Budget Tension

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Budget Tension

Revenue Growth and Incremental Operating Profit

By Rick Beyer

Budget tensions is a natural law that impacts every business. Pressures often arise when organizations simultaneously try to accelerate revenue growth while investing initiatives to drive competitive position and increase incremental operating profit (IOP).

There is no straightforward approach to align both budget and investment priorities and avoid creating budget tension. Organizations must continue to invest in revenue growth and their competitive position while producing scalable IOP. As a result, companies must continuously optimize their business to create re-investment dollars.

Optimization of the business is not an easy process. Organizations must look critically and deeply to analyze all aspects of the company, especially in areas where spending is significant. Consider the following:

  • Can you eliminate non-value-added procedures and reallocate those resources for revenue growth and investment
    into a competitive position?
  • What activities can you postpone or substitute for creating internal investment trade-offs?
  • At scale, what should be the incremental operating profit margin on revenue growth?

Continuous business and performance optimization are a must for companies seeking a successful trifecta of growth, income, and competitive position. The fastest way to
achieve this is for executives and stakeholders to determine and monitor their incremental operating profit (IOP): revenue growth – expense growth = IOP.

Measuring IOP on revenue growth allows executives to comprehend and study the company’s optimal performance. In a later stage business, expenses that grow faster
than revenue can signal internal operating issues. In growth businesses, IOP can be used as a metric to prioritize internal investment.

For example, if a company generates revenue growth of $10M and $4M of IOP (40%), decisions can be made on how to allocate margin contribution for the growth and competitive position investment.

Continuous optimization, along with a formulaic IOP methodology allows companies a disciplined approach in determining a logical pathway for investment and revenue growth initiatives.

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Success with Dormant Buying Influencers

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Success with Dormant Buying Influencers

Sales Methodologies for the Corporate Market

By Rick Beyer
Business-to-Business (B2) marketing and sales require a comprehensive approach to activate and nurture the right decision-makers. While it may be clear regarding who the technical decision-maker is, there are multiple buying influences at any organization dormant within every significant deal. The technical buying influencer relies upon the specifications of your product. They are usually risk-averse and will only operate within a corporate policy or guideline. When working only with the technical buying influencer, it poses challenges when breaking into the B2B market.
“If your message is the same between your technical and dormant buyer, you’ll likely get bumped down”

Other buying influences within a corporate account may not be activated, thus creating an opportunity to outmaneuver your competition. These dormant buying influencers are often not interested in your product’s technical specifications. Instead, they will buy knowledge, improved competitive position, and strategic improvements.

Who are these dormant buying influencers? They are the executives and stakeholders who buy an improved competitive position and say “Yes” when everyone else says no. There are also other constituents who will directly rely upon the performance of your product and can be very influential in the decision process.

Dormant buying influencers require different messages and approaches. If your communication to an executive is the same as your technical buying influence, you will likely get bumped-down to the technical buyer for an inability to activate the dormant buyer. Also, if you start the sales process low in the organization, you’ll likely be stuck with the technical buying influence who can only say “No” to value-add or innovative deals.

You never have a second chance to make a first impression. Commencing your sales journey at the highest level of an organization with a credible message aligning with your competitive position, strategy, and knowledge are ideal starting points. This approach will result in a higher probability of activating the dormant buying influencers and outflanking your competition.

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Making Sales in a Down Market

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Making Sales in a Down Market

By Bryan Foe
When the economy is hot, every sales team is the best. But when the economy is struggling, competition decreases, as some competitors will choose the path of a deficiency mindset. Companies with a growth mindset prefer to broaden their view and find opportunities for new geographies, industries, and services.

Make Investment in Relationships Based on Trust

  • Connect with the right companies
  • Engage with the best people
  • Clean out and be true to your pipeline
  • Be visible in the market-place. There is nothing to hide from

Reframe Your Value Proposition To Reflect Reality

Describe your value with these factors in mind:
  • What can you do for your customer?
  • How can your company differentiate from the field?
  • Can you highlight in bold terms your value proposition?
  • Can you show proof through testimonials?

Increase Investment in People and Your Sales Process

  • Implement or bolster a sales methodology
  • Double down on coaching and training
  • Be consistent with the rigors of sales management
  • Avoid being bogged down in the details of the numbers

No matter the market conditions: ensure you have a winning attitude and share it with your team. Companies with a winning attitude and a culture for success sell more, in any market. Companies maintaining a positive attitude know customers have new and even greater needs to be met. These organizations also know their competition is encountering challenges that clear a path for driving new business home.

Successful companies understand that a positive outlook improves the chances of winning. It starts at the top with communication, energy, ongoing motivation, and support.

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Strategic Boards in Higher Education

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Strategic Boards in Higher Education

Role of the Board During Unsettled Times

By Rick Beyer

The business model for higher education is under severe stress. There is more capacity than student demand. Consumer behaviors have changed, technology demands are increasing, and deflationary forces are curtailing revenues.

As a result, an increasing number of colleges are closing their doors in the face of financial trouble. Some are finding ways to continue advancing their missions through innovation and strategic decision-making. What’s the role of the Board during these unsettled times?

The latest Association of Governing Boards Trustee Index Poll found that ninety-two (92%) percent of Trustees see the need for moderate (58%) or drastic (34%) change to the business model of higher education.

In this new environment, the financial model that propelled higher education for the past several decades is crumbling. The growing number of institutions are becoming going concerns, victims of dwindling enrollments, and declines in both private and public funding. In many cases, the institutional leaders fail to come to grips with this reality. This challenge leaves boards with some significant governance decisions to make, including to maintain independence, merge with other institutions, or develop affiliations that consolidate strengths.

92% of Trustees see the need for a change in the higher education business model*

For institutions that struggle to match revenues with expenses, it may be clear from a financial and operating perspective to consider new alternative strategies. This is often difficult to comprehend emotionally, especially when viewed through the lens of a board composed of volunteers. Yet, the fiduciary responsibilities for intergenerational sustainability rest with the Board. It is impossible, if not impermissible, to defer decisions that will affect the institution’s future.

It takes courage and leadership to navigate these uncharted waters. Passive boards will set the course for their institution’s decline with inaction, but strategic board leadership, aligned with its president, can position institutions for long-term prosperity.

*Association of Governing Boards of Universities and Colleges (AGB) Trusteeship Magazine, College Mergers and Affiliations, June, 2019

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