. Sales vs. ServiceWhen salespeople spend too much time on customer service issues and not enough time selling new accounts sales suffer. Sales will increase when your salespeople focus their time on doing what they do best...selling.
7. Sales MetricsYou are focused on the weekly number of sales calls when you need to focus on all the metrics: daily sales calls, qualified weekly appointments, new opportunities in the CRM, monthly proposal presentations and monthly, quarterly and annual sales goals vs. actual sales. Holding your salespeople accountable is a critical driver of sales. Focus on the above and you'll increase sales performance substantially.
8. Sales PresentationsConsistency in each salesperson's discovery meeting process, sales presentations, proposal presentations and closings are critical to your success. Role play at sales meetings on a regular basis to perfect the sales process, sales presentations, overcoming objections and closing techniques.
9. Overcoming ObjectionsIn your on-going training at sales meetings, provide the sales team with sharp answers to the most common sales objections they face every day. Overcoming objections can be the crown jewel of closing sales, so cover these in your sales meetings and closing meetings with prospects.
10. Professional TrainerHiring an outside sales trainer/business consultant can generate a tremendous return on your investment. Improve sales by reviewing all aspects of your sales department and sales team and provide professional sales training to all sales reps at your company.
11. ReferralsReferrals improve sales and reduce the sales cycle so set goals for referrals and emphasize them in all weekly sales meetings. Referrals represent the least course of resistance and highest quality customers.
12. Sales ToolsMake sure your sales team has all the necessary tools to maximize sales, including brochures, sales presentations, customer lists, testimonials, a CRM like Salesforce.com and other sales tools and materials.
Sales success always goes to the team with the best management training and sales skills. CEO Advisor provides professional sales training, CRM set-up and training, goal setting to optimize sales results. Contact Mark Hartsell, MBA, CEO of CEO Advisor, Inc. for a no cost initial consultation at (949) 629-2520, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.