Monday, November 12, 2012

What is YOUR Exit Goal and Process for Creating Value?

Today we have a guest blog from Earl Bell:

Being a business owner/CEO can be addictive and imagining what life will be like when you no longer “run the show” may seem like a distant blur.  However, this is EXACTLY what I’d like to suggest you take a moment and do right now!

Are the majority of your assets are tied up in the company?  If so – a sell transaction will substantially fund your retirement.  Do you know “how much money is needed” to provide financial peace of mind?  Do you know what the company is worth today?  What is the gap – in other words – how much additional value must be created before selling the business to achieve your financial goals? 

Get started by assembling the right leadership team before developing a “process for creating value.”  Great leaders know how to coach employees and inspire them to greatness in support of a company’s mission!  Conversely, ineffective leadership and guidance is like having a rudderless ship…  

So… on to the good stuff - what does a process for creating value look like? 

Well, that’s way too complicated to cover in a blog post, but let me give you a simplified model:

1.    Identify the value gap (for example – let’s pretend you want $5 million more enterprise value or $1.25 million in annual operating earnings.)
2.    Quantify what risk you are willing to take – (such as - expanding geographic territory is OK but acquiring a competitor is not OK.)
3.    Identify what creates value - automate decision making in support of this.  Think “offense” in this area – like building stronger relationships with key customers.
4.    Identify what destroys value – build process to eliminate bad decision making.  Think “defense and risk management” – such as using scientifically proven methods to make the right hires for your organization.
5.    Monitor, measure and reward progress – lead and inspire others – align rewards with achievement.

The point I want to make it this… “defining an exit goal and value creation process improves odds for achieving financial peace of mind.”  I’d suggest action sooner rather than later – the stakes are high!


EARL BELL is the author of, Winning in Baseball and Business, Transforming Little League Principles into Major League Profits for Your Company, which provides a roadmap to success for leaders that desire to build thriving companies in a very competitive 21stcentury business environment.  Earl believes that “everything you need to know about business, leadership and team building can be learned from Little League baseball.”

Earl coaches and consults with owners, business leaders and their teams, teaching them how to dramatically reduce the time it takes to improve profitability, customer experience, employee engagement and company value, while simultaneously increasing discretionary time and reducing both stress/employee burnout.  He believes the secret to winning in baseball, business and life can be summarized in a simple formula:  Winning = Service + Humility. His motto is that Winning in Business is a Team Sport!

Earl has served in the Chief Financial Officer role for numerous companies throughout North America. His personal passion is youth sports and he has coached 28 teams since 2002.  Earl is a CPA, graduated from SU (Seattle University) with a BA in Accounting and from the MILL (Mercer Island Little League) with a Master’s in Youth Baseball.

Monday, November 5, 2012

3 Tips for More Effectively Setting Marketing Budgets

Today we have a guest blog from Elizabeth Andreini:

One of my favorite quotes comes from Peter Drucker. Considered the father of business consulting, he made an insightful observation:

"Because the purpose of business is to create a customer, the business enterprise has two--and only two--basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business."

For many CEOs though, marketing somehow seems like a cost, rather than an investment. They come to me seeking benchmarks and comparisons with competitors to know how much they have to spend. What no one wants to hear is the real answer to the question of how much should be spent in marketing, which is “it depends.” Since we are in budgeting and planning season right now, I thought I would give you some practical advice and guidelines to consider.

First, consider the type of business you are in, your target market and how you sell. The size of a marketing budget can vary based on a company’s industry, position in the industry, whether it is selling products, services or both, size, stage of development, the target market, etc. (In general B2B marketing spend is less than that for a B2C focused company.) Most companies allocate between 5 and 12% of revenue for marketing, but it can vary widely depending on a company’s business and marketing objectives. Having said that, if you need a ballpark, start with 8% and adjust from there.

Secondly, make sure your marketing strategy and budget support a clear, focused business strategy (grow market share, expand into new markets, launch new revenue-producing products/services, increase customer retention, etc.). To grow market share you may need to spend more. If you go into new markets, you’ll need to spend more or decrease spending on other initiatives or in other markets. Also, add a budget amount for “unexpected opportunities” which you won’t want to pass up when the time comes – even if you don’t know what it will be!

Lastly, consistently and accurately track the impact of marketing activities to determine what drives revenue (short & long term), customer retention and other metrics. Rank the marketing activities based on expected “bang for the buck” payback. Now build a marketing budget from the ground up. Those activities with the biggest payback go into the budget. Then execute, measure, adjust and repeat!

As the CEO, the questions you should ask about your marketing budget are:

1.    Is our business strategy aligned across the company so initiatives in each department, especially in marketing, support the company’s goals? How does our marketing budget support those goals and the way we sell?
2.    If we spent more could we significantly increase our market awareness or grow our customer base and market share? Can we afford or are we willing to make that investment now, and what are the implications or tradeoffs?
3.    Do we have reliable (and consistently used) tracking systems in place to know whether we are spending our limited marketing dollars on the right things? How do we know our marketing dollars are being invested in the most productive way?

Additional Resources
One free resource about marketing budgets is an annual report summarizing an August survey of CMOs available at The survey results are broken out based on industry and company size. (Note: Marketing budgets as a percentage of revenue have been rising steadily since February 2011 according to the August 2012 survey of CMOs.

If you are interested in reading some more articles about the marketing during recessions, here are some links:


As the President of Accelerate Marketing, LLC, Elizabeth Andreini, is the “secret weapon” CEOs turn to at key growth points when they need to transform marketing and product management to grow their customer base, increase revenue & scale their business. In addition to providing experienced executive insight and guidance, Elizabeth often works as an interim CMO or VP to provide the hands-on leadership needed to rearchitect marketing and product management and improve execution from the inside.

Elizabeth Andreini, founder & president of Accelerate Marketing, LLC 
Accelerate Marketing, LLC
Twitter: @acceler8mkting