LEADER LOGIC LTD

Richard Peters, Founder 

richardpeters@leaderlogic.ca 

(416) 471-1956

DELIVERABLES: Revitalizing under-performing businesses, developing leaders, enhancing competitive position, new revenue opportunities, strengthening brands, streamlining operations & growing revenue/profit. 

TRACK RECORD FOR OPTIMIZING OPERATIONS 

EXPERIENCE: Leadership roles with national, regional & global market leaders plus entrepreneurial experience as business founder as well as mentoring, managing & advising start-ups & early stage organizations. 

INDUSTRY BACKGROUND: Media, software, digital technology, finance, consumer goods, food & social enterprise.less

LEADER LOGIC LTD

Richard Peters, Founder 

richardpeters@leaderlogic.ca 

(416) 471-1956

DELIVERABLES: Revitalizing under-performing businesses, developing leaders, enhancing competitive position, new revenue opportunities, strengthening brands, streamlining operations & growing revenue/profit. 

TRACK RECORD FOR OPTIMIZING OPERATIONS 

EXPERIENCE: Leadership roles with national, regional & global market leaders plus entrepreneurial experience as business founder as well as mentoring, managing & advising start-ups & early stage organizations. 

INDUSTRY BACKGROUND: Media, software, digital technology, finance, consumer goods, food & social enterprise.less
 

Don’t Lose Your Shirt on an Acquisition

The best way to profit from U.S. deals is to buy American companies. But it can be a disaster if you don't consider these 4 key issues

John Lorinc

Despite a fondness for cheap, made-in-Asia, goods, Americans still like to buy American-made goods. Ivan Rebello, vice-president of Zenan Glass, a $19-million-a-year firm that makes customized beer and spirits glasses, bottles and other sorts of specialized stemware, came to this realization about four years ago; his epiphany was to become the driving force behind the company's expansion strategy into the U.S.

At the same time, Zenan Glass was filling smaller orders for U.S. customers, but the shipping and customs costs were proving to be onerous. Their margins were so narrow that Zenan (ranked No. 260 on the PROFIT 500) walked away from an order from a huge customer—Diageo, one of the world's largest liquor companies, according to Rebello. The company wanted Zenan to supply glassware to 20 locations across the U.S. But when Rebello and his colleagues ran the numbers, they realized they'd lose money on the order. "We couldn't fulfill this profitably."

It was a head-slapping moment.

The acquisitions
Throughout 2011 and 2012, Zenan worked their way out of this problem by purchasing a pair of financially strapped glass and dinnerware factories in the U.S., one in Rochester, New York, and the other, in Ohio, outside Pittsburgh. Together, the acquisitions cost almost $2 million.

Rebello said Zenan's bankers told him not to make the investment. He didn't listen, saying, "Entrepreneurs like myself get a kick out of taking risks."

Since completing the acquisitions, Rebello has spent hundreds of hours traveling between Zenan's Toronto headquarters and the two factories as he pushed ahead with restructuring the facilities so they could begin to deliver on the promise of improved access to large U.S. customers.

Rebello soon found himself focusing on several key issues that arose in the wake of the acquisitions:

• Do due diligence on the due diligence. "We almost lost our shirts" with the first acquisition in Rochester, says Rebello. Before the deal closed, Zenan relied on a local lawyer to supply financial information about the target firm. But once Rebello's team took possession, they discovered that the information they'd been given included a lot of falsified payables and receivables, and double-bookkeeping. Zenan paid $250,000 for the plant, yet ended up spending $1.2 million to sort out the problems. It's taken almost two years, Rebello says, to stem the losses.

• Demographics and the workforce. At the Ohio facility, most of the employees were nearing retirement. Zenan embarked on an aggressive recruiting process to bring in younger workers who would be able to use new technologies and deliver increased productivity. Today, about half the employees are new hires.

• Hire trustworthy managers who understand your vision. When Zenan completed the purchase of the Rochester factory, the company decided to keep the former owner on as the operations manager. After a year, Rebello says, it became clear that this manager was "a major problem." The former owner was replaced with his second-in-command. The new manager had a military background, which pleased Rebello, a former lieutenant in the Indian navy. "He had the necessary discipline with the operation. Knowing my background and this man's background, I would give him instructions and they would be followed to the letter."

• Invest in the right technology. Zenan picked facilities that had ovens capable of reaching the temperatures needed to make glass and dinnerware. However, much of the rest of the equipment in the plants was outdated, so Zenan replaced the aging machines with modern ones identical to the ones used in the company's Toronto facility.

These days, Zenan's revenues include almost $4 million in sales in the U.S. Heading into fiscal 2014, Rebello feels confident that he's worked out the kinks that came with Zenan's new U.S. holdings. Thanks to the technology and management changes, Zenan managed to win back some of the previous customers of the two U.S. plants, and is now better positioned to bid on large deals that have to be shipped to American destinations.

"This year we'll show profit on the two factories," he says. "Next year, I'm looking at substantial growth."

The Irrelevance of Profit-Driven Leadership

Leadership is not a position. It is the totality of your actions rooted in a set of beliefs that influence your interactions with people.

Dominating corporations and small-businesses for centuries is a mechanistic-leadership view. Such a view holds that organizational profit is the leading input to a manager’s leadership style. The overused style takes for granted the brilliance and sacrifice of the people whose human capital generate the profit. Instead, employees are treated as though they are cogs in a machine that merely need to be fine-tuned for maximum output.

A mechanistic-leadership view disregards the human element of business. The unchallenged and outdated view underlying such a leadership philosophy is employees are replaceable. 

While it’s true anyone can be replaced, the faulty logic is built on the belief that another person is readily available. In today’s job market and the changing demographics of the workforce and their expectations of employers, replacing someone is often a long, expensive process.

In a time when more employees are seeking meaning from their work or wanting to have an impact on society and customers, profit-driven leadership is a mis-fit for many businesses. It places employees as the means to a profitable end. Employees have grown restless and disillusioned by making the men at the top richer while they receive meager increases.

Profit-driven leadership is rooted in the belief that the business purpose is a luxury that cannot be examined. The purpose is not to make money; that is a result, as Simon Sinek aptly reminds us. Organizational purpose is the reason for existence – it’s a bigger calling.

Profit-driven leaders uses time as an excuse for not exploring purpose and connecting actions and outcomes to it. Profit-driven leaders see merely trees when the forest is more compelling and interesting.

Misguided in their efforts, profit-driven leaders believe profit comes through efficient processes and policies. The truth has always been that profit comes from the toil and sacrifice of a workforce inspired by a purpose that invites them to unleash their best effort for a cause worth believing in.

Leadership is an honorable distinction. Not everyone shows it, but everyone is capable of it. Your leadership capability is rooted in your beliefs about people. The irrelevance of profit-driven leadership reveals to us that purpose and believing in people’s capabilities to do great work is what is needed in today’s workplace and business environment.

Shawn Murphy

Co-Found & Co-CEO at Switch and Shift

Change Leader | Speaker | Writer Managing Director of Organizational Development at KAI Partners. Passionately explores the space where business & humanity intersect. Promoter of workplace optimism. Believes work can be a source of joy. Top ranked leadership blogger by Huffington Post.

How To Set Prices To Seriously Increase Profit

 

Not many companies would characterize themselves as having an obsession with pricing, and yet pricing represents one of the most attractive and most overlooked opportunities out there to increase profit.

There have been a number of studies over the years that have highlighted the importance of pricing as a key lever in driving profit increase. Large consulting firms such as A.T. Kearney, Boston Consulting, and PwC have published a vast array of data that have indicated pricing as the fastest and the most efficient way to improve your bottom line. Perhaps the most often quoted example, the McKinsey study, found that a 1 per cent price increase, if the demand remained constant, would result in an average of an 11 per cent increase in profits.

The graph below shows that pricing has more leverage than reducing costs or growing sales volume. It is also an area that relatively few companies focus on. Mastering how to set prices can give your company a competitive advantage.

Source: Ken Wong- Queen’s School of Business

Where Are We Today?

Buyers have become far more knowledgeable about how to extract pricing concessions from sellers; they understand multi-tiered discounts, a myriad of promotion programs ranging from lump sum commitments to per unit discounts, and the concept of using information as leverage.

Attitudinally, most companies struggle with the idea of a price increase based on volume risk. 

Even maintaining current pricing is a challenge in our hyper-competitive realm of bricks and mortar big box retailers, off-shore competition, and cyberspace-based virtual stores.

Organizationally, the responsibility for pricing can be varied as it is linked to many aspects of the business. This can cause a nightmare scenario in some companies, with one group responsible for setting invoice prices, another team handling allowances and perhaps even a third group managing rebates/ performance based discounts. Lots of numbers, lots of data, little unified focus and/or direction.

How To Set Prices

I wish it were as simple as applying a 1 per cent increase across the board and reaping the 11 per cent gain at the bottom line. As I’m writing this, I’m thinking of the number of times this has been included in the business plan, always with the good intention of coming back and scouring pricing to deliver the bottom line. In my experience, this seldom happens.

Pricing is a large and complex issue for many companies, but there is profit upside to taking a focused approach. I generally think of a four stage process for how to set prices, directed against a key product, category or group.

• Stage One

  revolves around data collection, both internally and (often) externally. This stage is meant to not only identify margins at the transaction level, taking into consideration the current pricing structure, but also to gather insights by the channel of distribution and competitive research.

• Stage Two

  is analytical in nature and is designed to turn big data into knowledge. This stage addresses the concept of leverage. It asks, are there potential pricing opportunities based on a particular brand’s equity? Or is there value in redefining a particular channel?

• Stage Three

  brings together the learning in a way that allows strategy development. You can click here for a free download of the most commonly used pricing strategies to help you with this stage.

• Stage Four

  has a focus on pricing policy, executional guidelines and timeline for implementation.

Control is a theme of the process, both in terms of input and output. Since responsibility for pricing actions, as well as the resultant data, can rest with a number of managers across the company, having some form of centralized leadership and control will be critical to success. Similarly, establishing policy and monitoring execution will also be added to ensure a controlled implementation.

It’s true that pricing represents the fastest way to grow the bottom line. It provides more leverage than reducing costs or growing sales volume does. You’ll need to apply analytical rigor and strategic objectivity to this complex area, but the rewards of a pricing focus will emerge quite quickly.

About John Slauenwhite

John Slauenwhite is a sales-oriented marketer who balances strategy and action. His background includes large corporate environments, senior roles in international trade development, and global leadership in the B2B arena across multiple channels, plants, and product lines.

How to make your business more attractive for sale

Arek Jajus cleans the windows of a Toronto restaurant on Jan. 5, 2011.

The dismal financial results for 2009 no longer need to be included in a company’s books. For any business looking to sell, this significant milestone allows for a marked improvement when potential buyers look at the performance of the past three years. The conversation doesn’t have to start with: “We looked at your financial statements. What happened in ’09? Want to talk about that first?”

That said, there is still a noticeable gap in valuation expectations between buyers and sellers. “The market downturn stripped out the profits for private companies and the survivors reduced and reinvented their businesses to add to their top line,” says Bob Gorrie, owner of Gorrie Marketing Services. “These owners have put a great deal of sweat equity into their businesses, and unfortunately that extra hard work and planning is not reflected in their financial results.”

But as the markets improve, profits are returning and owners interested in selling are watching their industry cycles like hawks for the upswing, waiting to get the timing right. A more relevant question for these owners is “where is my own business in its life cycle?”

For any business owner contemplating a sale in the next few years, here are a few ways to add to the valuation:

Does your business have solid management?
The owner may be leaving but buyers want to know whether there’s a team in place with big goals to drive the business forward with equal determination. Having a succession plan is critical, but when Crosbie & Co. recently conducted an owners’ survey, it revealed that fewer than 5 per cent have a written document with a strong operator or family member ready to take over. Owner-operators have built their lives around running their businesses and they do not want to let that go. This reluctance may prevent them from seeing the importance of planning for their own exit and they will get dinged on their company sale price for this omission.

Are your key processes institutionalized?
“There is the risk that the company incurs a fatal loss of knowledge and connections upon the exit of the owner,” the president of a manufacturing business told me. “The earn-out helps, but two to three years does not make up for 30 years experience in a company. One way to mitigate this risk is to bring in a guy like me.” Paying a high-quality CEO for a few years will help the owner of a windows manufacturer convert “in the head” knowledge to written processes. “We preserved the knowledge and demonstrated the existence of a reliable management team to a potential buyer,” the president added.

Do you know good buyers?
The sale price of a business is what buyers offer and when a company is in the growth part of its business cycle, there will be multiple offers and phone calls from all sorts of interested parties. “I know the ‘I’m comfortable with my business’ owners where the offers to buy have made great sense,” says succession planning coach Janice Lahiti. “The owners don’t do it because they think their ability to influence a variety of broader agendas will diminish.” As the business hits the mature stage of its life cycle, which often occurs in tandem with the owner’s life cycle, suddenly the pool of multiple bidders dries up and as Janice says: “The owner can no longer command the multiples they want.”

The owner may also miss the opportunity to sell to a buyer who will structure the sale so that the majority of the company is purchased but the owner can keep 20 per cent to 30 per cent with a fixed medium-term buyout schedule. They can also have limited management or board involvement. This structure keeps the owner involved mentally and financially in his or her ‘baby’ while taking some money off the table to free up time to pursue other interests.

What is your opportunity cost, really?
Melanie Kau exited her successful family business, Mobilia, to take on the challenge of running Le Naturiste. “The ‘what next’ after you have worked for 15 to 20 years in a business prevents people from asking themselves the cost of staying where they are because they are comfortable. I know what that feels like because I have just been through it. Therein lies a great deal of value with the experience the entrepreneur has built up: sometimes the business is more like a cage than a platform.”

Jacoline Loewen is a director at Crosbie, which focuses on succession advice for family businesses and closely held small to medium-sized enterprises. Crosbie develops customized strategies, particularly in relation to M&A, financing and corporate strategy matters. Ms. Loewen is also the author of Money Magnet: How to Attract Investors to Your Business.

Numbers Don't Lie; Interpretations Might

By: Gary Patterson

"A full 17% of respondents admitted that their CEO's had pressured them to misrepresent results at least once" per a 2002 Electronic Business article. How comfortable are you with the financial results used to manage your business?

 

This article will cover five major areas you might look at or have someone look for you to increase your ability to better know where you really are financially, to be able to sleep better at night. The more of these areas that may be a concern at your company, the more urgent a corporate physical may be.
1. Most companies do not accurately know their top ten customers.
2. Many companies have capitalized some item in the past, whose realizable value will become questionable.
3. Most companies do not know how they will be affected by profitability changes at their top ten customers.
4. Many companies have an asset that strategically they would be better off selling at a loss to pursue some new opportunity.
5. Many companies have painted an overly optimistic picture to a customer, vendor or financing source. 



Top ten customer profitability "I am starting to visit our top ten customers. If you find out who they are, please let me know." said the CEO. I have been asked different versions of that question by more than one corporate leader. A little talked about secret is that most companies do not accurately know their top ten customers. If you are willing to define that as the largest customers by revenue, maybe you know this top ten list. If you want to accurately know the ten most profitable customers, good luck. Changes in business, product changes and system incompatibilities often make this difficult to do without getting the right eight people in a room for a day. 

A past capitalized item will be questioned.Cisco wrote off two billion dollars of inventory several years ago. Many companies have capitalized some item in the past that will be questioned. Goodwill will be reviewed annually. All of us have read the horror stories of write-offs that in hindsight raise questions that often were not valid or even a factor when those assets originated. 

One of my favorites was a company that accidentally set up a sophisticated process that accidentally capitalized part of the write off to that asset in the current year additions to the capitalized asset. If you have reserves, allowances or estimates for loss, why not take a critical look at them at least once a year for downside risk. In more conservative days, the CFO would cover things like this when a year came in better than expected. 

Profitability change at the top ten customers.Those fortunate companies that accurately know the profitability of their top ten customers normally fail to cross the next hurdle of knowing with conviction how the fortunate company's top customers will be affected by profitability changes to those customers. There is a timeframe when top ten customers drop off the A list.
 
Having discussed how this affects the best performing companies, guess what that means for the companies who do not accurately know profitability of their top ten customers.

 

 
One very interesting exercise I helped on was to estimate the benefit our customer received from our service to see which customers were benefiting or losing money on being our customer. That produced some very interesting and unfortunately accurate estimates of customer retention.

Sell that asset and re deploy the money Has your financial department ever told you that the company has to keep losing money on branch or product because we can not admit to the financial loss the company would have to take if it disposed of the asset? I suggest a lesser version of this situation is failure to look at return on equity related to assets or departments. Many companies have one or more assets they would be better off selling at a loss and re investing in another opportunity. This can be particularly true when the executive bonuses are mainly a function of the dollar level of profitability, with limited influence on return on equity or similar measurements. For those of you who say their company has a mechanism that investment proposals meet threshold rates, how often does someone report back convincingly with what return the investment actually received? 


Painting an overly optimistic picture to outsiders Last but not least. How many companies have painted an overly optimistic picture to a customer, vendor, or financing source? If "forty four percent of Americans lie about their work history" per ADP Screening and Selection Services, might they stretch the truth a little while representing your company. The effects of this are really hard to quantify. When does puffery become misrepresentation? 

I have told CEO's and groups that Murphy's Law suggests your not knowing your company's real equity and risk areas will be a problem at the worst opportune time. Just take a look at all the items someone like me will ask for using a due diligence checklist, and follow up to see how well your company's rough spots would stay hidden. If you do not have such a list, contact me for an example of a standard list. What will you do next week to understand the soft areas and risk factors that all companies have to some degree? 

Author Bio
Gary Patterson is the author of "Numbers Don't Lie; Interpretations Might." He has helped numerous high growth companies enhance growth and profitability. Visit his site to see how you can get a free consultation www.FiscalDoctor.com or mail to Gary@FiscalDoctor.com

Numbers Don't Lie; Interpretations Might

By: Gary Patterson

"A full 17% of respondents admitted that their CEO's had pressured them to misrepresent results at least once" per a 2002 Electronic Business article. How comfortable are you with the financial results used to manage your business?

 

This article will cover five major areas you might look at or have someone look for you to increase your ability to better know where you really are financially, to be able to sleep better at night. The more of these areas that may be a concern at your company, the more urgent a corporate physical may be.
1. Most companies do not accurately know their top ten customers.
2. Many companies have capitalized some item in the past, whose realizable value will become questionable.
3. Most companies do not know how they will be affected by profitability changes at their top ten customers.
4. Many companies have an asset that strategically they would be better off selling at a loss to pursue some new opportunity.
5. Many companies have painted an overly optimistic picture to a customer, vendor or financing source. 



Top ten customer profitability "I am starting to visit our top ten customers. If you find out who they are, please let me know." said the CEO. I have been asked different versions of that question by more than one corporate leader. A little talked about secret is that most companies do not accurately know their top ten customers. If you are willing to define that as the largest customers by revenue, maybe you know this top ten list. If you want to accurately know the ten most profitable customers, good luck. Changes in business, product changes and system incompatibilities often make this difficult to do without getting the right eight people in a room for a day. 

A past capitalized item will be questioned.Cisco wrote off two billion dollars of inventory several years ago. Many companies have capitalized some item in the past that will be questioned. Goodwill will be reviewed annually. All of us have read the horror stories of write-offs that in hindsight raise questions that often were not valid or even a factor when those assets originated. 

One of my favorites was a company that accidentally set up a sophisticated process that accidentally capitalized part of the write off to that asset in the current year additions to the capitalized asset. If you have reserves, allowances or estimates for loss, why not take a critical look at them at least once a year for downside risk. In more conservative days, the CFO would cover things like this when a year came in better than expected. 

Profitability change at the top ten customers.Those fortunate companies that accurately know the profitability of their top ten customers normally fail to cross the next hurdle of knowing with conviction how the fortunate company's top customers will be affected by profitability changes to those customers. There is a timeframe when top ten customers drop off the A list.
 
Having discussed how this affects the best performing companies, guess what that means for the companies who do not accurately know profitability of their top ten customers.

 
One very interesting exercise I helped on was to estimate the benefit our customer received from our service to see which customers were benefiting or losing money on being our customer. That produced some very interesting and unfortunately accurate estimates of customer retention.

Sell that asset and re deploy the money Has your financial department ever told you that the company has to keep losing money on branch or product because we can not admit to the financial loss the company would have to take if it disposed of the asset? I suggest a lesser version of this situation is failure to look at return on equity related to assets or departments. Many companies have one or more assets they would be better off selling at a loss and re investing in another opportunity. This can be particularly true when the executive bonuses are mainly a function of the dollar level of profitability, with limited influence on return on equity or similar measurements. For those of you who say their company has a mechanism that investment proposals meet threshold rates, how often does someone report back convincingly with what return the investment actually received? 


Painting an overly optimistic picture to outsiders Last but not least. How many companies have painted an overly optimistic picture to a customer, vendor, or financing source? If "forty four percent of Americans lie about their work history" per ADP Screening and Selection Services, might they stretch the truth a little while representing your company. The effects of this are really hard to quantify. When does puffery become misrepresentation? 

I have told CEO's and groups that Murphy's Law suggests your not knowing your company's real equity and risk areas will be a problem at the worst opportune time. Just take a look at all the items someone like me will ask for using a due diligence checklist, and follow up to see how well your company's rough spots would stay hidden. If you do not have such a list, contact me for an example of a standard list. What will you do next week to understand the soft areas and risk factors that all companies have to some degree? 

Author Bio
Gary Patterson is the author of "Numbers Don't Lie; Interpretations Might." He has helped numerous high growth companies enhance growth and profitability. Visit his site to see how you can get a free consultation www.FiscalDoctor.com or mail to Gary@FiscalDoctor.com

SOCIAL MEDIA MARKETING IN AGRI-FOODS

I consulted on a social media book which was recently launched on Amazon. Written by Bruce MacDonald, a 30 year veteran of the agri-food industry, in "Social Media Marketing in Agri-Foods: Endless Profit and Painless Gain", Bruce applies his background and expertise in Agri-foods and social media to the latest trends, tools and methodologies needed to craft a successful on-line campaign. While the book focuses on the agri-food market specifically, I believe that many of the points Bruce makes are equally applicable to most other industries.
 
The book is currently available on Amazon @ www.amazon.ca