Strategy Business Consulting

02/20/2025

Financial metrics are more than history. They're decision-making tools.

Which ones should you track? It depends on your business.

Gross margins guide pricing. You need to have the right (variable) costs in your COGS, and then your gross margin (Revenue-COGS/Revenue) can help you determine pricing (by setting a standard) or focus (which products/services are generating the best margin).

Cash flow dictates timing—especially in early-stage companies or anytime cash is tight. Knowing cash flow and predicting cash is critical to knowing when to take on a project or cost.

Net Revenue Retention is great for any business that is driving Recurring Revenue. Compare the recurring revenue you got last period to the recurring revenue you got during this period for the same customers [For last year's customers only: (NewARR/OldARR)]. The result will tell you how sticky those customers are: 1.0 they stayed the same, 1.1 they grew, .9 they shrank. You can then calculate it for all customers to see how you did when adding new customers. [For all customers: (NewARR/OldARR)]. If you are below 1.0, ask why?

Beyond your financial statements, there are many other metrics you can apply. Finding the right few for your business enables good strategy.

Use your numbers to lead, not just report.

02/19/2025

Strategy needs to be baked into your management processes, not something you pay lip service to once a year.

The annual strategy planning offsite is a must. Grab your leaders, get away from the grind, and think about long-term success. Review your goals and set new ones. Do the organization chart exercise. Make plans. Often, it's the conversations that come out of these sessions that get everyone to share the same vision and build the same culture. Great stuff.

But it can't end there. Weekly management team meetings set the operational cadence, encourage a culture of communication, and prevent information siloing. Keep your strategy and goals in mind as you navigate those meetings.

Monthly financial reviews (actual v. budget) are important to keep you on track and detect anomalies quickly. Having a budget is key here, as is getting the right costs into COGS and Expenses.

Some companies want more—quarterly strategy meetings can be helpful, especially in early-stage companies or those going through a change.

Occasionally, a strategy meeting or series of meetings around a specific topic is needed. Create a team and employ best quality decision-making practices, but your overall strategy should be used to frame the decision here. It can take givens out of scope and improve decision quality.

If you see this on the day I posted it (Wednesday, February 19, 2025), I will see you at Tech After Five Greenville tonight. You can talk strategy to me.

02/18/2025

Many of my new clients begin with the idea that they want to build the value of the business so they can exit. And that's great. I had a great client exit just last year and it was wonderful. He was ready.

But for many of them, they want to exit because they are worn out. They feel trapped. They feel:

* Too busy operating to build systems
* Too involved to train successors
* Too central to delegate authority
* Too essential to take vacation

But once you are past the start-up grind, you can begin to build a life you want to live inside your business. It takes a plan, but it can be done.

Start with basic questions:

* What parts of the job do I really enjoy and am good at?
* What things do I not enjoy or am not efficient at and it would be great if someone else did that?
* Who depends on you daily?
* What decisions need you?
* Which relationships require you?
* Where are you irreplaceable?

Then, create transfer plans:
* Build a Management Team and create a Shared Vision
* Document your unique knowledge
* Train your replacements
* Delegate authority to those replacements
* Build relationships between customers/vendors and your team

Your management team should:
* Make daily decisions
* Solve routine problems
* Handle key relationships
* Drive growth initiatives
* Report to you, and each other, on a regular cadence

Measure what happens:
Decision quality
Problem resolution
Customer satisfaction
Employee confidence

Focus your time on:
Strategic planning
Maintaining Quality
Guardian of Culture
Cash
Anything you enjoy doing

I have had many clients decide, after building their company like this, that they don't want to sell anymore. At least not soon. They enjoy their life, aren't overworked, and have a great team.

The good news, though, is that all this also builds business value. So if you still want to exit, you can exit at the time you choose and for good value.

02/17/2025

Partnership breakdowns rarely start with big issues. They begin with small misunderstandings.

Watch for these early warning signs (especially in yourself): Am I . . .

* Avoiding difficult conversations (why are they difficult)

* Making unilateral decisions (you don't share a vision)

* Hoarding information (you feel trouble coming)

* Meeting resistance (you're not on the same page)

Most partnership conflicts trace to:

* Unstated expectations

* Assumed authority

* Unclear roles

* Hidden agendas

* Starting to believe that your contributions are more important than your partners!!!

Partners should regularly discuss:

* Current challenges

* Future opportunities

* Resource needs

* Performance issues

* Strategic direction

Healthy partnerships maintain:

* Regular meetings (I prefer weekly)

* Open books (Monthly actual v. budget)

* Clear roles (who does what)

* Shared vision (the cornerstone)

* Active communication (regular meetings help with this)

Document key decisions:

* What was decided

* Why it matters

* Who's responsible

* When it happens

* How it's measured

Review partnership health regularly:

* Goal alignment

* Role clarity

* Resource adequacy

* Communication quality

* Decision effectiveness

Address conflicts immediately. Time makes them worse.

Use outside advisors to help keep you on track (like a fractional Chief of Staff!)

Strong partnerships aren't maintained by trust alone. They need systems and processes.

02/12/2025

Do you need more customers? Here are 8 ways to find customers for your SME:

1. Network: In-person relationships are gold. Go to events, meet people, build connections.
a. Business Events
b. Your Industry Events
c. Ideal Customer Industry Events
d. Conferences

2. Social Media: Create helpful, valuable content your customers can use. Prove you know their pain and solutions.
a. LinkedIn
b. Facebook Business Page
c. X
d. Create content, use ads
e. Comment on your ideal customer’s posts and reply to comments on yours

3. Web: Let the people who are searching come to you.
a. Good website
b. SEO
c. Blog posts to keep it fresh
d. Google My Business

4. Partnerships: Find businesses with similar ideal customers and work together. Bonus points if customers often bundle the services or they are in the vertical (contract/subcontract).
a. Give and Take
b. Be their reliable go-to
c. Learn how to share

5. Referrals: A happy customer is a gold mine.
a. You have to ask
b. Make the ask specific as to who your ideal customer is
c. Go through their LinkedIn and find connections they have that are your ideal customers and ask for a specific introduction

6. Farm: The easiest person to get to write you a check is someone who is already writing you a check.
a. Create an offer that your current customers will say yes to.
b. Follow up often, and not just to sell
c. Be genuinely curious about how their business is going and build connection

7. Cold Outreach: Sometimes you just have to grind.
a. E-mail
b. Phone
c. Door-knock
d. Build sequences in your CRM and be persistent

8. Dandelion: When a key person in a happy customer moves on, you move on with them,
a. Build those farming connections.
b. Know when a key person moves on
c. Use your network to help them
d. When they land, ask if you can help them look good by bringing your amazing service with them!

Trust the process. Work the process.

Did I miss any good ones?

02/11/2025

A profitable company isn't necessarily a valuable one. Buyers look at profit and cash flow, but perceived risk modifies all their calculations. Value drivers reduce perceived risk and increase value.

Some value drivers that matter:

Recurring revenue streams - reduce the risk of buying uneven future revenue

Scalable processes - Show a buyer they can increase sales without breaking the system

Protected IP - Give substance to the transaction.

Diversified customers—What if that one big customer leaves because the owner has changed? This is a huge risk that will drive down value.

Professional management - Regular meetings, Strategy Planning, Good reporting, collegiality, long-tenured managers. These things all drive down perceived risk and drive up value.

Clean financials—Financials that make sense, good financial controls, a solid budget that is regularly reviewed against actual, and limited add-backs or other tax shenanigans. Your financials are a buyers' window into the business. If they can't trust the numbers, value vanishes.

Focus on building sustainable, transferable value - even if you plan on building a company to operate and not to sell. Today's profit is just one component.

02/10/2025

Partner compensation discussions reveal misaligned expectations.

Address these key areas upfront:

Base compensation vs. profit share (separate labor from ownership—pay base comp. for the work, and profits should be shared for ownership).

Sweat equity valuation (especially important if there is a work partner and a money partner. How much ownership is the work worth?)

Performance metrics (I like those not as a stick but rather as a guideline. Who is in charge of what functions? How will we know if it is going well or needs attention?)

Capital contribution rewards (If you have to put in more money, how will you do that? Beware a plan that lets the "money" partner put in more money for ownership and dilute the "work" partner to nothing.)

Benefit standardization (Who gets what benefits? What if one partner needs health insurance for a large family, and the other is single? What if one needs a work vehicle and the other doesn't? etc.)

Set clear compensation and work rules and expectations while relationships are strong.

"

02/07/2025

Your Fractional Chief of Staff

Accelerate your tech company's growth without the overhead of a full-time

CoS. As your fractional Chief of Staff, I help:

Build and align high-performing management teams

Create a shared strategic vision

Implement effective decision frameworks

Develop professional management practices

Drive strategy ex*****on

02/05/2025

I love to do the Org Chart Exercise.

First, build your company's current org chart and put it on the board.

Then, take your 3 year plan. What revenue are you predicting?

Now, build the organizational chart it will take to implement that plan.

In other words, if we are making $2 million in sales today and plan to make $6 million in sales in 3 years, what does the company look like that can deliver $6 million of our product or service and maintain quality and culture?

This future org chart can drive strategy. The discussions around building it are golden.

Tomorrow's chart shows what you need:

Key positions to add

Skills to develop

Functions to build

Leadership to grow

Design your future organization first. Then, build toward it systematically

02/04/2025

Want better profits? Start with better data.

Your chart of accounts should track:

Revenue by product line, channel, or service. Some companies only have one. Many have several, and it is worth breaking them out so you can learn from the data.

Cost by Revenue Source (you want a 1:1 match between Revenue source/type and COGS/COS for that revenue. Only then can you track gross margin and set goals around gross margin. Gross margin will also tell you where to focus your efforts.

Fixed vs variable costs - Variable costs should be in your COGS/COS. Fixed costs in your expenses. Again, this gives you a better view of gross versus net margin and lets you know your "nut" - the fixed cost you cover each month. It also allows you to quickly see unusual variations in fixed costs and to budget.

Recurring vs. project revenue—Recurring revenue is more valuable because it is more reliable and reduces buyer/lender/investor perceived risk. If you have recurring revenue, you should track it by customer in detail so you can calculate churn and net revenue retention.

Good data reveals opportunities. Poor data hides problems.

Make your numbers work for you.

01/04/2024

Scott Pfeiffer and Phil Yanov on combating loneliness and building your resilience!

Phil Yanov and Scott Pfeiffer discuss the growing epidemic of loneliness and social isolation, citing a government report that excessive isolation is as detrimental to your health as smoking 15 ci******es a day. We provide practical tips on how to combat loneliness by intentionally building social r...

01/04/2024

"Think about the small daily habits or routines that keep you productive and focused. How do these daily practices contribute to your success?"From "Entrepreneur's Gratitude Journal," by Claire Pfeiffer and Scott Pfeiffer.