Would Licensing Cannibalize Your Sales?

If you have an established service firm, you undoubtedly realize that you need to invest time and money to create a system (maybe even proprietary software).  It’s part of the ongoing process to be less labor-intensive, become more efficient, reduce training costs, and improve quality and consistency.

Once you do that, inevitably, someone in your firm comes up with the bright idea that your company could have another revenue stream if you license the use of your proprietary software or system to smaller niche businesses. You can’t reach every customer out there and the licensees will pay you for the privilege of increasing visibility of your product/system/ software; which strengthens your positioning as an industry leader.  But you pause because the licensees could actually become direct competitors to you and cannibalize your results.

Some business owners freeze at this point and pull back from the licensing option.  It pays to not freeze. A sales executive and/or informed contract attorney can create territories and spell out the rules to maintain the WIN/WIN situation.

Plus, here’s something else to think about. Could the licensees later become candidates for acquisition when you are ready to expand geographically or accelerate growth? You would be familiar with one another.  Your licensees will have experience utilizing your system which would reduce post acquisition “learning curve” costs. Your firm could represent a marvelous exit strategy for hard working Baby Boomers who enjoyed being your licensees.

For more information about achieving synergies between licensing, acquisition, and strategic alliance strategies, go to www.GrowthStrategistShow.com to download my (date) interview with Robert Digby, CEO of PAY CHOICE.

 

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST™. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB service, technology, and distribution clients get on…and then stay on…the published lists of the fastest growing privately held companies. All of her own service businesses (strategic planning, executive advisory, growth financing, talk show, speaking, search) help privately held midsized companies achieve accelerated growth with sustained profitability.™ Ambler is wrapping up her 7^th year hosting a weekly peer-to-peer-to-peer on line talk show at www.Business.VoiceAmerica.com and www.growthstrategistshow.com that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. Family owned businesses are being emphasized in 2011.   Ambler is in the process of launching her 8^th enterprise. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com

 

BEFORE You JUMP into a Joint Venture, a Strategic Alliance, a Franchise, Equity Deals, a Roll Up, an ESOP…

 

Recently, I’ve noticed more and more executives of midsized companies JUMPING into strategy implementation.

It’s too easy to fall in love with one strategy over another because you’ve heard a peer share a success story. “Hey, we could do a strategic alliance. George did it.”  Well written articles or webinars with great case studies can convert some people into raving fans of joint ventures or roll ups.  One of our clients became enamored with the idea of franchising his company after his wife was hired by a successful franchise.

The economy has created uncertainty.  Bright ambitious executives (perhaps you) feel like caged cats and are “itchy” for a change. It becomes very tempting to JUMP right into a strategy.  At least that way, something is happening, right?  Well, disruption might be happening that way, but your team will not understand the rationale behind the strategy you have jumped into. You lose credibility as a leader.  And successful implementation is risked. Some folks are JUMPING into strategies when they don’t know the differences between them, what each really involves, and the pros of cons of each. And then they are surprised when bankers are still reluctant to finance them.

Instead of jumping right into a strategy, this would be a great time to involve your executive team. Everyone could benefit from some concentrated learning.  Your controller could be asked to analyze the costs associated with strategies like franchising, roll ups, joint ventures, etc.  Your VP Business Development could be asked to analyze which approaches are being used in your industry and why.  Your General Manager of VP Operations could study pacing and look at what is involved with each strategy.  Everyone would be smarter and by the time you and your team select a growth strategy you will all have a much better sense of WHY it was selected.

 

Aldonna R. Ambler, CMC, CSP has earned the right to be called The Growth Strategist™. She has won over two dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across four recessions.  Her midsized B-to-B service, technology and distribution clients get on…and then stay on…the published lists of the fastest growing privately held companies. All of her own service businesses (strategic planning, executive advisory, growth financing, radio show, speaking, search, etc.) help midsized companies in Achieving Accelerated Growth With Sustained Profitability®. Ambler is in her 7^th year hosting a weekly peer-to-peer-to-peer online radio program Growth Strategist Radio Show, at www.GrowthStrategistRadioShow.com, that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy of the week. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.

 

Strategy: Prepare Your Business to Become a Franchise

Preparing a business to become a franchise is a wakeup call. You start looking at your business from the outside in rather than be so lost in the weeds from within.  Asking questions like “How much net profit would a prospective franchisee need to be interested in investing” helps you assess how much net profit YOU should expect anyway.  Thinking through your marketing program so it would be effective enough to attract high quality franchisees makes you hold your marketing campaigns more accountable. Revamping your training programs and procedure manuals so you are ready to exhibit at a franchise tradeshow leads to clarified roles, accountability, and improved results for your existing employees.  And knowing that franchisees would be emulating the behavior of your key employees cues you to address mediocre performance that you may have been tolerating for several years.

Over the past year or so, my growth strategy consulting firm has been working with an entrepreneur who has a great concept to update their company, leverage new technology, and provide a fabulous experience for customers.  To scale the business, they may end up with company owned locations (satellites), boutiques (twigs instead of branches), on line boutiques, or franchise owned locations. Just the possibility of franchising has helped them improve.

 

Aldonna R. Ambler, CMC, CSP has earned the right to be called The Growth Strategist™. She has won over two dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across four recessions.  Her midsized B-to-B service, technology and distribution clients get on…and then stay on…the published lists of the fastest growing privately held companies. All of her own service businesses (strategic planning, executive advisory, growth financing, radio show, speaking, search, etc.) help midsized companies in Achieving Accelerated Growth With Sustained Profitability®. Ambler is in her 7^th year hosting a weekly peer-to-peer-to-peer online radio program at www.business.voiceamerica.com or www.GrowthStrategistRadioShow.com that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. She can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com.

 

It’s Time to Address Two Expensive Executive Behaviors

If you read my weekly blogs, you undoubtedly also know that I host a weekly on-line radio show called The Growth Strategist™. I’m in my seventh year hosting it and just LOVE hearing about what people have done to make growth strategies like acquisitions, franchising, market expansion, etc really work.  My guests are all Presidents/CEOs of midsized companies (typically $20 -200Mil/yr) so they are all bright and experienced. Most convey enthusiasm and are articulate.  We are coming up on our 300^th show soon (YEAH!) plus I’ve provided strategic guidance to over 800 consulting clients over the years.  The point is…by now I can hear some distinctive patterns. Some of the patterns may not be surprising.  But in a way, if they are so predictable, wouldn’t you think that more executives would be addressing them by now?

For example: When I am rehearsing with the President/CEO of a family-owned business, I usually get candid responses to questions about target markets, primary customers, and key products.

Don’t get ahead of me here.  Of course, I can’t start with questions about succession, exit strategies, or executive compensation.  Heck…an executive doesn’t have to be running a family owned business to be reluctant to talk about all of that.

Take a step back from all of that. The answers from executives of family owned businesses seem strained when the topics of strategic alliances, joint ventures, or acquisitions come up. The implication is that internal relationship issues make negotiations with outside entities more difficult.  These days, that fact would certainly turn “family owned” into a handicap because customer expectations are going up and up.  The cost of trying to do everything yourself is becoming prohibitive.  Plus the world is getting smaller and smaller.  Today, a family must proactively address relationship issues that slow down strategic analysis or decision-making.  It sure comes across in media interviews. The radio guests who attract new business opportunities as a result of appearing on my show have conveyed openness, clarity of direction, a capacity to interact with a wide range of people, and an understanding of how deals are struck.

I’ve also noticed that most of the female executives avoid directly answering questions about strategy. I repeat, my guests are all Presidents/CEOs of midsized companies. These are accomplished executives!  I’ve been amazed how many times I have had to encourage (no plead) with the female guests to share the logic behind major decisions like acquisitions, new products, or geographic expansion. Several have been reluctant to directly respond to the straight forward question about their gross revenue… even though the numbers are plastered all over press releases and resources on the Internet.  And when these reluctant female executives do share their gross revenue, they provide too much explanation. It sounds almost like an apology.  Some of them are running $Bil businesses!  Why on earth are they apologizing to anyone!?

There are undoubtedly several understandable reasons for the reticence to just talk. But frankly, my experience as a talk show host has given me new insight about why so many corporations have been reluctant to appoint successful women business owners to their corporate boards. The major search firms who are looking for board members screen shows like mine. They must be concluding that the female guests CAN’T think strategically or CAN’T keep up with a high level discussion. That’s very sad.

 

Aldonna R. Ambler, CMC, CSP has earned the right to be called THE GROWTH STRATEGIST™. She has won over 2 dozen national and statewide “entrepreneur of the year” awards for the resilient growth of her international businesses across 4 recessions.  Her midsized BtoB service, technology, and distribution clients get on…and then stay on…the published lists of the fastest growing privately held companies. All of her own service businesses (strategic planning, executive advisory, growth financing, radio show, speaking, search) help privately held midsized companies achieve accelerated growth with sustained profitability.™ Ambler is in her 7^th year hosting a weekly peer-to-peer-to-peer on line radio program at www.Business.VoiceAmerica.com and www.growthstrategistradioshow.com that features interviews with CEOs/Presidents of midsized companies (typically between $20 and 200 Mil/yr) sharing success tips about the growth strategy-of-the-week. Family owned businesses will be emphasized in 2011. Ambler can be reached toll free at 1-888-Aldonna or at Aldonna@AMBLER.com

 

 

It Is Not a Good Sign If You Resist Even Considering Franchising

I fess up.  It took me a few years, but I finally noticed that the majority of business owners are scared of franchising.  That is an amazing fact when you consider the high success rate of franchises.

The reluctance could be entrepreneurs’ classic aversion to attorneys and accountants.  To turn your business into a franchise…yep…you’ll need the assistance of a CPA and a franchise attorney, but that is for your protection.  And even though their fees seem high at first, the amount of money that a good franchise attorney saves you in time, law suits, and mistakes turns their fee into a moot point.

The reluctance could be entrepreneurs’ classic aversion to committing to standard operating procedures (SOPs).  Yep…if you turn your business into a franchise, you’ll need clear procedures and a training program.  Even though most entrepreneurs don’t enjoy writing SOP manuals, fortunately there are great people available who would welcome the opportunity to have that job, especially during a slow economy. If your business is going to grow beyond an “incorporated career”, it will need talent within the operations area.

The reluctance could be entrepreneurs’ classic aversion to obtaining assistance in marketing. Yep…if you turn your business into a franchise, you’ll need insistent, consistent, persistent marketing.  But don’t we all need that if we want to grow our companies?

The reluctance could be entrepreneurs’ classic aversion to committing to the consistent generation of net profit. Yep…if you turn your business into a franchise, you’ll need to have a profitable business model.  Why else would someone want to follow you?

The reluctance could be entrepreneurs’ classic aversion to having people around them who may have more experience, may ask tough questions, want to hold the business accountable, have ideas and loyal customers, and deserve to be acknowledged (and not just the lead entrepreneur).  Yep…if you turn your business into a franchise, you’ll need to excel at attracting and retaining top talent, brag about them more than yourself, and be excited about growing people. But isn’t that what business growth always requires?

Franchising isn’t for everyone.  I get that.  But I can’t help but wonder if you wouldn’t even consider the option of franchising (or at least licensing), do you really want to grow your business?  Think about it.  With franchising, someone pays you to do things your way! What a concept!

 

Avoid Wishful Thinking and Presumed Conclusions During Deal Making

A deal is a sale with a non-customer. 

Some deals help your company acquire new technologies or capabilities more quickly than trying to develop it yourselves.  Some mergers and acquisitions are done between complementary companies to expand the product or service offering to better serve the best customers. Acquisitions can also be done to eliminate a competitor in an important market. 

I noticed that the lingering recession has led some tired entrepreneurs to consider acquisitions and mergers as a way to get relief from their intense schedules.  Unfortunately, this increases the vulnerability of the already tired entrepreneur.  Wishful thinking takes over, and the entrepreneur convinces him/herself that an acquisition can solve their problems.  Why not hire a strong “#2” and get centered again before considering any acquisition or merger? 

I have become convinced that acquisitions are like marriage.  When a tired single parent marries to “solve his/her problem,” new problems often develop.  Acquisition, merger, and marriage negotiations all seem to go more smoothly when each participant is centered.

But what do you do when/if the two entities don’t seem “centered”?  What if you thought you were negotiating a merger, and the other entity (key person) waffles, seems a bit too nervous, and withholds information? It pays to slow down and expand your view. Maybe the other person just wants to cash out and retire.  Maybe he/she had become bored. Maybe the transaction will only involve the purchase of assets so you don’t take on their debt or “people” issues.  Maybe you should only offer to pay a licensing fee and not purchase anything.  I’ve seen acquisition negotiations end in simple subcontracting arrangements.  We all know couples who concluded that they should just continue dating one another.

The best deals are when the leaders of two companies look for synergy (fit) and leave their options open…instead of starting the process assuming the answer will be an acquisition or merger. If there is not win/win fit, the title of the deal you don’t make won’t matter. It pays to leave the structure of the deal to attorneys.  Whether it’s a strategic alliance, a joint venture, an acquisition, a merger, an asset purchase, or something else isn’t the most important question.

 

Stop Waiting for Teleseminars – Learn from Your Peers While on the Treadmill

Here’s a suggestion for busy Presidents/CEOs of midsized businesses (especially $20 – $200 Mil/yr) who

• feel that your time is STILL your scarcest resource
• recognize the need to feed your mind, learn, stretch, grow
• find relevant teleseminars but then can’t participate because they run at the same time you are involved in important meetings
• know you need to exercise but are going to the gym less often
• have been tempted to attend an Inc. Conference on Growth… 

Why not download free online radio shows onto your iPod to take to the gym? Take shows featuring interviews with your peers on the Inc. 500 list of the fastest growing privately held companies who are sharing success tips about the growth strategy-of-the-week. 

Most of you, the readers of my blog and Twitter tweets, know that I have been hosting a peer-to-peer-to-peer online radio show The Growth Strategist™ for 5 years now. We rotate through various geographic locations, industries, and growth strategies.  One week, my show might feature an interview with the President of a Singapore-based retail company that has grown through franchising. The next show may be with the CEO of a Kansas City-based manufacturer sharing success tips about how they’ve grown through acquisitions. 

Many of the guests on my show are on the Inc. 500 (or at least the Inc. 5000) list of the fastest growing privately held companies. They are bright, ambitious, somewhat intense, fabulous leaders….just like you. The show is #2 in its category and attracts over 180,000 listeners. 

I have LOVED hosting the show.  How can the discussion of growth strategies between people who actually live the journey EVER be boring?! 

I open each show with some tips on the growth strategy-of-the-week gleaned from my 30+ years of experience as a growth strategist helping midsized companies earn and keep their spot on the Inc. 500 while increasing their profitability. Many of you know that I have also won over two dozen national and statewide “entrepreneur of the year” awards for the resilient growth across 3 recessions of my own midsized businesses. So I share examples from my own journey as well. 

It’s been 5 years so my website, www.TheGrowthStrategist.com, and the station’s website (www.business.voiceamerica.com) now have over 200 downloadable shows (podcasts if you prefer) available for you to download onto your mp3 players and take to the gym.  Our research shows that most listeners do that or they listen to the show between 11:00 pm and 1:00 am as they do their last round of email “after the spouse and the kids have gone to sleep for the night”. The only reason you would break from an important meeting to listen to the live broadcasts each Tuesday at 11:00 am EST would be if you wanted to ask a question.  Most listeners send emails with questions to me and my guests following the shows. It’s NOT like traditional radio broadcasts where listening at the exact time of the live broadcast represents your only opportunity. 

Why wait for teleseminars when you can download 5, 6, …sometimes as many as 10… timely peer level radio shows focused on a growth strategy you are using or have been considering, including

• specialization
• diversification
• acquisitions and mergers
• franchising and licensing
• new products/new markets
• joint ventures and strategic alliances
• equity deals and IPOs
• several others….

I did a series of shows earlier this year about ‘HOW TO CHANGE YOUR BUSINESS MODEL” and another on “THE CHANGING IMPACT OF REAL ESTATE ON STRATEGIC GROWTH DECISIONS”. 

You can suggest topics, offer to be a guest, or recommend someone else you think might be an interesting guest.  The toll free number is 1-888-Aldonna and the email is Aldonna@AMBLER.com.

 

Achieving Accelerated Growth With Sustained Profitability® with The Growth Strategist™ Blog

This blog is a way for YOU to quickly benefit from my multiple complementary roles.

 

My life is filled with interactions with bright, ambitious, active people: 

·         President/CEO level across industries and continents as guests on my weekly radio show

·         fellow directors on business and economic development boards

·         “C Suite” consulting clients with award winning distribution companies, construction related businesses, professional service firms and/or technology driven enterprises.

·         Case study participants and expert contributors to my books and articles

·         Richly diverse audiences for my speeches focused on business growth

·         Private investors, venture capitalists, angels, and bankers who welcome opportunities through my role as an intermediary

·         A robust network of complementary resources (lawyers, accountants, speakers/trainers, consultants, coaches, researchers, and other service providers)

·         And more

 

Therefore, my weekly blog at here and at www.TheGrowthStrategist.com is a place for me to share timely practical examples of how you can succeed in Achieving Accelerated Growth With Sustained Profitability® through:

o       adapting the approaches being used by the 2% fastest growing companies to your situation

o       being centered despite recessions, distractions, and other challenges

o       capitalizing on opportunities to have a true competitive advantage

o       executing growth strategies (specialization, geographic expansion, franchising, joint ventures)

 

Of course, I do not disclose proprietary information….but information in my blog entries is the real deal.