Posts Tagged ‘revenue’

Top Ten In 2014……

Monday, December 29th, 2014

The results are in!

Our top 10 blog posts in 2014 were:

1.   Adaptive Strategy – A Way To Profits In The New Normal? looks at an alternative strategy that is built on the 3 R’s (Responsiveness, Resilience, Readiness) required in a changing environment.

2.   6 Ways A Business Owner Can Influence Culture looks at the ways a business owner can develop a culture which will help increase operating profits and build shareholder value.

3.   6 Challenges Fast Growing Companies Face discusses the 6 challenges of execution which, if not dealt with, could prove fatal.

4.   3 Times When You May Need To Change Your Strategy explains when a company should review its strategy and what makes that review and any subsequent actions necessary.

5.   The Difference Between A Strategy And A Plan talks about the difference between strategy and planning and why it’s important to understand what these terms mean.

6.   6 Things We Can All Learn From Family-Owned Business puts forward 6 simple things business owners can implement to achieve better long-term financial performances.

7.  Use These 3 Tips To Make Your Next Critical Decision offers 3 things Ram Charan, co-author of “Execution”, says business leaders do when faced with a critical decision.

8.  5 Traits Effective Business Owners Share outlines some of the traits effective entrepreneurs have in common that contribute to the growth of their businesses.

9.  3 Reasons Why Consulting Assignments Fail and 3 Reasons Why Consulting Assignments Fail – Part 2 addresses the most common reasons why things can go wrong between consultants and their clients.

10. Strategic Planning – 3 Things That Are Wrong With It outlines how business owners make 3 mistakes that could destroy their company when they confuse strategy and strategic planning.

If you missed any of them, here’s another opportunity!

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Strategic Planning – 3 Things That Are Wrong With It

Tuesday, February 18th, 2014

We all know that picking a strategy means making choices.3 things wrong with strategic planning

But that means making guesses about that great unknown, the future. What happens then if we make the wrong choice? Could we destroy a company?

That’s why, according to Roger Martin¹, we turn choosing a strategy into a problem that can be solved using tools we are comfortable with.

And we call that strategic planning.

But, Martin says, companies make 3 mistakes when they confuse strategy and strategic planning.

1.  Putting the cart before the horse:

All strategic plans have 3 parts:

•  A vision or mission statement,
•  A list of initiatives required to achieve it,
•  The results of those initiatives expressed as financial statements.

These financials typically project 3 – 5 years into the future, making them “strategic” (although management typically focuses on only the first year’s numbers).

But the dominant logic in these plans, says Martin, is affordability; the plan consists of whichever initiatives fit the company’s resources. And that’s putting the cart before the horse.

2.  Relying on cost-based thinking:

The company is in control of its costs – it can, for example, decide how much office space it needs and how to promote its products.

And costs are known, or can be calculated, so fit easily into planning.

This thinking is extended to revenue forecasting and companies build detailed, internal forecasts by, for example, salesperson or product.

But these projections gloss over the fact that customers control revenue and that they decide how much a company gets.

3.  Basing strategy on what the company can control:

A number of well-known models are used for strategic planning. But they can be misused. Take Mintzberg’s concept of emergent strategy.

Martin believes it was intended to make business owners comfortable making adjustments to their deliberate strategy in response to changes emerging in the environment.

However, because waiting, and following what others are doing, is much safer than making hard choices and taking risks, emergent strategy has been hijacked to justify not making any strategic choices in the face of unpredictability.

But following competitors’ choices will never produce a unique or valuable advantage.

What do I think?

I like Martin’s views but the crux still lies in linking planning to execution, turning desire into results.

__________________________________
“The Big Lie of Strategic Planning”, Harvard Business Review, January 2014,
http://hbr.org/2014/01/the-big-lie-of-strategic-planning/ar/pr

 

If you enjoyed this post you’ll also enjoy Bad Strategy – How To Spot It

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

3 Reasons Growth Slows In Good Companies

Tuesday, June 18th, 2013

It caught my attention immediately.Periodic slow-downs in growth are inevitable, even in solid companies

A blog post about why successful companies stop growing. A topic I was tempted, only last week, to call an obsession.

While the examples Ron Ashkenas uses are all large corporations, it really doesn’t matter.

The points he makes apply equally well to business owners and family businesses.

Ashkenas argues that periodic slow-downs in growth are inevitable – even for solid companies. That doesn’t mean that business owners and their management teams can’t do anything to slow the decline or to reverse it quickly.

First, however, they have to understand the 3 forces that Ashkenas says always slow down high-flying companies. Here they are.

1.  The Law of Large Numbers

When revenues are $5 million, targeting annual growth of 20% means adding $1 million to the top line. When they’re $50 million, chasing 20% growth means adding $10 million in sales in 12 months.

It takes significantly more resources to support $10 million in new sales than it does to add $1 million. And some of them, e.g. people with the skills and experience required, can’t always be found quickly and easily.

Then there’s the size and growth rate of the market. If it’s $100 million and growing quickly, adding $1 million in sales means taking, at most, 1% more market share. However, adding $10 million in a mature or declining market means getting 10% more market share – and that probably means taking it away from competitors.

2.  Market Maturity

When a market turns hot, competitors multiply like mosquitos. That limits the potential for price increases, which are a relatively easy way to increase revenues.

Some companies build stronger brand loyalty than others, slowing the ability of the weaker competitors to grow. Some products become commoditized, price becomes king and margins become thin, affecting bottom line growth.

Eventually markets become saturated and the bigger, stronger players either gobble up the weaker ones or force them out.

3.  Psychological Self-Protection

Ashkenas describes this as pressure to maintain the base business and unwillingness to risk it with innovative new products.

In the companies we’ve worked with, it often appears in a different form (and perhaps deserves a different name). As these companies grow, the management team spends more and more time focusing on meeting the increasing demand while maintaining quality. This is often caused by weak processes, lack of discipline and lack of accountability.

In both cases, however, management is the cause of the declining growth.

No company grows forever without hitting some bumps along the way. The challenge for the business owner is to recognize what’s really going on and to deal with it.

Sometimes it takes an external, third party to be able to do that.

You can read Ron Ashkenas’ full post here.

 

If you enjoyed this post you’ll also enjoy Why Would Anyone Hire A Management Consultant? and Why Would Anyone Hire A Management Consultant? – Part 2.

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Why Would Anyone Hire A Management Consultant? – Part 2

Tuesday, June 26th, 2012

In my last post I talked about how owners of companies can find themselves faced with situations they haven’t encountered before – and not realize what’s happening.

After all, that happens in our personal lives. Remember the first time you fell in love?

We’re caught up in the symptoms – the tune playing endlessly in our head, the face we can’t get out of our mind and the grin we can’t wipe off, no matter what else is going on. How many of us simply didn’t understand what was happening? I don’t know about the ladies but believe me, none of the men did!

Sometimes it takes someone who has already had the experience, to alert us to the situation.

Think for a moment about a company with between $3 and $5 million in annual revenues and which has been in business for anything from 5 to 20 years. The owner is successful by any measure. They’ve grown their businesses to a respectable size, provided employment for others and beaten the odds of failure.

But then things start happening that many of them have never encountered before.

I’m So Frustrated

For example, in companies of this size the owners are typically directly involved in everything that happens. That may work well for a time, but eventually either the volume or the complexity of the business reaches a point at which no human being can sustain the effort required.

That’s when we hear them say things like “I’m just so frustrated!” When we ask why, typical responses are “I’m working 16 hours a day, 6 or 7 days a week – but sales aren’t going up.” Or he or she often feels that they’re not paid enough for hours they work. They only want to work 4 days a week in the summer and take more vacations with their families.

Because they’ve been successful up to this point, they believe they can figure it out for themselves – overlooking the fact that this is a situation they haven’t encountered before.

Some may try developing (or hiring) supervisors or managers to take work off their shoulders. But it isn’t successful and they feel it isn’t worth trying again.

But a consultant, who has had experience delegating and working with a management team, knows that it isn’t something that comes easily or naturally to most people. He or she can help the owner select competent team members and get them working together effectively.

A Victim of Their Own Success

Business owners can also be a victim of their own success. For example, adding a new distributor can result in sales growing so quickly the company can’t cope.

This leads to a dramatic increase in customer complaints – about customer service, quality, delivery or all three. And the owner is caught in an endless cycle of dealing with urgent, day-to-day issues and juggling operational balls.

An experienced consultant can see beyond the symptoms, help the business owner break out of the cycle and put processes in place to maintain control of key functions.

I don’t want to take the romantic analogy too far and suggest that a management consultant could be a business owner’s best man (or woman). Even I realize that may be stretching things a bit!

But there are times when getting an objective, third party opinion could be the best thing to do – no matter how difficult or unlikely a solution it seems.

 
If you enjoyed this post you’ll also enjoy 3 Reasons Why Consulting Assignments Fail Part 1 and Part 2
 

 

Why Would Anyone Hire A Management Consultant?

Tuesday, June 19th, 2012

 I gave a presentation last week on the topic – “Why would anyone hire a management consultant?”

I think the topic the organizer actually had in mind was – why would anyone in their right mind hire a management consultant? But they were too polite to be that specific.

Many members of the group I talked to know business owners whose companies have between $3 and $5 million in annual revenues and who have been in business for anything from 5 to 20 years.

So, I customized the presentation to that situation, which wasn’t difficult, because owners of businesses like that often face an intriguing situation.

They’re successful by any measure. They’ve grown their businesses to a respectable size, provided employment for others and soundly beaten the odds of failure (80% of new businesses don’t make it beyond the second year).

But, at around $3 to $5 million, something changes and annual sales stop growing. The exact point at which it happens varies depending on a number of things e.g. the industry – but it does inevitably happen. It’s not that sales go into free fall, they just stay flat or go up one year and down the next.

The owners’ first reaction is to focus on their sales team. They may, for example, try to get their salespeople to make more calls or they even make personnel changes. They may also try some marketing – by which they generally mean promotional – programs.

Most of the business owners have never encountered this situation before. And because they’ve always been successful up to this point, they believe they can figure it out for themselves.

However, life is full of situations we’ve never experienced before. The analogy I used in my presentation was falling in love for the first time.

Lots of us (particularly males) don’t understand what’s happened. We focus on the symptoms – the churning stomach, the same tune playing endlessly in our head, the picture of the other person we can’t get out of our mind and the grin that’s fixed firmly to our face no matter what else is going on around us.

It may take a good friend, who is already in a long-term relationship, to alert us to the situation – we’ve finally met the “one”.

An experienced management consultant can play the same role for a business owner. An objective third party, they use the symptoms to find the root cause of the situation.

For example, we had a client in an industry in the early stages of consolidation. The bigger players were beginning to buy up the smaller ones, changing several aspects of how the game was being played. We spotted that because we’d seen it before – unlike our client.

I’ll tell you about a couple of other situations when hiring a management consultant will help in my next post…….
 

3 Times When You May Need To Change Your Strategy

Thursday, February 2nd, 2012

We all do things that are crazy.

One of my things is telling people that they shouldn’t be changing their strategy.

I do it when business owners – or CEOs – say things like “It’s time for our annual strategy meeting”. The implication – for me at any rate – is that they change their strategy every year.

But that would be just plain wrong.

Changes to a well thought-out, well-crafted strategy shouldn’t be driven simply because it’s been in place 1, 3 or 5 years.

A strategy shouldn’t necessarily be changed even if it isn’t producing results. In this situation I always look at how well (or badly) the strategy is being executed before I look at the strategy itself.

So when should a company review its strategy? And what makes that review and any subsequent adaptation, revision or recreation necessary?

Here are three occasions.

1.    When the company has outgrown its strategy.

There’s research which suggests that companies can “plateau” when they achieve certain levels of revenue. Depending on the industry those levels are around $5 million, approx. $10 -12 million, somewhere between $18 – 30 million and so on.

Typical symptoms of “plateauing” are upward spikes in revenue which can’t be maintained, increasing lead times delivering the product or service, decreasing levels of customer satisfaction and higher employee turnover.

The plateauing occurs because the things – e.g. strategy, processes – the company has done up to that point in its life can’t support any more growth. It’s like expecting a teenager to fit into the clothes they wore when they were eight.

To rekindle growth the owner either has to change the strategy, the way it’s executed – or both.

2.    Significant internal change.

This occurs when, for example, a company develops a game changing new product or service or finds a new way of doing its existing business. This gives it an edge over its competitors by e.g. reducing costs or increasing efficiencies.

To reap maximum benefit from this new competitive advantage the owner will have to adapt or change the existing strategy.

3.    Significant external change.

In this case the owner or CEO has to react to e.g.:

  • A competitor who is taking advantage of a significant internal change.
  • The industry “maturing”. In other words the business has been around long enough for a number of competitors to have become large enough to e.g.:
    • Reduce their costs and pass this on as reductions in the selling price or,
    • Buy up smaller players who introduce game changing technology or process improvements. This is also known as industry consolidation.
  • Major changes in e.g. the economy, labour pool, legislation governing the industry, or all of the above.

Continuing with a “business as usual” approach under any of these situations is clearly not going to be effective.

To be fair, when business owners and CEOs say “It’s time for our annual strategy meeting” they usually mean that it’s time to start the annual business planning process. That is something that must be done every year.

And, since we have services which can make the annual business planning process more effective, perhaps I’m not as crazy as I look – I mean sound…….

If you enjoyed this you will also enjoy 2 Things That Cause Bad Strategy

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2 Key Questions Every New Product Must Answer

Friday, June 10th, 2011

1. It Failed!

Everyone can think of companies – large and small – that have committed resources and spent money on new products/services only to fail.

Does anyone remember Sony’s Mini-Disc or the Apple Newton? Then there are those high profile classics New Coke and Crystal Pepsi.

How do large, credible organizations make mistakes like these?  And if they can do it, what chance do smaller, owner managed companies, with significantly less resources, stand?

2. Here’s A Reason Why.

One reason for these lapses is that the team members making the key decisions (who often spend most of their time in the company’s offices not in the field) believe passionately that the idea is going to work. That’s because, when you’re close to something it’s easy to become convinced you’re right. And when you feel that way you tend to push on regardless.

Maybe their research was faulty, or maybe they just didn’t do any.

Or maybe they didn’t take the time to take a step back and ask the question “What role can our product/service play in the market?” before committing resources to the initiative.

That’s not just a marketing strategy question – it’s a business strategy question. Because if it’s a bad idea and it fails, money and other resources that could have been deployed elsewhere are wasted. And the reputation of the company as a whole – and the people backing the project – is damaged.

3. Products Have To Earn The Right To Exist.

A company’s new products have to earn the right to exist. They do that when the answers to the following 2 questions are “Yes!”
• Do the products provide value that is perceived to be unique compared current offerings?
• Can they generate sufficient revenue, profit and cash to be sustainable?

As a business owner you can find the answers to the questions in a couple of different ways.

The first is by posing them in the early discussions about the products. Finding the answers will generate a lot of the information that will be required to assess the target market, develop a marketing mix, complete financial forecasts and weave them all together in a business case. So it’s hardly a waste of time!

The second is to wait and look for the answers when the business case has been completed.

4. The Important Thing Is………

Both approaches have their advantages and disadvantages. The important thing is to choose one and use it.

If you proceed without answering the 2 questions then you are taking unnecessary risk with your money and other resources – and your reputation.

The Future Of Your Business: Succession or Exit?

Thursday, May 5th, 2011

Our guest this week is Jim Pullen of Concert Partners. His career has included cross-border mergers and acquisitions of international technology companies. He is a senior advisor to Tequity, a specialist M&A firm in the technology sector.

Succession or exit – it’s a stark choice, but since we are all mortal, one of these is going to happen!

A recent study of Canadian businesses showed that while 70% recognized that a transition or exit will have to take place, only 7% had a plan! And incidentally, selling at the best price at the right time doesn’t constitute a plan!

I worked for an international mergers and acquisitions company in both London (UK) and Boston (USA). While I was there we carried out a study of 250 M&A transactions we were involved in, over a span of 8 years.  The transactions took place in Europe, US, and Canada. 

We wanted to find the key areas that buyers looked for in a transaction.  Based on the study, we developed a framework for ranking and assessing a company on the factors that were proven to drive a valuation.

The main areas of value enhancement that emerged are described below.

1. Financial

This category includes basic financial metrics such as profitability and revenue growth.  Companies with high profit margins and high rates of revenue growth obviously command a higher valuation. 

Other aspects include the type of revenues a company generates.  Recurring revenues can add to a valuation as it makes the company’s cash flow more predictable. So, for example, a company that sells big ticket one-off products could look to build up more of an offering around maintenance and post-sales services for their product – where they can sign their clients into multi-year maintenance contracts. 

Companies with strong cash generation are also more attractive to buyers.  They are able to take on more debt that can be used to finance growth.  It also makes a leveraged buy-out possible.

2.   Market & barriers to entry

In this category the factors include the strength of customer relationships and degree of uniqueness the company enjoys in its market.  Companies that have a direct and strong relationship with the end users/purchasers of their product will get a higher valuation.

Brand, which clearly has to be part of a long-term strategy, plays a large role in the value a buyer places on a company.  We found that a strong brand can make up to 70% of the value in a company.

In terms of barriers to entry, companies should use many mechanisms to defend their position. Examples are legal protection though patents and trademarks, exclusive relationships with key suppliers, and building internal expertise through strategic hiring.  Anything a company can do to make it harder for competitors to enter their space will help command a premium on valuation. 

3. Human resources

In this category, the framework looks at both technical skills and management skills.  As companies grow, it is important to distribute the key skill sets deeply across the organization.  Often after an exit, the founders will want to leave, either because they have a large financial gain or they prefer to be entrepreneurs over working in a large corporation.  A buyer will place a premium on a deep management team so the company can continue to innovate and execute even with the loss of the founders.

4. Strategic fit

This factor relates to the degree that the company being acquired is a strategic fit for the buyer’s product portfolio.  We have seen cases where buyers are willing to pay a 50%-70% price premium for a company that fills out a missing piece of their product portfolio and gives them access to the markets and expertise. 

Partnerships are an excellent way to lay the foundation with a potential buyer.  A partnership is a low-commitment way for them to get deeper experience with a potential acquisition. If things work out well and strategic synergies start to develop then it is easy to take the step towards a deeper relationship.
 
5. Governance

The last factor involves good governance.  We have found that a strong board of directors can add a 25% premium to the value of a company.  This is due to the buyer having more assurance that the company has been well governed and there will be no unexpected surprises they need to deal with.

A Few Final Thoughts.

There are 3 main ways in which the succession issue can be handled: a younger generation of the family takes over; the executives buy out the owner via a management or leveraged buy-out (MBO/LBO); or there is a liquidity event (the shares are given some realizable value) by means of a trade sale or listing on a public market (Initial Public Offering or IPO).

Whichever route is taken, it is clearly in the shareholders’ interest to maximize the value of the business prior to that event.  The ideal time to begin that process is on day one, but it may not be too late; 2 years is a realistic timescale in which to groom a company for sale/transition.

Let me leave you with 2 thoughts. Begin thinking about it today. And get some help from people with experience.

Jim currently provides corporate development consulting services and mentors early stage businesses at the ventureLAB in Markham. You can contact him at jpullen@concert-partners.com

4 Laws of Effective Implementation

Tuesday, April 27th, 2010

When we want something – for example more revenue, bigger profits, a new home, or a dream vacation we’re told that we have to do 3 things. They are set a goal; make a plan to reach the goal and implement the plan. But which is the most important – the goal, the plan or the execution?

There’s no doubt in my mind that the third thing – implementation or execution – is the most important of the 3. Many years ago someone told me that “A weak plan strongly executed is better than a strong plan weakly executed”. Just last week someone told me about a promotional piece that had been written for them some time ago. They didn’t think it was great but, having spent time and money on it, they decided to use it and much to their surprise it worked. Not perfectly, but sales did go up and they did attract new customers.

So, how do we make sure we tackle this key activity – implementation – effectively? Here are 4 aspects of execution that are so important that they could be laws. Follow them and dramatically increase the odds of achieving your goals.

Law # 1. The first law of implementation is that 80% of something is better than 100% of nothing. Don’t wait for the perfect opportunity, try to develop the perfect product, try to find a “breakthrough” strategy or write the perfect plan. You must take what you have and make a start – now, today. Because if you don’t then there will also be some reason not to start tomorrow and before you know it the month or the quarter or the year have gone – and you’ll have accomplished nothing.

Law # 2. Persist. There’s an old adage about 10 salesmen who hear about the same deal. In the early stages, it’s hard to get an appointment, the prospect is demanding but slow to return calls, and 4 of the salespeople become so frustrated they just give up. Four more drop out when the prospect begins to bring up objections and does price/benefit comparisons and asks for references. The moral is that the 2 salesmen who stay at it improve their odds of getting the deal from 1 in 10 to 1 in 2 – simply by persisting.

Law # 3. Be prepared to adapt. There has never been a plan developed that worked precisely as conceived and exactly on time. All plans are based on assumptions which, even if they are logical and include the most detailed information available at the time, are just that – assumptions. Effective owners and managers review their plans regularly, for example quarterly, and compare what actually happened to their assumptions. Then they adapt their strategy and action plans for the rest of the year.

Law # 4 is all about commitment. Once you’ve decided to implement a plan then support it by allocating sufficient resources to it. No half-hearted measures – buy high quality raw materials, train everyone thoroughly, make the right equipment available and put enough people on the job. Because anything less than total commitment will jeopardize the goal.

The odds are that none of the 4 laws are a revelation. But in the face of day to day pressures we all lose sight of lessons that we’ve learned, things that are common sense. Remember these 4 laws and you’ll achieve more.

4 Tips to Make Sales Forecasting Easier……………

Monday, September 7th, 2009

If we could forecast the future accurately, most of us would spend our lives at a racetrack or casino rather than at work. But forecasting the future is something we all have to do as business owners – either to set internal goals, to obtain additional financing and for other reasons. Forecasting is, however, one of the most difficult and frustrating things that we have to do and few things cause as much anguish and soul searching as sales forecasts.

Tip # 1. Forget trying to predict the future and focus on using “informed judgment”. Many attempts at forecasting fail because those involved, from sales reps. to business owners, don’t have the detailed knowledge of their market, their competitors, their customers and potential customers that is essential for making good estimates. They are less than fully informed when they make their judgment of what will happen – and that’s a failure of work and effort, not of technique.

Tip # 2. Remember that we can only control some of the things that have an impact on our forecasts, for example, the number of dealers we approach, the effectiveness of our promotional tools and our price strategy. There are others factors which directly affect the odds of our success but which are beyond our control. Some are known and can be reflected in the assumptions on which are forecasts are based, for example the price of crude oil, low pay scales for offshore labour. But there are others to which we can only react, for example an unexpected outbreak of SARS.

Tip # 3. The most common mistakes, in my experience, are that we overestimate how much we can sell and how quickly we can sell it. Avoiding those mistakes is hard enough when estimating how much more our existing customers will buy of the products they currently use. Adding any “new” dimension just adds complexity.

Forecasting increased sales to current customers should be easy. We either increase the volume of existing products, start selling them products they don’t currently buy and/or increase prices. But if the account managers don’t have the skill – or don’t make the effort – to get as much information about, for example, what is happening in the customer’s own business and how that affects our offering to them, we will be trying to forecast with less than detailed knowledge. So, we can’t make informed judgments – fertile ground for overestimating what can be sold.

What happens if, for example, we’re going to start selling an existing product in a new geographic market? If our competitors already offer a product in that region/province/country, how much of our sales will come from the market share we’ll take away from them and how much will come from the continuing growth of the market? To begin, we must understand how our product quality, lead times and prices compare with our competitor’s and how much it will cost to get our message heard over their promotional “noise”. We can do some simple, inexpensive research to gain the detailed knowledge required to answer those questions.

When it comes to taking market share away from competitors, we have to make 2 sales. Firstly convince the customer to stop buying from our competitors and then convince them to buy our product – which is untested in this marketplace. But for most business owners, who are natural optimists and driven, type ‘A” personalities, it is not difficult to underestimate how long this will take!

Estimating the sales that will come just from market growth may seem easy by comparison. All we have to do is to convince the remaining distribution channels to sell our widget – make 1 sale instead of two (always assuming our competitors have left some distributors for us). But estimating how long our new distributors will need to ramp up requires information to help us assess how effective the distributors will be. We also want our share of the market to grow at least as quickly as the market itself. The future market growth rate can be forecast using the actual growth rate for the last 2 or 3 years (either as is, or adjusted upwards or downwards). The rate at which we grow depends on how good a Marketing plan we have. Developing an effective Marketing plan requires informed judgment. Anything less, combined with that optimistic approach of the entrepreneur, will, once again, result in overestimates.

Tip # 4. Even if you’ve worked hard and spent time gathering detailed knowledge which you used to make informed judgments, don’t stop when you develop a “final” set of numbers. Unless you’ve been unusually pragmatic in arriving at this first forecast, call it your best case. Now think of the things that are most likely to go wrong, assume that they will, change your spread sheets accordingly – and call that your worst case. Finally, it’s unlikely that everything will go against you but it’s equally unlikely that everything will go your way so take a third approach, which avoids either of the extremes, run the numbers again – and call that your most likely case.

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