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Exploit New Business Opportunities

In this age of technology, it’s time for companies to be willing to exploit new business opportunities. More than ever before, companies are navigating this fast-pace and uncertain terrain. Bankruptcies, mergers, acquisitions, reductions, etc… It’s all changing the business landscape. But if companies do not exploit new business opportunities in fear of failing, then they are sure to fail or fall behind competitors. As financial leaders, how do we enable our leadership to take risks without neglecting the numbers?

Exploit New Business OpportunitiesWhy Exploit New Business Opportunities

The reason why one would exploit new business opportunities is to stay ahead of the ever-competitive marketplace. What needs are not being fulfilled yet? How can you gain more market share? What competencies does your company have that can be expanded into other areas – customers, markets, etc.? Opportunity exploitation is what keeps businesses moving forward. In this day and age, we need to continually reinvent our companies or we will not be around very long. Our competitors are doing this every day.

Have you identified any opportunities yet? If not, then click here to access our External Analysis Whitepaper.

Opportunity Exploitation Definition

According to Wiley Encyclopedia of Management, “opportunity exploitation refers to activities conducted in order to gain economic returns from the discovery of a potential entrepreneurial opportunity“. Typically, entrepreneurs are known to exploit opportunities or identify opportunities because it is in their nature; however, financial leaders know what the numbers say and can identify opportunities that make economical sense for the business while balancing risk and reward.

Example: Planet Fitness and Vacant Malls

E-commerce has been growing significantly while brick-and-mortar stores have been steadily decreasing. Shopping malls are more vacant than ever before. But there is one company that is taking advantage of those vacancies and benefitting from it. In a recent Wall Street Journal article, “Planet Fitness Inc. is the rare mall tenant expanding its share of commercial real estate even as many retailers shrink their physical footprint as more commerce moves online.” This is a great example how to exploit new business opportunities. Furthermore, Planet Fitness is focusing on those that do not already have gym memberships. This combination of target market and location is proving profitable for them as they have reported “revenue increase 31% to $140.6 million compared with the same three-month period last year”.

How Entrepreneurs Identify New Business Opportunities

According to Babson College, “entrepreneurs are often characterized by their ability to recognize opportunities (Bygrave & Hofer, 1991) and the most basic entrepreneurial actions involve the pursuit of opportunity (Stevenson & Jarillo, 1990).”

Steps to Identify Business Opportunities

There are several steps to identify and exploit new business opportunities that Babson has outlined:

  1. Preparation
  2. Incubation
  3. Insight
  4. Evaluation
  5. Elaboration

Preparation

Experience is the prime ground for preparing yourself or your company for opportunities. Identify what experiences your team has and what your company is good at. For example, if your company excels in supply chain and logistics, then an opportunity that needs incredible supply chain and logistics processes will be a good fit.

Incubation

Incubation refers to the brain processing a potential idea or opportunity subconsciously. They are already attempting to solve a problem that they haven’t yet written down. This is an ongoing process.

Insight

Then, in the insight stage, an entrepreneur will have the “eureka” or “ah-ha” moment where it all makes sense. As a financial leader, it’s important to talk with your CEO about their ideas so that you can engage in this insight stage. You may even see how to exploit the opportunity before the CEO does.

Evaluation

This step is where the financial leader truly steps up to the plate. Research and analyze whether this opportunity is worth pursuing. At the end of this stage, it could end up in either one of two ways:

  • The idea is not feasible and they kill it
  • The idea is feasible and you move forward.

Elaboration

Finally, the elaboration stage is where you exploit the new opportunity through business planning and implementation.

Example of Identifying a New Business Opportunity

For example, a steel manufacturer primarily sells to commercial developers who require the steel for building and/or roadways. One day, they realized that they were not using any scraps of steel, and the company was just throwing them away. Instead of continuing to throw away those scraps, they inquired whether there was an opportunity to take advantage of it. One day, the entrepreneur stumbles across a custom scrap metal design company where they create home decor out of scrap metal. The entrepreneur goes back to his CFO to discuss this potential idea. The CFO knows of a team member who actually does this in his spare time. They gather a team and start outlining a business plan. Eventually, they decide that it is a profitable idea, and they go forward with it.

If you are not familiar with the petrochemical sector, they are experts at this. Nothing goes to waste in the petrochemical business. A chemical is made or processed, it generates a bi-product or waste, and there is always another business in the petrochemical space that buys it to make yet another product, and on and on and on… Eventually, very little is true “waste”.

Manage New Business Opportunities

So, how do you go about managing new business opportunities? It is so easy for entrepreneurs to get caught up in their ideas and chase “squirrels“. They lose focus and may not capitalize on the opportunity sitting in front of them. As a financial leader, it is crucial for you to manage those new business ideas as part of your strategy to improve profitability.

Exploit New Business OpportunitiesConduct a SWOT Analysis

First, conduct a SWOT Analysis on your company with your team. A SWOT Analysis stands for Strengths, Weaknesses, Opportunities, and Threats. There are two view points in this analysis: internal focused and external focused. This analysis provides a comprehensive look at what your company does well and what it may be lagging in. This also helps the CEO/entrepreneur figure out what opportunities they need to look for to convert those weaknesses to strengths and those threats to opportunities.

If you want to get started on your SWOT Analysis, then click here to access our External Analysis Whitepaper.

Enable Your CEO to Make Calculated Risks

Then, enable your CEO to make calculated risks. Entrepreneurs need to take risks and make moves – that’s part of their nature and gift. But, they do not need to make uncalculated risks or risks that will cause more harm than good. As the financial leader, help them to mitigate risk and enable them to do what they do best – find opportunities and grow the business.

Do you know the opportunities and threats that your company faces? If not, then the time to figure it out is now. Click here to access our External Analysis to gear your business for change.

Exploit New Business Opportunities

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Exploit New Business Opportunities

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How do you tell an entrepreneur that their business sucks?

business sucksYour business sucks…
How does that make you feel? Probably upset, maybe a little defensive. But what if it’s the truth? Many entrepreneurs generate new ideas as if it were a bodily function. As you have likely seen, not all ideas result in a multimillion dollar venture. Some of those ideas will fail to even bring a penny in!
In the business world, no one will outright tell you idea or business sucks because of business etiquette. However, that doesn’t mean that people don’t think it. After working with CFOs and Controllers for the past 25 years, I have learned that the majority of financial leaders will not tell their entrepreneur (or boss) that their business sucks, even when it does. Unfortunately, the truth needs to be told.
Before we go into how to give them the bad news, it’s critical to identify if there really is bad news to give.
As the financial leader of your company, it’s your duty to vet new ideas. This is part of the responsibility of being a wingman to your CEO. If you’re interested in learning how you can elevate your status, download the free How to be a Wingman guide by clicking here.  

How To Identify If Your Business Sucks

Have you ever seen an ugly baby? Most of us have, yet no one thinks that their baby is ugly. In much the same way, entrepreneurs think that all of their ideas are home runs and most people won’t tell them that their idea baby is ugly.

Unfortunately, all entrepreneurs are going to make at least one wrong call. Because you are their wingman, you should be guiding your entrepreneur to take financially sound risks. But before you tell your entrepreneur their business sucks, there are a couple things to look at when identifying whether an idea or business is worth investing in.

business sucks

Is it profitable?

If the idea or business is not profitable, you should not pursue it. This is the easiest way for a financial leader to identify that the business is not going to be successful. As the financial leader, you should be able to steer your executive team to a more successful and profitable road.

Are customers leaving?

Churn. If your customers are leaving quicker than you are bringing new ones in, your business probably sucks. Churn is one of the KPIs that we use to indicate the success of our business. If you are not able to reduce that number in your business, then your business will likely fail. A business cannot survive without its customers, so this is a telltale sign that your business sucks.

If customers are leaving quicker than they are coming in, look at your current strategy and pivot. This may mean that your entire business strategy is not working or just a small sliver of it. The product may not match your audience. As a financial leader, it is important for you to understand both the sales and operational legs of your company. Finance doesn’t have to be simply a cost center. You can only cut so many costs in the business before you need to turn your focus on how to improve the business itself.

No Buy-In From the Team

If you, the entrepreneur, or the person who came up with this new idea or business strategy is left all alone without any support from the team, that’s a problem. An idea cannot successfully come to fruition without buy-in from the team. Why? Because the team’s support and belief that this idea will be a winner is critical to its success.

Have you ever been told to do something that you truly didn’t believe in or want to do? Most likely, you didn’t put your best effort into that task. Other tasks took priority in your book so that you would not have to bring that idea to life. You may have spread your negative attitude towards “it” to other employees, essentially building a coalition against “it”.

I have been there. My clients have been there. You have probably been there (either on the ideation side or the fulfillment side). That is why it is essential to have a strong buy-in from the team when deciding to pursue a new business venture, idea, or strategy.

business sucksThe Numbers Don’t Add Up

Oftentimes when someone isn’t in the day-to-day financials and doesn’t understand how an idea impacts the company, it’s easy to punch a few numbers in the calculator. This habit is what leads to people being calculator rich. Even if the person operating the calculator knows their economics, it’s easy to be blind to the bigger picture when you have a shiny idea sitting on your desk.

But after the dust has settled, it is important to nail the numbers down out to see if it is really viable to pursue. In my business, I consistently have to reevaluate whether the numbers actually add up after I have had a couple hours or days to sit on it.

How To Let the Entrepreneur Down Easy

Naturally, entrepreneurs are bold, risk takers. If you outright tell them that their idea isn’t the best thing since sliced bread, it’s going to hurt their ego (and potentially more). They are all excited about this new idea, and they are great at convincing you and making it incredibly difficult to disagree with them. You want to let the captain of your ship down easy, but how do you do that when the truth is… Their baby is just plain ugly.
HINT: You have to be a trusted advisor to your entrepreneur. (Download the How to be a Wingman guide to start letting your entrepreneur down easily, while still moving forward.)

Your Baby is Ugly

Several years ago, I had a client who wanted to get out of a lengthy banking relationship. Red flag #1. This client had broken several debt covenants and were out of compliance. The bank was telling my client that their baby was ugly. They were put into a work out group, where it was the bank’s decision to either work them back into compliance or kick them out of the bank. Why was my client’s business so ugly? It started with their financials.

Instead of going through the process of fixing the ugliness of the financials, my client wanted to break up a long-standing and generally successful relationship. The owner was hurt and felt defeated. When I started working with the owner, I explained that there was an opportunity to fix the financials, get back into compliance, and grow like crazy. It wasn’t like they had severely strayed off of the pathway to success, but they were riding on the backroads. My job was to let the entrepreneur down easy.

“If it were my company…”

The way to do this is to go back to your pre-marital counseling. One of my team members just recently got married, and we were joking about some of the things she learned in pre-marital counseling were the same things I heard 30+ years ago. To prevent any blaming or hard feelings, it’s important to fight with feelings. No one can argue with your feelings. “I felt _____ when you did ______.”
The same methodology happens in business. Start by saying, “if it were my company, I would do this…” A) No one can argue with how you feel you would do something differently. B) You’re not telling them their business sucks but rather having a conversation. C) There are no hard feelings.
For example, if one of my team members suggests ideas to better my business, I’m going to be more open to those suggestions. However, if she starts telling me that I’ve screwed up and my business sucks, I’m going to get defensive. Create a dialogue, rather than an argument. An idea is just an idea in the beginning. Even if the idea becomes a reality in the end, I, as the entrepreneur of my company, have the final say so.
Guide your CEO or entrepreneur effectively as their wingman. This ability to be the trusted advisor your CEO needs will elevate your status, increase the amount of trust, and steer your company to success. Download our free How to be a Wingman guide today!

business sucks

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Networking Lessons from a Green Beret

networkingMany of us struggle with the notion of networking.  We know we should do it, but how do you fit it in with everything else going on?  Given that the benefits of networking are often not seen until months or years later, it’s easy to put it at the bottom of the “to-do” list.

Networking Lessons from a Green Beret

I recently read an article about the power of networking written by Josh Wathen, a former Green Beret who is successfully undertaking the transition from battlefield to boardroom. I first came to know Josh through our office manager, Saundra, who is his proud mom. In the article, Josh describes his sometimes difficult journey from elite soldier to multi-tasking entrepreneur and student. What does Josh credit as the key to his successful transition?  Networking.  Here’s an excerpt from the article:

I learned how to network and used my Special Forces groups on LinkedIn to find and acquire my Territory Manager position with Rand Brands. I applied to the Wolff Center for Entrepreneurship (WCE) and began the educational experience that challenges and consumes me today.

Click here to read the rest of Josh’s story.

Josh’s article illustrates how important building and maintaining a network can be.  In his case, the network he formerly relied upon to save his life became the means by which he changed it.  Not everyone has such a powerful network, but we all have groups and individuals that we look to for personal and professional support and guidance.  Take time to develop those relationships.  They may just change your life one day.

Click here for more Networking Tips. Need guidance in networking? Download your free Networking for Introverts guide and start building your network today. 

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True Definition of Entrepreneur

The True Definition of Entrepreneur

What is the true definition of entrepreneur? Some say that it is a person who runs a business at his own financial risk and others may say it is someone who organizes and manages any enterprise. However do those “textbook” definitions truly define an entrepreneur in this day and age? Technically yes, but an entrepreneur is simply more than that.

An entrepreneur is a personality that you find in someone. The definition of entrepreneur cannot be merely defined by a conglomeration of words and phrases. After meeting an entrepreneur personally one can actually understand the definition of entrepreneur because it gives substance to the term. In a general sense, all entrepreneurs are a master of none but superior to the average in aspects of business. However, they are unique in their own way. Not one entrepreneur operates in the same way or possesses equal traits. That’s why it is difficult to define an entrepreneur.

It is an entrepreneurial mindset that one possesses which really creates the true meaning of entrepreneur. So if you get the chance, I would highly recommend spending time around a successful entrepreneur to really grasp the concept.

Traits of a Successful Entrepreneur

How do you know if you possess the traits of a successful entrepreneur? You may have entrepreneurial traits that come naturally. Entrepreneurs are passionate to the highest degree. “No” is not an acceptable answer because the level of drive you possess is naturally higher than the median. An entrepreneur gets things done and loves to be competitive in the process. A true entrepreneur is not predictable, one that possesses a certain creativity level that allows one self to see and produce “ahead of the curve”. However, without strong people skills, an entrepreneur cannot be successful alone.

People Skills

People skills are underrated in this aspect and can decide whether or not you are meant to be a successful entrepreneur. Not a single person wakes up on any given day and decides to be an entrepreneur on a whim. These people have distinct entrepreneurial traits that make them tick a certain way and that’s what makes one an entrepreneur. That is why they stray from the average and stick out in their own creative manner.

In this current era, entrepreneurs are constantly innovating their traits. They don’t change them but, in a sense, they update their qualities by adoption and modification to create fresh ideas that stay ahead of the curve. Continuous learning is one of the key traits of entrepreneurship. Not by simply reading articles or following up on some of the master entrepreneurs, but actually implementing these entrepreneurial concepts. Successful entrepreneurs never stop learning; because once you think you know it all is the moment you get left behind the entrepreneurial curve.

Awareness

Awareness is another vital trait of successful entrepreneurs. If you can obtain the indicators of a recession in your market by extensive research of the market trends then by all means do it. Keeping tabs on these indicators is vital to the survival and overall health of your business. The next trait of successful entrepreneurs posses is consistent brainstorming. All epic ideas are a product of some type of brainstorming. As a business entrepreneur one cannot simply rely on ideas you have taken from others. Effective entrepreneurs are constantly writing down new ideas that catch their attention. These entrepreneurial traits are vital to being a successful entrepreneur and can pave the way to being a successful entrepreneur.

Download our three most powerful tools to take your business to the next level.

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CEOs Want a Wingman

wingmanAs part of my research on leadership for our Coaching Workshops, I met with several Houston-area entrepreneurs to determine what a CEO wants in a CFO.  One of the last people I met with made a comment that I felt summed up all the things the CEOs were looking for.  He said he was basically looking for a wingman.

CEOs Want a Wingman

What does it mean to be a wingman?

Wikipedia says this:

The wingman’s role is to add an element of mutual support to aerial combat. The presence of a wingman makes the flight both offensively and defensively more capable by increasing firepower and situational awareness, permitting the attack of enemies, and increasing the ability to employ more dynamic tactics.

So to paraphrase, the wingman’s job is to support the leader by helping to assess the situation, take out obstacles, and adapt to change which improves the ability to achieve goals and mitigate risk.

Assessing the Situation

CEOs want a CFO who help them determine the “lay of the land”.  Often, they do this by projecting financial needs, modeling new ideas or preparing “what if” scenarios.  They work within the organization to build relationships with other functional areas and determine what their needs and opportunities are.  They also represent the company externally to bankers and investors to determine what opportunities the company has for growth.  A CFO wingman helps bring clarity to the situation so that better decisions can be made.

Taking Out Obstacles

CEOs are excellent at developing new ideas. CFOs are excellent at identifying problems.  What some CFOs fail to realize, however, is that the CEO looks to them to provide solutions rather than to simply point out how things can go wrong.  A CFO wingman doesn’t shoot down each new idea, but looks to find a creative way to make the idea work in a financially sound way.

Adapting to Change

Most CFOs react to change by seeking to stabilize the environment.  Since most CEOs are great initiators of change, this can lead to frustration on both parts.  One way a CFO can avoid the frustration is to be a sounding board for new ideas.  If the CFO is part of the vetting process, he or she will not only be more likely to be on board with the new idea but will also be able to guide the creative process in a way that ensures a greater degree of success.  As a result, the CFO develops a better understanding of company goals and is more comfortable contributing their own ideas on how to grow the company.  A CFO wingman realizes that the best way to address change isn’t to fight it, but to adapt to it.

Achieving Goals

The goal for most CEOs is to grow the company profitably.  CFOs can help their organization reach this goal by cutting costs, improving productivity, and assisting in developing sound pricing strategies.  Since the CFO has control over most overhead costs, they usually are very skilled at cost cutting.  CFOs looking to improve productivity can often make the most impact by helping to determine what the companies key performance indicators are and developing reports to track these KPIs.

The area outside of most CFO’s comfort zone is pricing.  Often, prices are set with input from sales and operations without consideration of the company’s economic model.  The CFO can provide this vital information to ensure that the prices set will result in profitable sales.  A CFO wingman shares the leader’s vision and helps him or her achieve it.

What are some of the things you think a CFO wingman should do?

Download our free How to be a Wingman guide by clicking the link below. Take your career to the next level and step up into the trusted advisor role.

CEOs Want a Wingman

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What is a Business Model?

Entrepreneurs and businesspeople have many different definitions of what is a business model.

Business Model Definition

In the simplest form, business models are the method and strategy that a business or organization uses to operate. This includes the purpose, systems, and people that work together to add value to customers. These components can either be formal or informal. For example, large corporations have very formal purpose statements. This gives a framework to build around the systems. Ultimately, the people are the ones that put the business model into action and create value in-line with the organization’s purpose.

What is a Business Model?

So, what is a business model? First, entrepreneurs are notorious for not writing their business models down. These entrepreneurs often overextend themselves. As a result, it increases the likelihood that the company will lose sight of its mission. This is a serious danger but is not all-inclusive. Some entrepreneurs keep their business model in their heads and continue to deliver quality products. More often than not, however, entrepreneurs do not write their plans down. As a result, those plans are in jeopardy of not being fully executed. One possibility that is equally as frightening as no execution is the inability to tell the effectiveness of the plan.

An organization’s business model is bound to change and adapt. However, if it is not recorded in some way—whether in writing, pictures, or computer graphics — then it is difficult to assess whether the plan was successful or efficient. This can be detrimental to entrepreneurs, because they don’t have clear feedback to learn from in order to improve. To learn more financial leadership skills, download the free 7 Habits of Highly Effective CFOs.

business model, Business Model Definition, What is a Business Model

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Did you have your favorite brew for breakfast this morning?

Hey, did you have your favorite brew for breakfast this morning? I did!

Did you have your favorite brew for breakfast this morning?

I was on my way to The Strategic CFO office today and stopped by the HEB off of 290. As I walked up, I noticed a new coffee shop inside of HEB — Sertinos Coffee. There was a sign up that said it was closed for training, but I decided to make sure that they weren’t serving any coffee. The owner graciously greeted me and offered me a latte. It was incredible.  I was also very impressed by the generosity of the owner, Cliff Hilton (pictured here).

Coffee Owner

Cliff Hilton, Owner of Sertinos Coffee

I stayed and chatted with Mr. Hilton about their first location inside of an HEB. He and his wife, Nancy, are full of entrepreneurial spirit. They plan to add Sertinos Coffee into more HEB grocery stores. The company also has Sertinos Café at 5657 Eastex Freeway in Beaumont. They serve numerous types of coffees, teas, sandwiches, and desserts. Take a look at some of their different coffee varieties here.

Cliff, Caroline and Dennis

Cliff, Caroline and Dennis

Since they closed the café for training, I also got to meet the Hilton’s newest two employees: Caroline and Dennis (pictured here).

Coffee Shop Entrepreneur in Ever-Competitive Market

They are training an energetic staff, and I’m confident that each café will have a lively atmosphere. It’s great to see entrepreneurs opening local Texas coffee shops and specializing in the ever-competitive coffee market. Make sure to be on the lookout for their grand opening.

All their coffees are rated very highly. In addition, I can say that the latte is one of the best around.

Download our three most powerful tools to take your business to the next level.

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LEARN THE ART OF THE CFO