Sales Bizdom: Helping Clients Unlock Hidden Value

From our "Industry Insights " series- Winter FinListics Newsletter

provided to all FinListics registered users and clients for internal publishing and viewing

by Dr. Stephen G. Timme, President, FinListics Solutions

To navigate the tumultuous business environment and better manage financial performance, many clients have undertaken tough measures like headcount reduction and expense cutbacks in R&D, travel and advertising. They’re also delaying capital expenditures and tightening control of working capital. Still, there seems to be much untapped potential to Unlock Hidden Value.

Research conducted by FinListics Solutions reveals that across a wide range of industries, better performing companies are over 50% more profitable. What’s more, a study by REL-Hackett published in CFO Magazine reports that better performing organizations have 48% less working capital (accounts receivable plus inventory less accounts payable.

Of course, some variance in profitability and working capital is due, in part, to differences in product and services mixes, goals and strategies. Nonetheless, the potential for improvement is substantial. For example, for the average company the cash flow improvement from closing 50% of the profitability gap per $1 billion in revenue is: Retail – $1.2 million; Industrial – $3.4 million; Communications – $4.2 million;  Insurance– $2.9 million; and Banking – $7.1 million. So how much of this hidden value do your solutions unlock?

To unlock hidden value, it’s imperative to answer three critical questions:

• What’s the compelling reason to change?
• What should be changed?
• How should it change?

Many clients expect sellers to act even more like trusted advisors, providing insights into what should be changed and how it should be changed. Most of them have already picked low-lying fruit like mandated cost cutting. The next phase demands a fundamental change in business processes like sales and marketing, product development, customer service, operations, supply chain management, human resources, finance and accounting, information technology and even how the company is financed.

Now consider this: in which one or two areas does the client experience the most pain — or benefit the most from improving? From a business process perspective, what are the root causes of the pain or challenges in improving what should be changed. What are the consequences of no change? To build a credible executive-level proposition on how it should be changed, it’s crucial to have the ability to articulate your solutions’ business benefits and not just feature/function benefits.