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5 Strategies to Optimize Your Business

All indications are that 2016 will be a strong year for Mergers and Acquisitions. Last week, I had a chance to spend time with Investment Banker, Mark Herbick.

Mark defines Business Optimization as “the process of making a business as efficient, effective, and profitable as possible”.

In the world of M & A, the more optimally you present your business the more value your company has, increasing your opportunity to attract the right pool of buyers at a higher M & A valuation.

Measuring a business begins with a financial assessment to thoroughly understand historic revenue, profit, G & A expense, etc. Understanding a company’s position with its customers, the relationships and their sustainability is a barometer for future revenue and will influence valuation. Let’s zero in areas of opportunity business leaders have to optimize their business regardless of any exit strategy.

What should you be doing NOW to Optimize Your Business from a CUSTOMER perspective?

1. Customer revenue and profit

All customers are not created equal. Do you have the right relationships with the right clients? Conduct a financial segmentation analysis of your account base. Chart your accounts low revenue/low profit to high revenue/high profit and everything in between. Next conduct a “what if” analysis to:

  • Review and determine if low revenue/low profit accounts are strategic to a particular market and if not, raise prices/rates or move to a lower cost channel (telesales, Internet).

  • Determine if you can raise prices/rates on higher to high revenue/low margin accounts.

  • Find a way to gain a bigger share of wallet in low revenue/high margin accounts by developing a penetration strategy.

  • To protect your high revenue/high margin accounts, implement Quarterly Business Reviews to educate these clients on the value you bring and look to further expand and secure your relationship.

2. Customer engagement and loyalty

The Net Promoter Score (NPS) has become the de facto standard for measuring loyalty for the best companies in the world. Sustaining relationships and continuing to develop loyal customers are essential initiatives to help you grow your business through increased client retention, expansion and new client acquisition and to truly MEASURE if your clients are at risk.

  • Make NPS an integral part of your culture

  • Make a commitment to analyze the data

  • Take action!

3. Competitive advantage

Can you articulate your competitive advantage or value proposition in the marketplace?

  • Does your value statement resonate with your clients to fulfill their “needs and wants”?

  • Can you differentiate yourself to the degree that you are your customers “best option”?

  • If asked, can you substantiate your offering to instill trust and confidence that you will “deliver what you promise”?

4. Customer relationships