October 3, 2016 | Dr. Stephen Timme
In good times, motivating companies to change is a challenge. It’s understandable. From their perspective, why mess with a good thing? Far too often, good economic times provide cover for less than stellar business practices. The current business environment, however, is proving a compelling reason for a number of companies to look for—and unlock—hidden value. How much hidden value? According to our own research here at FinListics, for an average company in the following industries the cash flow improvement opportunity from closing 50 percent of the profitability gap between a company performing at the median in their industry and a top performing, or first quartile company, per $1 billion in revenue in the following industries is:
- Retail--$1.2 million
- Industrial--$3.4 million
- Communications --$4.2 million
- Insurance --$2.9 million in industry
- Banking--$7.1 million
Big numbers…..so with so much value lying dormant, why don’t more clients find it? It’s an obvious question, but not enough companies ask it. Our research shows that better performing companies are over 50 percent more profitable and tend to have about 50% less in working capital. Some of the variance in profitability and working capital is due to differences in product and service mixes, and goals and strategies, but across a wide range of industries there is untapped value waiting to be unleashed by improving performance. Low-lying fruit like mandated cost cuts have been picked clean by most of your clients. To unlock hidden value by improving performance requires another level of effort. It requires fundamental changes in business processes such as product development, sales and marketing, customer service, operations, supply chain management, human resources, finance and accounting, information technology—even how the company is financed. What are the top one or two areas where your client is experiencing the most pain? In what area could this client gain the biggest benefit if a process were improved? From a business process perspective, if you’re able to help your clients identify the root causes of their pain points or the obstacles to implementing improvements, you help build a case for your company’s solutions. So how do you help your clients find and unlock the hidden value in their organizations? (1) Identify what the client needs to change (2) Quantify the consequences of not making that change and quantify the business and financial benefits of your solutions – why they need to change. (3) Move beyond reciting a list of features and functions to building a credible, executive-level business case for how to change it. By doing so, you’ll help them unlock hidden value… and help yourself make the sale in the process.
Posted in
Executive Industry Insights,
Selling Strategies
In good times, motivating companies to change is a challenge. It’s understandable. From their perspective, why mess with a good thing? Far too often, good economic times provide cover for less than stellar business practices. The current business environment, however, is proving a compelling reason for a number of companies to look for—and unlock—hidden value. How much hidden value? According to our own research here at FinListics, for an average company in the following industries the cash flow improvement opportunity from closing 50 percent of the profitability gap between a company performing at the median in their industry and a top performing, or first quartile company, per $1 billion in revenue in the following industries is:
