Business Value

Can you Offer Too Many SKUs to Your Customers? The short answer is YES! A SKU, or Stock Keeping Unit, defines each different product version that you sell and keep inventory of.  There may be different SKUs of the same overall item based on size, color, capacity (think computer or cellphone memory), features, and many other parameters.  For build to forecast businesses, that number of variations can quickly explode and become difficult to manage. Your customers are busy and want ordering simplified. Of course, they may need (or want) more than one variation of a product. That is reasonable and a common aspect of business – one size does not fit all! But there is a point where too offering too many SKUs is not value added either for your customer or your business.  In his April 30, 2013 article “Successful Retailers Learn That Fewer Choices Trigger More Sales” in Forbes, Carmine Gallo discusses his experience and a study about “choice overload” by other authors. He writes about a retailer that “has discovered that giving a customer more than three choices at one time actually overwhelms customers and makes them frustrated…when the customer is faced with too many choices at once, it leaves the customer confused and less likely to buy from any of the choices!” Choice overload is well-documented in consumer studies but can apply in B2B as well. While customer satisfaction is important, another key concern is the often-hidden costs associated with a business offering and managing a large number of SKUs for a given product type. These costs include holding inventory, S&OP (Sales and Operations Planning) team time, small production runs, and scrapping inventory. Holding inventory takes up space, which may come with a cost or utilize racks that could be used for other products. Scheduled inventory counts take up employee time and may result in blackout periods when the warehouse is not shipping product.  The more SKUs there are, including extra SKUS, the greater the potential impact. The Sales team’s forecasting and the Operations team’s purchasing reviews that are part of the S&OP process can occupy more of their valuable time if they need to consider these times. If small orders or forecasts require a new production run, this could be costly and create excess inventory. Whether from this new production or past builds, eventually it will make sense to write off and scrap old inventory, another cost impact to the company. How do you know which SKUs to focus on if you wish to look at reducing your total number of SKUs? Start by examining SKUs that have: Low historic sales over a period of time Small variations between SKUs that customers do not value Older technology or model when newer option SKUs are available This requires a true partnership between Sales and Operations. It starts with educating both teams on the costs involved – neither group may be aware of the money and time impact to the company. Periodic (such as quarterly) reviews of SKUs that meet the above descriptions should become a fixed part of the calendar. A review of the data and other available for sale options should result in the identification of SKUs which may not be needed. At that point, it is helpful to have a customer friendly EOL (End of Life) Notice process by which you inform customers of last time buy requirements for this SKU and alternates available. It is usually best to provide some time for the last time buy in the interest of customer satisfaction, although that may not always be necessary. At a company that designed and sold electronics, a robust SKU rationalization process was implemented to help address these issues. A representative from the Operations team analyzed SKUs that met a version of the above criteria and suggested candidates for the EOL process. Next, a member of the Sales team reviewed them and, where appropriate, issued product change or EOL notices to customers, providing them time for last time buy orders when needed. These steps helped reduce the work involved in maintaining these SKUs while not leading to any customer complaints. A final note – sometimes it makes sense to continue offering low selling SKUs – to support customers buying other items (hopefully in larger quantities). It may be worthwhile to encourage them to keep coming back to you for all of their product needs and this may be a way to accomplish that. But it helps to understand that this is truly the case and not assume that this customer would not be equally happy with another, more popular, SKU.   Steven Lustig is founder and CEO of Lustig Global Consulting and an experienced Supply Chain Executive.  He is a recognized thought leader in supply chain and risk mitigation, and serves on the Boards of Directors for Loh Medical and Atlanta Technology Angels.

    Truth in pricing is a common issue when discussing the sale of a business. The selling price of their company is a point of pride for any owner. When they are willing to share the price they were paid, they usually include everything that was listed in the purchase agreement. While there is nothing inherently dishonest about that, it’s often not exactly the truth either. In our

During my first visit to one factory, I quickly noticed on a wall in the lobby a collection of cards with employee suggestions – normally a good sign of a facility’s commitment to continuous improvement and employee engagement. A closer look revealed the opposite – improvement ideas that were months and even quarters old without any response or follow up. While creating that program was a good idea, the lack of follow through likely discourages employees from contributing further suggestions. Unfortunately, that company is not alone. This all-too-common practice is highlighted in the article “Companies Often Solicit Employee Feedback but Seldom Act on It” (in the May-June 2024 issue of Harvard Business Review) which discusses a 2023 Gartner white paper “Employee Engagement: Close the Action Gap to Drive Business Outcomes” by Jen Priem. Employees want to help. In fact, “40% of survey respondents said they would rather have difficult processes fixed than receive more career development opportunities”. That interest is not always matched by a company’s efforts. Aside from the missed opportunities in quality, cost, efficiency, and safety improvements, this also negatively impacts employee engagement: “only 34% said they thought their companies would act on feedback they provide” so why would they take the time and effort to participate? Setting up an effective employee suggestion program is more than placing a box for suggestions or creating an internal software tool. To be successful, the company needs to dedicate management effort and commit to a timely, closed-loop initiative. A cross-functional management level team should be established to review the qualifying ideas. This does not need to be top management but should be leaders high enough such that they can approve and implement many ideas themselves and have ready access to higher level managers to discuss larger improvement suggestions.  A coordinator, perhaps someone from the quality department or in an administrative role, can be designated to facilitate the program – helping create the methods for employee suggestions, collecting the inputs, and maybe conducting a first level sort of ideas (the entire review team does not need to spend time on the suggestion to paint the bathroom a different color!) This team should meet frequently (perhaps monthly) to evaluate and prioritize the employee suggestions that were submitted since the last meeting. Plans to implement or investigate the most valuable ideas should be developed. Someone on the team should be designated as a sponsor of each such idea to obtain updates and ensure progress even if the responsibility for investigation or execution is handed over to a functional area leader. Often, a team of employees from the impacted area(s) will be created – this helps make use of their more detailed knowledge and improves buy-in to the solution. Whenever possible, the employee who suggested the improvement should be included on this implementation team. There are different ways to celebrate the improvement ideas that were selected for implementation – monetary and non-monetary awards, inclusion in the employee’s performance review, public recognition, plant competitions, etc. The choice will depend on the company’s and location’s culture. Communication is key to a successful employee suggestion program. Leadership should consistently share its enthusiasm for the improvement idea program and what type of ideas are desired (not that bathroom color suggestion!). Leaders can also show their support by attending events associated with this program. Regardless of whether a valid improvement suggestion was approved for further action or not, it is important that a member of the team (for example, the facilitator) always provides prompt feedback to the employee on the decision and why that was the determination. This closed loop aspect is essential if the firm wants to continue receiving, and benefit from, employee ideas. Are there other sources for great ideas beyond your employees? Stay tuned….   Steven Lustig is founder and CEO of Lustig Global Consulting and an experienced Supply Chain Executive.  He is a recognized thought leader in supply chain and risk mitigation, and serves on the Boards of Directors for Loh Medical and Atlanta Technology Angels.

It’s midnight. Your recycling bin is overflowing with rejected resumes. Your eyes can barely focus on the letters in front of you — and you have this uneasy feeling that you are about to invest in another candidate who just isn’t going to work out. This has been a vicious cycle over the past several years, and you find yourself asking yet again,” Why can’t I find the right salespeople?” You’ve spent an excessive number of hours and are well into six figures in budget dollars hiring, training, firing, and rehiring. You’re losing credibility in the marketplace because your customers are continually being introduced to new reps. With each salesperson that doesn’t work out, you can feel your employees questioning your leadership and the direction the company is headed. And this last candidate… they checked every single box. An ideal candidate with a promising start. Industry experience. Excellent references. High performance everywhere they went. You gave them everything they wanted only to discover they weren’t what they appeared to be. How could you have been so wrong about yet another candidate, a supposed “A-Player” who just couldn’t deliver the level of success they promised in the interview. Instead of burying yourself in another pile of seemingly perfect resumes, it might be time to take a step back. Key Article Takeaways: ·       Pitfalls that prevent A-players from performing in a new sales environment ·       How to lay out a sales roadmap to generate consistent results ·       Key sales leadership focus areas that pay dividends Time to Slow Down to Speed Up Some organizations seem to have it all figured out: low sales turnover; tremendous growth; happy employees doing what they love. Sure, when things go right, everyone is happy. But when issues continuously arise that take your top salespeople away from their outbound calls to chase down problems or they are struggling to know where to focus their effort, there’s likely a more significant issue at hand. By all means, keep searching for the best and brightest salespeople – the ones you know have the talent and desire to excel in your organization. But before you get too far in the process, take a step back and examine your sales readiness. · Are you setting your salespeople up for success right off the bat? · Are there things you know you could do better but haven’t had the time to fix? · Are you doing everything you should be to create a sales culture that allows anyone you hire the opportunity to see success? Structure: Another pitfall that can derail even the best A-Player is when an organization does not have the proper infrastructure to support its sales efforts. This encompasses a wide range of elements from staff structure to the necessary systems to measure and manage performance. For example, creating clear lines of accountability for all roles and functions that interface with the customer will bring clarity to performance expectations. This prevents time-consuming distractions and fosters a customer centric culture. Another area of structure involves the method in which your prospect and customer segments are designated and managed. This provides your customers with a consistent experience and enables your sales resources to be positioned in their areas of strength. These best practices create a solid platform for your salespeople to work from. Then, layering on the appropriate systems to capture sales activity, report on key metrics, manage sales pipeline, etc., allows you and your leadership team the critical visibility needed to keep a pulse on how the business is progressing toward its goals. As you assess your performance in this area, consider the consistency of your weekly one-on-one sales meetings for individual planning and mutual accountability. Given the reliance of the salesperson on their sales manager, powerful outcomes are produced when both sides are willing to be accountable to the other. Another important area to review is the level of value your sales meetings deliver to the team. Lastly, keep track of how often you participate in sales calls — both in-person and video calls, and how often you are creating powerful learning moments for your reps through these interactions. Are you struggling to find the time to apply this level of focus? Do you recognize there are times when you aren’t sure how to confidently lead and develop your salespeople? These common needs in small to mid-sized businesses were the driver behind my decision to transition my extensive VP Sales background to help top executives on a fractional or interim basis. If you’d like to have a preliminary discussion about the sales challenges you are facing, please feel welcome to contact me through any of these methods: 413-626-7040 , kdonovan@salesxceleration.com or book a call through my

Business owners, advisors, and buyers frequently have widely different impressions of value when it comes to a business. The Pepperdine Private Capital Markets Survey canvasses intermediaries who sell privately held Main Street and mid-market companies. One question is about the obstacles that prevented the sale of a business. The number one response is “Owners’ unreasonable expectations of value.” That may be self-serving or an excuse. Nonetheless, valuation is a sensitive subject. Many owners have worked in the business for 30 or 40 years. They assume it will fund their next 20 years of retirement. Their target price is set only by their desired lifestyle after the business. Different Values for the Same Business Unfortunately, many owners have an opinion about the value of their business that is grounded in the multiples of public companies. Others are based on conversations with colleagues, salespeople, and articles in their trade publications. Even those who have professional appraisals of their business may not understand that the purpose for getting your valuation may skew the results. Valuations that are done for estate planning or internal transfers of equity often have little resemblance to a company’s fair market value. Various people including H.L. Hunt and Ted Turner have said “Money is just a way of keeping score.” For many owners, the emotional tie between the perceived value of their company and their self-image of success is closely connected. Some advisors skirt this issue by recommending that their clients get a professional opinion of the fair market value of the business. While this is certainly a safe approach, it can take substantial time. It also requires considerable assembly of the underlying data for the appraiser. This can slow down any consulting project considerably and may derail it entirely. Impressions of Value A coaching approach helps the owner understand the practical boundaries surrounding the value of the company without either dictating to him or taking the project in a tangential direction. We do that by helping the client model “lendable value.” We start by explaining that most businesses are valued by their cash flow. There are certainly many areas where value can be enhanced. These include intellectual property, exclusive rights to a product, protected sales territory or long-term contracts. Owner Centricity™ or customer concentration can also reduce the fair market pricing of your business. In the final analysis, however, cash flow to pay an acquisition loan is of principal concern to a lender. SBA minimums for financing include a cash-to-debt service ratio (1.25 to 1) and required owner compensation – usually $75,000 a year for acquisitions under $500,000 and twice that for larger deals. While not all lenders follow SBA guidelines, they are a useful national baseline for looking at your value. The company may well be worth what you think it is, but finding a lender to finance it is a different problem. Understanding a lender’s impression of value before starting sale negotiations can save you considerable time and negotiation down the road.

A common area of confusion among advisors is understanding the difference between a “Main Street” business, a “Middle Market” business and a “Mom and Pop” business. Main Street Businesses The term “Main Street” is defined by the International Business Brokers’ Association and other professional intermediary organizations as any company with a Fair Market Value of less than $3,000,000. That is about the upper limit of a business that can be purchased by an individual using “normal” 20% down financing. They are making the acquisition for the purpose of earning a living. Main Street businesses typically calculate cash flow as Seller’s Discretionary Earnings (SDE). As discussed by Scott Gabehart, the creator of BizEquity valuation software, SDE is a better measure of a business’s return on owner labor, rather than return on investment. SDE includes the benefits of ownership including salary, employer taxes, distributions, health insurance, vehicle and other perks of ownership. It also includes non-cash tax deductions such as depreciation. The average selling price for an owner-operated business in the United States is 2.3 times its SDE. That cash flow must support any debt as well as provide a living for the principal operator. If we extrapolate from the average multiple (which is accurate based on my past experience as a business broker), we would say that “Main Street” encompasses businesses that produce up to $1.3 million in cash flow. That number is pretty high, and actually crosses the threshold of where Private Equity companies typically seek acquisitions. At that level a buyer would have to have $600,000 for a down payment and about $25,000 a month to cover debt service. In reality, companies that generate more than $500,000 a year in adjusted EBITDA cash flow (not counting owner compensation) are more commonly sold for multiples of EBITDA. At that size, a multiple of four times adjusted cash flow is pretty common, and would classify a company with up to about $750,000 in adjusted cash flow as “Main Street.” Mom and Pop Businesses exitplannerssurvey.com This article was originally published by John F. Dini, CBEC, CExP, CEPA on ExitMap.com.

As a small business owner, you face many challenges when running your own company. Financial management is one of the most critical aspects of any business, but hiring a full-time CFO can be a costly and unrealistic expense for many small businesses. This is where Fractional CFOs, like those provided by FocusCFO, come in. What is a Fractional CFO? A Fractional CFO is an industry-experienced professional who provides part-time financial management services to a company. They can help small business owners make informed decisions, manage cash flow, and improve financial performance. To maximize the value of this valuable resource, it’s important to use your fractional CFO wisely. Here are some tips to help you get the most out of your partnership. How to Maximize the Value of Your Fractional CFO [Read the full blog post here….

Since selling your business is likely the most significant and financially impactful transaction of your life, I share the Top 3 Sales Priorities every business owner must take to maximize their company’s sales price at Exit. Background – Unfortunately, Sales has been one of the most impactful, yet overlooked, aspects of Exit Planning. Exit Planning Horizon  According to Laying the Foundation By now, you’ve already hired a solid management team, including an experienced COO, CFO, CPA, CMO, and CHRO. You’ve begun to forge long-term relationships with experts who will help guide you through the M&A labyrinth. You’ve likely engaged an experienced M&A Lawyer, an Investment Banker, a Wealth Planner, and a Business Insurance Broker, in your personal network of Advisors. Strategic Value of an Exit Planner One of the most important M&A professionals you can have in your corner is an experienced Exit Planner. Some will have a Certified Exit Planner Advisor (CEPA) credential. Interview a few, and find someone you like and trust. I’ve found that most tend to understand the tremendous value a Fractional Sales Leader can provide as they prepare a client for exit or transition. Three Critical Sales Priorities There are many things a business owner can do to help prepare for an exit. In my opinion, here are the three most critical Sales Priorities a business owner can take to maximize their business’s value: Confirm You Have the Right Sales Leader. Make sure your Sales Leader (CSO/CRO/VP of Sales) has a track record of achieving the company’s weekly/monthly/annual sales goals and hold that individual accountable. Has he/she consistently achieved their annual sales goals? If not, why not? If their track record of delivering results has been inconsistent, your exit may be at risk. If you don’t have the right Sales Leader, hire one. If you can’t afford to hire one, engage a Fractional Sales Leader until the transaction is complete. If you’re unsure your Sales Leader is the right one, hire a Fractional Sales Leader to help with the evaluation. It always helps to have a second set of eyes on a critical hire, and this one might be your most critical of all. Develop and Execute Your Sales Plan with a Laser-like Focus. One of the keys to achieving your desired exit is developing a realistic Sales Plan. Keep it simple and focused, while being detailed enough to provide insight across the organization. You don’t need to measure everything, instead, focus only on the variables that matter. Refer to my article,

Here are ten ways to increase the value of your business:   1. Stop chasing revenue. A bigger company is not necessarily a more valuable one if the extra sales come from products and services that are too reliant on the business owner to deliver them. 2. Start surveying your customers. It’s a fast and easy way for your customers to give you feedback, and it’s predictive of your company’s growth in the future 3. Sell less stuff to more people. The most valuable companies have a defendable niche selling a few differentiated products and services to many customers. The least valuable businesses sell lots of undifferentiated products and services to a concentrated group of buyers. 4. Drop the products or services that depend on you. If you offer something that needs you to produce or sell it, consider dropping it from your offerings. Services and products that require you suck up your time and cash and don’t contribute significantly to your business’s value. 5. Collect more money up front. Turn a negative cash flow cycle into a positive one and you boost your business’s value and lessen your stress load. 6. Create more recurring revenue. Predictable sales from subscriptions or recurring contracts mean less stress in the short term and a more valuable business over the long run. 7. Be different. Refine your marketing strategy to emphasize the point of differentiation that customers value. Be relentless in highlighting this advantage. 8. Find a backup supplier for your most critical raw materials. Consider placing a small order to establish a commercial relationship and diversify the sources of your most-difficult-to-find materials. 9. Teach them to fish. Answer every employee question with “What would you do if you owned the business?” Your goal should be to cultivate employees who think like owners so they can start answering their own questions without coming to you. 10. Create an instruction manual. Document your most important processes so your employees can do their work independently. You can write these down or use instructional video.

Did you know that 80% or more of your company value lies within four areas of your business? These four areas are called the 4 Intangible Capitals and believe it or not….they have nothing to do with your financials! Just because you are a profitable business, does not mean you are a sellable business. Now don’t get me wrong, having a growing trend of profitability over time is very attractive and WILL increase value. But focusing on the below four key areas will help you add massive value to your company. What are the Four Intangible Capitals Human Capital – this is perhaps the most important one of the four because it’s your people, your team, your employees. And people are everything to a business. It doesn’t matter if you have the best product or process, if you don’t have the right people on the bus, you are in major trouble. Working with people can also be the most difficult to navigate because everyone has their own personality, skill sets, or what motivates everyone can be wildy different. Human capital also measures the quality of talent you have on your team. One of the most difficult challenges for business owners is finding, recruiting, and retaining top talent. Ask yourself… – Why would top talent want to join my company? – What qualities and characteristics am I looking for in a key employee? – What am I doing to motivate the talent I already have in place? – In order to retain talented people, am I providing a path for growth as well as retention incentives for my team? ​ Social Capital – this is the company culture. It’s the heartbeat of the organization and fabric that holds everyone together. It’s how your team members communicate, how you communicate with your customers, and your suppliers. It represents your brand, how your team works together, and it’s the rhythm of your daily operations. This can take years to develop in a business and can be very difficult to transition to a new owner. What I often see when a business goes to sell is they don’t always go with the buyer willing to pay the most. If they are in a position with multiple offers, they will often choose the buyer who has the best culture fit to make their interests and values align. Ask yourself… – What standards do I hold my team and employees to? – When a customer walks into the front door of my business, what is the client experience like? Am I adding value and is it consistent across the company? ​ Customer Capital – Move your customers from being engaged with your company to becoming entangled with your company. Think about the company Amazon. I feel like there is an Amazon box on my front door step every other day of the week. Simply because of the convenience factor. We also use Amazon Prime and Amazon music via our 4 echo dots to play music throughout our house. Can you imagine a world without Amazon?! You get the point. Get your customers entangled with your company. It drives up your value. Ask yourself… – What products or services do I offer my customer that they couldn’t possibly imagine getting somewhere else? – What makes my business indispensable to them? ​ Structural Capital – This is what makes your business run on a daily basis. This is your processes, your documentation, training programs, tools, equipment, real estate, sales process , HR process etc. This is your Standard Operating Procedures.

When a valuable employee tells you that they’ve received a job offer from another company, making a counteroffer may seem like a no-brainer.  But before you do, consider these potential downsides. If you are throwing money at jobs, think twice. Owners that have not paid attention to employee compensation on an annual basis will now be faced with a demand for catch up.  Compensation ranges are available and employees know the market compensation rates. We are seeing the early impact of throwing money at jobs, everyone is hiring, and employees are jumping to the next highest offer without intention about how long they will stay. Don’t just offer more money, build a solid compensation structure.  You can retain your workforce in varying economic conditions if compensation has a place on the strategic planning agenda. Consider the following indicators that your approach to compensation needs attention. Increased turnover New employees are not staying long. Management is retained and teams are leaving. Unused exit data on what employees are telling management. Performance problems Employees are not meeting goals. Difficulty securing candidates Top candidates are declining offers. Align Compensation and Contribution Employment surveys reveal that most people don’t leave a job because of money alone, so it’s not likely your counter-offer will address the underlying issues that may have provoked an employee to pursue other opportunities. A raise (and maybe a new title) will not be enough to keep an employee from becoming a flight risk again in a few months.  In the small business world, every decision you make will set precedence for the rest of your workforce.  If you are offering more compensation to attract new employees or to keep a current one, your teams will wonder if they are being fairly compensated. Avoid an impromptu approach to keeping people engaged.  Spend time on clear alignment of roles and expected contributions, and plan associated compensation using current ranges.  Retaining top performers requires continual development of personal contributions, as part of a long-term working relationship. What does your long game look like? Most small business employers and leaders view the long game as: we are flexible, we are understanding of employee needs, and we get along with one another. That is part of cultural development. What you need next is a super clear line of sight about a role and the associated compensation for meeting performance goals. A compensation plan is a decision-making guide.  You can avoid reactive responses to the current money grab job market. A strategic view of positions and compensation ranges will provide you with a basis for adjustments and the ability to maintain a fair compensation structure across your workforce. Recognize that a counteroffer may sow doubts about your leadership.   People talk.  If you are offering a new hire more than tenured team members, word will get out.  Then key people will leave—or if they stick around, they lose trust and your relationship is vulnerable to lagging interest, loss of commitment, and performance deficits that could have been prevented.  A lack of leadership around compensation feels to employees like their loyalty goes unrecognized and even penalized. If an employee is offered money to stay, and they are not viewed as a high performer, any performance deficit will not only reflect badly on the individual, it will also reflect poorly on your ability to assess and coach talent. More money gained by some may stimulate an emotional response that spurs on your workforce to start looking at new opportunities. A counteroffer can negatively impact team morale.  If your employee shares their new salary with the team or jumps up the org chart, the rest of your team could be left feeling undervalued. It can also erode respect for the individual if others don’t feel he or she deserved the promotion and got it by threatening to leave. Consider the long game of employee engagement and retention as more than money.  Weigh the impact of one person leaving against potentially losing the trust of the rest of your team. Implement a compensation structure to guide your decision making and retain your best talent in any market. People and Money, plan wisely, retain top talent.  

Simply put, a predictable revenue model is a framework for consistency that provides business growth data based on a formulaic process. Think, forecasting. Implementing a predictable revenue model provides business owners an understanding of average revenue over time, including leads (MQL and SQL), sales growth, cost of customer acquisition, and more. In this new blog, the marketing experts at YGL Enterprises explain marketing’s role in predictable revenue and why implementing this model is essential to organic growth and a strengthened business valuation. WHAT IS ON THE BUSINESS HORIZON Consider these startling statistics in the U.S.: Over 78 million people are closing in on retirement in the next 10-15 years. Baby Boomers own 65%+ of businesses, totaling nearly four million companies. Retiring business owners plan to sell or bequeath $10 trillion worth of assets by 2025. The Baby Boomer generation controls roughly 80% of all U.S. aggregate net worth. Ultimately, this means that a tsunami of Boomers is on the precipice of selling their businesses. All of that said, what does this trend have to do with marketing, specifically? A lot! When it’s time to sell, owners who haven’t developed and implemented structured marketing strategies will be at a disadvantage as potential buyers consider the “market value” of buying said business. WHY MARKETING IMPACTS BUSINESS VALUE Every business must invest in marketing-related activities—it doesn’t matter if you are a start-up enterprise or have been in business for 40 years. If prospective buyers don’t know about the company, there’s little opportunity for growth. No growth, no revenue. Unfortunately, many businesses, especially small businesses, don’t invest the time and money in 

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I once had the thrill of interviewing Jerry West on management. He was “The Logo” for the NBA, although back then they didn’t advertise him as such. Only the Laker followers knew for sure. In 1989 the “Showtime” Lakers were coming off back-to-back championships.  Pat Riley was a year away from his first of three Coach of the Year awards. 

Can you Offer Too Many SKUs to Your Customers? The short answer is YES! A SKU, or Stock Keeping Unit, defines each different product version that you sell and keep inventory of.  There may be different SKUs of the same overall item based on size, color, capacity (think computer or cellphone memory), features, and many other parameters.  For build to forecast businesses, that number of variations can quickly explode and become difficult to manage. Your customers are busy and want ordering simplified. Of course, they may need (or want) more than one variation of a product. That is reasonable and a common aspect of business – one size does not fit all! But there is a point where too offering too many SKUs is not value added either for your customer or your business.  In his April 30, 2013 article “Successful Retailers Learn That Fewer Choices Trigger More Sales” in Forbes, Carmine Gallo discusses his experience and a study about “choice overload” by other authors. He writes about a retailer that “has discovered that giving a customer more than three choices at one time actually overwhelms customers and makes them frustrated…when the customer is faced with too many choices at once, it leaves the customer confused and less likely to buy from any of the choices!” Choice overload is well-documented in consumer studies but can apply in B2B as well. While customer satisfaction is important, another key concern is the often-hidden costs associated with a business offering and managing a large number of SKUs for a given product type. These costs include holding inventory, S&OP (Sales and Operations Planning) team time, small production runs, and scrapping inventory. Holding inventory takes up space, which may come with a cost or utilize racks that could be used for other products. Scheduled inventory counts take up employee time and may result in blackout periods when the warehouse is not shipping product.  The more SKUs there are, including extra SKUS, the greater the potential impact. The Sales team’s forecasting and the Operations team’s purchasing reviews that are part of the S&OP process can occupy more of their valuable time if they need to consider these times. If small orders or forecasts require a new production run, this could be costly and create excess inventory. Whether from this new production or past builds, eventually it will make sense to write off and scrap old inventory, another cost impact to the company. How do you know which SKUs to focus on if you wish to look at reducing your total number of SKUs? Start by examining SKUs that have: Low historic sales over a period of time Small variations between SKUs that customers do not value Older technology or model when newer option SKUs are available This requires a true partnership between Sales and Operations. It starts with educating both teams on the costs involved – neither group may be aware of the money and time impact to the company. Periodic (such as quarterly) reviews of SKUs that meet the above descriptions should become a fixed part of the calendar. A review of the data and other available for sale options should result in the identification of SKUs which may not be needed. At that point, it is helpful to have a customer friendly EOL (End of Life) Notice process by which you inform customers of last time buy requirements for this SKU and alternates available. It is usually best to provide some time for the last time buy in the interest of customer satisfaction, although that may not always be necessary. At a company that designed and sold electronics, a robust SKU rationalization process was implemented to help address these issues. A representative from the Operations team analyzed SKUs that met a version of the above criteria and suggested candidates for the EOL process. Next, a member of the Sales team reviewed them and, where appropriate, issued product change or EOL notices to customers, providing them time for last time buy orders when needed. These steps helped reduce the work involved in maintaining these SKUs while not leading to any customer complaints. A final note – sometimes it makes sense to continue offering low selling SKUs – to support customers buying other items (hopefully in larger quantities). It may be worthwhile to encourage them to keep coming back to you for all of their product needs and this may be a way to accomplish that. But it helps to understand that this is truly the case and not assume that this customer would not be equally happy with another, more popular, SKU.   Steven Lustig is founder and CEO of Lustig Global Consulting and an experienced Supply Chain Executive.  He is a recognized thought leader in supply chain and risk mitigation, and serves on the Boards of Directors for Loh Medical and Atlanta Technology Angels.

When it comes to careers, business owners are a minority of the population. In conversations this week, I mentioned the statistics several times, and each owner I was discussing it with was surprised that they had so few peers. According to the Small Business Administration (SBA), there are over 33,000,000 businesses in the US. Let’s discount those with zero employees. Many are shell companies or real estate holding entities. Also, those with fewer than 5 employees, true “Mom and Pop” businesses, are hard to distinguish from a job. The North American Industry Classification System (NAICS) Association, lists businesses with 5 to 99 employees at about 3,300,000, and 123,000 have 100 to 500 employees (the SBA’s largest “small business” classification.) Overall, that means about 1% of the country are private employers. Owners are a small minority, a very small minority, of the population. Even if we only count working adults (161,000,000) business owners represent only a little more than 2% of that population. So What? Where am I going with this, and how does it relate to our recent discussions of purpose in business exit planning? It’s an important issue to consider when discussing an owner’s identity after transition. Whether or not individual owners know the statistics of their “rare species” status in society, they instinctively understand that they are different. They are identified with their owner status in every aspect of their business and personal life. At a social event, when asked “What do you do?” they will often respond “I own a business.” It’s an immediate differentiator from describing a job. “I am a carpenter.” or “I work in systems engineering,” describes a function. “I am a business owner” describes a life role. When asked for further information, the owner frequently replies in the Imperial first person plural. “We build multi-family housing,” is never mistaken for a personal role in the company. No one takes that answer to mean that the speaker swings a hammer all day. Owners are a Minority We process much of our information subconsciously. If a man enters a business gathering, for example, and the others in the room are 75% female, he will know instinctively, without consciously counting, that this business meeting or organization is different from others he attends. Similarly, business owners accept their minority status without thinking about it. They expect that the vast majority of the people they meet socially, who attend their church, or who have kids that play sports with theirs, work for someone else. There are places where owners congregate, but otherwise, they don’t expect to meet many other owners in the normal course of daily activity. This can be an issue after they exit the business. You see, telling people “I’m retired” has no distinction. Roughly 98% of the other people who say that never built an organization. They didn’t take the same risks. Others didn’t deal with the same broad variety of issues and challenges. Most didn’t have to personally live with the impact of every daily decision they made, or watch others suffer the consequences of their bad calls. That is why so many former owners suffer from a lack of identity after they leave. Subconsciously, they expect to stand out from the other 98%. “I’m retired” carries no such distinction.       This article was originally published by John F. Dini, CBEC, CExP, CEPA on

In a recent research study by The Value Builder System™, they analyzed data from 20,000 business owners who completed a Value Builder assessment of their business and discovered that owners who have businesses dependent on them, known as Hub & Spoke owners are facing a 35% discount on the value of their businesses and part of the problem may be the degree of customization they offer. For the purposes of the study, a Hub & Spoke owner is someone who answered the question “Which of the following best describes your personal relationship with your company’s customers?” with the response, “I know each of my customers by first name and they expect that I personally get involved when they buy from my company.”  One reason customers want the owner to personally attend to their project is the degree of customization Hub & Spoke owners offer.  In fact, the study shows that Hub & Spoke owners are more than twice as likely to say they offer a complete custom solution for each customer.  Since the owner is usually the person with the most subject matter expertise inside their company, it’s not surprising customers want the owner’s full attention on their job. The secret to making a business less reliant on its owner is to stop offering a custom solution for every customer.   How Ned MacPherson Built More Value By Doing Less   Ned MacPherson is a digital marketing guru, so it’s not surprising that when he first started offering his time, it was in demand.   In the early days as a consultant, he offered all sorts of growth hacking services. But when demand outstripped his supply of time, Ned had a decision to make. He could either turn away prospective clients or build a team of consultants underneath him.  As a growth guy, the idea of treading water didn’t appeal to Ned, so he opted to build a team. However, to ensure his team could execute without him, Ned decided to focus on one service offering: post-click analysis. Rather than help optimize a website for the entire customer journey, Ned’s company would become one of the world’s leading firms on optimizing a customer’s journey after they opted in to a website.   Most digital marketing consultants offer a wide range of services, but Ned knew it would be impossible to remove himself if they offered help in too many areas. By specializing in post-click analysis, Ned and his team were able to streamline their offering. Demand for Ned’s time started to diminish as his employees became some of the world’s leading experts in a narrow slice of the analytics market.   Within seven years of starting Endrock Growth & Analytics, Ned had 70 employees, more than $2 million a year in EBITDA, and multiple acquisition offers.   

The sale of a business marks a major life event. It’s emotional, stressful, and exciting all at the same time. And unfortunately, it’s often a lot of work. Most business owners will only experience the process of selling a business once in their life. This is both good and bad news. On the bright side, you only need to get through it once. But many business owners aren’t ready for the process and risk leaving money on the table as a result. With many sellers relying on the sale to fund their retirement and lifelong financial goals, getting it right from the start is critical. Here are tips from sell-side business advisors on what to do (and not do) when selling a business. What to do (and not do) when selling a business Start thinking about selling your business early — really early One of the top mistakes sellers make when selling their business is not starting the process early enough. There are many reasons starting last minute can really hurt your bottom line. It’s not uncommon for business owners to assume they’ll never retire at some point during their life. But as often happens, life changes. Perhaps health concerns for you or a spouse make continuing to run your business difficult. Or maybe you eventually lose the excitement when getting up every day and want a change of pace. Sudden sales or immediate retirements Unfortunately, when business owners want to sell with a tight timeline (or fire sale), they may have fewer options to exit. It’s not uncommon for some buyers to want the owner and/or members of the management team to stay on for a period to help with the transition. If there’s an earn-out, it’ll usually require the seller to stick with the company for different milestones (time, financial, or otherwise) to earn the full purchase price. Earn-outs aren’t ideal for sellers, but if you’re unwilling or unable to consider deals with any continuation component, it could impact the sale price, timeline to find a buyer, or both. Make your business more sellable later by getting advice now Business brokers often recommend getting a valuation done years before expecting to sell the company. Sarah Grossman, Principal of BayState Business Brokers in Needham, MA, says this helps sellers “shape their timeline and any financial planning that needs to be completed prior to a sale.” Understanding the fair market value of the company is critical to setting expectations for the seller, but understanding the drivers of the valuation can help increase the sale price over time. Grossman says, “a [business] broker can advise them on things they can do in their business over the next few years to make it more saleable when it does go on the market.” How to maximize your cash at closing Aaron Naisbitt, Managing Director at Dunn Rush & Co, an investment bank focused on sell-side M&A in Boston, MA, emphasizes the importance of going to market and knowing what your business is worth. He says, “the biggest mistake many businesses owners make is not running a competitive process when the business is capable of attracting interest from a broad number of buyers. This mistake most often occurs when the owner has already made the second biggest mistake – not taking the time to educate themselves and prepare adequately for the process.” Not every business will be able to run a competitive process. But those that can, and don’t, “Will leave money and terms on the table if they do not do so” he adds. Getting professional help is key here as trying to negotiate a sale directly with a buyer might be short-sighted. Grossman says it’s not uncommon for sellers to be approached directly by competitors. She cautions sellers considering working with buyers directly as “They could be leaving significant money on the table without a clear understanding of the valuation of their company. Sellers also need to work with a broker and their advisors to understand a typical deal structure so that they can maximize their cash at closing.” The importance of understanding the terms of the deal cannot be overstated. This is where money is made or lost. Naisbitt cautions that sometimes terms can sound really good, but aren’t always common sense. He adds that without an advisor, sellers “Don’t know where to argue.” During negotiations, you have to consider “What is it that’s important to you and what are you willing to give up” he says. Exit planning is not time to DIY — assemble your team of advisors When selling a company, gathering your team of advisors early on is key to getting a successful outcome. Again, odds are you haven’t sold a business before and probably won’t again. We don’t know what we don’t know…and you only have one shot to get this right. Your team of business and personal advisors will be instrumental in getting the deal over the finish line. Your business advisory team may consist of: a business broker or M&A advisor, accounting and tax advisors, and transaction/M&A attorney. On the personal side, your sudden wealth advisor who focuses on helping individuals experiencing a transformative liquidity event. Be sure to involve your wealth advisor in discussions around deal terms too. For example, when considering deal structure, it’s important to ensure alignment with your objectives or financial needs. What are your income needs after the sale or do you have plans for a big purchase? Your advisor can help determine how much cash you need at closing and whether to consider the pros and cons of arrangements like an installment sale. And at closing, a financial advisor can help you determine Section 1202, realizing the gain over time with an installment sale, asset versus stock purchase, or state tax implications such as the charitable goals, legacy objectives for heirs, or estate tax planning strategies. Brokers explain what sellers are most unprepared for during the process Selling a business is a lot of work. In addition to running the company in the usual course of business, sellers also need to comply with a host of due diligence requests from the buyer’s team and the lender financing the transaction. The magnitude of this process is by far the most 

In March 2022, Florida enacted the politically charged Individual Freedom Act, informally known as the STOP WOKE (Wrongs to Our Kids and Employees) Act. Less than two years later, the U.S. Court of Appeals of the Eleventh Circuit blocked the enforcement of the Act on the grounds it violates employers’ right to free speech. This decision directly impacts employers in the Eleventh Circuit and will have a ripple effect on employers nationally.   How did the Individual Freedom Act (Stop WOKE Act) affect employers? The Act attempted to prevent employers from mandating training or meetings for employees which “promote” a “certain set of beliefs” the state “found offensive” and discriminatory. There are eight prohibited beliefs each relating to race, color, sex, and national origin. According to the Act, employers must not teach the following: Members of one race, color, sex, or national origin are morally superior to members of another race, color, sex, or national origin. An individual, by virtue of his or her race, color, sex, or national origin, is inherently racist, sexist, or oppressive, whether consciously or unconsciously. An individual’s moral character or status as either privileged or oppressed is determined by his or her race, color, sex, or national origin. Members of one race, color, sex, or national origin cannot and should not attempt to treat others without respect due to race, color, sex, or national origin. An individual, based on his or her race, color, sex, or national origin, bears responsibility for, or should be discriminated against or receive adverse treatment because of, actions committed in the past by other members of the same race, color, sex, or national origin. An individual, based on his or her race, color, sex, or national origin, should be discriminated against or receive adverse treatment to achieve diversity, equity, or inclusion. An individual, by virtue of his or her race, color, sex, or national origin, bears personal responsibility for and must feel guilt, anguish, or other forms of psychological distress because of actions, in which the individual played no part, and were committed in the past by other members of the same race, color, sex, or national origin. Such virtues as merit, excellence, hard work, fairness, neutrality, objectivity, and racial colorblindness are racist or sexist, or were created by members of a particular race, color, sex, or national origin to oppress members of another race, color, sex, or national origin. Employers still had the ability to mandate employees attend sessions that either refute these concepts or present them in an “objective manner without endorsement.” This dictates how an employer deals with its employees and is particularly limiting in how employers address discrimination training. Employers who failed to adhere to the law were liable for “serious financial penalties—back pay, compensatory damages, and up to $100,000 in punitive damages, plus attorney’s fees—on top of injunctive relief.”   The Ruling – Honeyfund.com Inc. v. Governor [2024] In March 2024, the U.S. Court of Appeals of the Eleventh Circuit served an injunction preventing enforcement of the Act. Despite the state insisting the Act banned conduct rather than speech, the court ruled the Act unlawfully violated the First Amendment’s right of free speech by barring speech based on its content and penalizing certain viewpoints. While certain categories of speech such as “obscenity, fighting words, incitement, and the like” are traditionally unprotected, the court pointed out that “new categories of unprotected speech may not be added to the list by a legislature that concludes certain speech is too harmful to be tolerated.” Florida is keen to appeal against the decision.   What does this mean for employers? Regardless of one’s opinions on the matter, this can be viewed positively from an employer’s standpoint. Employers in the private sector can control speech in the workplace, and this ruling confirms their autonomy will continue. Whether or not the rest of the country will follow suit remains to be seen. This case, in tandem with the US Supreme Court’s ruling to ban race based affirmative action, signals today’s intense political climate is likely to continue to impact how employer diversity, equity and inclusion (DEI) initiatives are approached. Employers should continue to review their DEI initiatives, ensuring they are in line with the latest precedents. Brody and Associates regularly advises management on complying with the latest local, state and federal employment laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560      

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