Solving The Value Equation

Are you seeking sales?

If you are in Houston on May 17th, join us for the upcoming TeXchange event with special focus on sales and marketing revenue growth tactics that are working in this slow growth economy.
(to attend email us and we’ll add you to the guest list)

Panelists will include:

• Mr. Colby Thames, a greater Houston native, whom has led and advised multiple software and service companies as is now the founder and managing partner Stryve Advisors. 
• Mr. Rich Barfield, clinical lab scientist by training, who works with healthcare and medical technology companies, national laboratories as well as hospitals across the nation.
• Mr. Austin Goings, Sales Director Upstream Group at GE Smart Signal with 20+ years of solution-based, enterprise software sales in both large established companies as well as smaller, start-up organizations.

Read more about TeXchange here.

 

At Ephor Group, we partner with our clients to accelerate growth and achieve best-in-class performance that results in better wealth creation for the founders and employees. 

There are many ways to grow, but which will ensure the business increases its profitability, sustainability, and value?

If you cannot attend TeXchange, then checkout our Video Series on Revenue Strategies for Growth in 2012.

1. More efficient cost of customer acquisition than the competition.  Alternative Distribution including Alliance Partners, Joint Ventures, Channel Strategies, inside sales, and ecommerce.
2. Boost lead generation via Internet Marketing, Inbound Marketing, and Online Advertising and boost demand generation via market research and brand building campaigns.
3. Migration Expansion via distribution channel, geographic expansion, product expansion, or vertical segment expansion.
4. Useful capital strategies for growth capital expansion.
5. M&A Corporate Development.

For more information on TeXchange or revenue growth strategies contact Charles Bedard

The Value of Strategic HR

‘Ineffective people = ineffective businesses’; it is that simple, and that complex because every business depends on its’ people to effectively perform as a team to achieve its organizational goals and objectives.

Unfortunately, “Traditional HR” (which has historically been administratively focused) provides little value to financial goals and does not manage the people issues that keep executives up at night.  

The move to adopt human capital best practices, also commonly referred to as ‘Strategic HR Capabilities” or implement a “High Performance Workforce” has been occurring at the Fortune 500 level since the mid 90’s. 

The recent financial hardships, changes in laws and regulations, and a fundamental shift in small business economics has mandated that top performing companies invest in their workforce like never before. 

With the growing demands and challenges placed on small business executives, those that adopt best practices, utilize effective external help/support and business partners, and rethink their current approach to HR have a chance to preserve and create wealth. 

Numerous studies by “Great Places to Work Institute”, consulting firms like McKinsey and Towers Wyatt, and business thought-leaders like Jack Welch and Warren Buffet all agree: the investment and alignment of a company’s workforce directly impacts profitability and financial success. 

Need further proof of the value of Strategic HR?  Here is the Business Case for Strategic HR:

1. Time Savings and Focus for Executives: Within small businesses, organizational leaders are themselves often responsible for HR (i.e. the workforce’s engagement, productivity, and development), an area where they typically have limited training and experience.

2. Workforce Scale:

• Highly engaged employees are on average 26% more productive, have lower turnover, and greater shareholder return (see findings in Watson Wyatt’s 2008/2009 WorkUSA Report). 
• Talent Management Practices power engaged companies to achieve higher profit per employee by nearly 40% (McKinsey).
• “Imagine if your employees enjoyed coming to work. Great Places to Work have outperformed the market 2:1”  (Great Place to Work Institute)
• “Nearly 40 percent had no formal measures to gauge the impact of their HR and training efforts on the performance of their top three workforces, and nearly another 40 percent said they have only limited measures.” Accenture ‘High Performance Workforce Summary’ 2006.
• “HR equals constant upgrading.  100% transparency into performance. Take care of the best and move up the averages, much like a GM/ player personnel director in sports. The only way to win is to have a great team.” “Enormous chance [for businesses] to change and reset, but takes a culture of innovation. The one thing you have to do in a time like this is communicate like hell… so your people know every move that is going on. You don’t go in and just slash positions and they don’t know why. HR defines a company in bad times.” Jack Welch @ 2009 SHRM Conference New Orleans, LA.

3. Risk Mitigation: 1 in 4 privately held companies has been sued by an employee The average litigation and settlement costs are nearly $190.000. (Chub Insurance).

4. Cost Efficiencies: The average company saves 20% to 60% per year (HRO Association).

Did you know than only a third of companies tailor their people policies and development to align with their workforces needs?

The primary objective of Strategic HR is to align the Workforce Capabilities to the Business Objectives of the organization. This includes: creating a strong pipeline of leaders that will drive business growth, installing workplace programs that ensure engaged, motivated, and productive and employees as well as implementing scale and risk operating measures.

Evaluation and Selection Criteria for HR Technology

“For years, we were able to practice HR without needing the numbers.  Those times have changed, and data deficiency has given the HR professional an Achilles’ heel.”  (Source: Talent Management Magazine article: “All Aboard the Numbers Train”)

HR Systems Drive Efficiency & Improve Profit-per-Employee

“50 percent of companies [enteprises] are now implementing some form of ‘Talent Management’ and the value-add is 26 percent higher revenue-per-employee than companies with no integrated processes.” –Bersin research analyst group.

The equation is simple, if profit-per-employee is increased through higher productivity and employee engagement and/or by eliminating waste and administration then the overall profit of your organization will increase.

While having an HR system becomes a requirement at a certain size (based on company complexity and their people needs) how do you choose from the hundreds of quality solution providers?  

The criteria system for evaluating HR Technology Systems that we start with is as follows (a full list of features and functionality should be compared in terms of the priority/need for your organization):

A major trend that has started to spread across industries is the need for many organizations to adopt full “Integrated Talent Management.”  This holistic talent management platform is typically implemented in modules:

I. Core HR: Payroll, Benefits, ESS & MSS (Portals), Administration, Compensation, T&A, etc.

II. Employee Record

III. Training and Development: Competencies, Assessment, LMS, Performance Management, Workforce Management, etc.

IV. Talent Acquisition: ATS, Onboarding, Assessment, Selection, Screening, Workforce Planning, Job Board integration, etc.

V. Enterprise Functionality: Workflow, Document Management, Testing and Surveys, Communication, CRM, Project Management, Social Networks, Web 2.0, etc..  For some organizations, it makes a lot of sense to take the CRM or ERP plunge in tandem with an HR investment in order to have true integration with core business processes. 

For a list of vendors checkout the following resources:

• http://www.humanresourceexperts.com/
• http://hrchitect.friscowebsites.com/Partners/vendorpartners
• http://www.bersin.com/Lib/Rs/
• http://www.hrtechconference.com/expo_attendee.html
• http://www.comparehris.com/

The most important result of systems implementation is that HR becomes strategic and enables the organization to focus.  Contact Ephor for a full list of features and functions by module component listed above.

Garry Meier Unveils Small Business Playbook for the New Economy

At an event earlier this week at the UT Club in Austin, TX Garry Meier presented “Small Business Playbook for the New Economy” to business advisors and small business executives.

Garry’s presentation highlighted the current affect of the Stimulus Bill on small business (Garry participated in the US Senate Small Business Advisory Panel back in Feb 2009 when the Stimulus Bill was being created), and forecasted the state of the union for small business. 

Garry also shared his “required actions” that executives must take to protect and create wealth in the new economy.

Memorable Quotes:

“In 2009 and beyond, wealth will be created for ‘perform businesses’ that are the most productive, cost efficient, promote and excel at change management, and focus on being REALLY good at a few things.”

“Prosperity and economic growth has no doubt been suspended for the near future. Small businesses that are and will prosper illustrate unique business models that add significant value to the consumer... change is upon us and those that embrace it and make it an asset will enjoy opportunistic times”

Download the full presentation: Small Business Playbook for the New Economy.

Business Owners Need to Get Paid > How-To Create an Institutional Investment

Business owners always say to me, “Why would I need capital and advice once I get to $5M?”  

This is a short-sighted view and one of the main reasons why less than 1% of all companies reach ten years and $10M in revenues (SBA Department of Labor finding). AND also why very few business owners achieve financial freedom. 

An executive team is effective, healthy, and wise when it creates “Optionality” for itself. 

While the days of angel investors and “hockey-stick funding” went away with the stock market losses in 2008; enterprises with a unique business model, effective management, and positive cash flows have access to institutional investors (private equity, SPIC,  family office investors, strategic investors, to name a few options) whom can provide Optionality.  

A small business has the following limited options:

1. Grow organically;
2. Merge to become bigger; or
3. Sell.

Institutional Investment creates additional options such as:

1. Get paid for the business you created by selling a percentage to institutional investors while still retaining majority control;
2. Grow by acquiring additional locations, competitors/substitutes, technology add-ons, or distressed revenues;
3. Expand into new products/services or markets; or
4. Acquire top talent.  

Ten Criteria for Institutional Investment

1. Repeat Customers. The main reason why most small businesses fail is that they run out of cash. By building a business with a recurring revenue model a firm not only creates more stable financial footing, but also opens the door for institutional investment.  
2. Easy to Realize 5X+ Revenue Growth.  Growth capital investors are seeking companies that can grow at 40% per year or more and realize a 40% return on invested capital.
3. Significant Barriers To Entry. What is in place to prevent other companies from copying what you’re doing?
4. Strong Financial Indicators. EBITDA of at least 10%, above industry average Gross Profit, cost-effective customer acquisition costs. Understanding of these key metrics is requirement before scaling and growing. 
5. Consistent Operational Performance.  This means steady margins, EBITDA, and new customers quarter after quarter.
6. #1 or #2 Market Targeting.  Unless you are positioned #1 or #2 in your market your branding and strategy needs work.  At the same time investors like to see some competition because it validates that a market exists.
7. 30 Named, Referenceable Clients.
8. Investable Market Sector. There are a plethora of investable industry sectors.  A few “hot” investment sectors for the second half of 2009 include:
   • Healthcare business services
   • Healthcare technology-enabled business service-oriented solutions
   • Business Process Outsourcing (BPO) including Human Resources Outsourcing (HRO) and Finance and Accounting Outsourcing (FAO)
   • IT mobility solutions
   • Marketing and online technology-enabled business solutions
   • Workforce software and technology
   • Small and mid-market focused SaaS solutions
   • In summary: anything that improves productivity while simultaneously reducing costs.
9. Scalable operating processes.  Does each new dollar invested at the field-level result in a higher percentage return of profit?  If not, additional operational refinement is needed. 
10. Effective management processes.  Monthly operating, sales, and financial performance is known, reported, and effectively communicated to all employees.

The institutional investment criteria listed above is a roadmap for wealth creation.  Are you and your firm ready for analysis by outsiders on a regular basis? 

It all depends on your “Happy Ending.”  Is your “Happy Ending” to create wealth and ensure a lifetime of financial stability for your family or to have 100% control of your business?

 

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