Wealth Advisor

“Wealth Creation” occurs when the potential of the market opportunity is realized for the stakeholders… …resulting in enterprise valuations.

 

 

Ten Barriers To Wealth Creation

Failure to Align Strategy with the Business and Operational Model for all constituents.

 

As the famous quote says, “Hope is Not a Strategy.” Knowing precisely where the organization is headed, how it is going to get there, and more importantly having all employees from managers down to the front-line employees “rowing in the same direction” is a key success attribute of enterprises that create wealth.

More specifically, defining the major milestones and necessary accomplishments of the business plan and financial model is critical such that all employees know the extent of the progress (or lack thereof) and whether they should “row harder” or celebrate.

Numerous research studies, and our experience have proven that greater than 70% of management initiatives fail to achieve their targets because of poor process implementation including failure to achieve constituency alignment at the board, management, employee, and partner levels.
*Constituency Alignment is the agreement on the goals, activities, behaviors, culture and desired outcomes of the organization and the process for achieving these outcomes.

Micromanagement

Every employee needs space to develop. Micromanagement hinders employee growth (and has a severe impact on morale) and is a major barrier to business process development, and creating scalability in the business.

Did you know that the average B2B services-based small business has one (1) manager for every six (6) employees?

The most successful organizations that maximize the market opportunity and create exponential wealth have 1:10 or 1:15 employee-to-manager ratio.

 

Why?

 

Because they effectively delegate responsibility (and require performance) of all employees regardless of rank or level.
Micromanagement is a symptom of ineffective “Command and Control” military style leaders who cannot trust people, are not comfortable with process and systems, or both. An organization is bound to fail when leaders or key executives ego’s become more important than the success of the company.

It is a leadership requirement to foster a culture of responsibility and empowerment, and to ensure that managers and supervisors create an environment conducive for success.

 

Accountability

Accountability begins with goal setting at all levels of the organization, followed by an effective measurement metric process. A culture based on accountability flourishes with results and creates a collaborative dialogue which will drive innovation and improvement. Communication Rhythms and Transparency (regular and frequent) provide updates on performance, progress, and results via:
• “Red, Yellow, Green” Progress Dashboards
• Benchmarked KPIs (Key Performance Indicators) against
targets
• Celebrating Wins and Milestones
• Analyzing Losses and Issues

 

Non-Performance Based Cultures & Environment

The vast majority of B2B organizations compete on the strengths, capabilities, and merits of their people. In people-centric businesses that depend on the performance of their people, it is only logical that the business will succeed when it
creates a performance-oriented culture.

 

A few keys to creating a perform culture include:
• Create an environment that fosters efficiency (i.e. eliminate distractions and time wasters)
and creativity (encourage innovation).
• Implement processes and methodologies that create collaboration and healthy conflict.
o Do people help each other? (i.e. do employees help and act like teammates)
o Does healthy competition exist?
• Does your company offer flexible scheduling? The difference between mediocrity and superior
results is often the difference between “Wanting” to come to work and “Having To” work.
• Do policy and procedures create bureaucracy and de-motivate employees?
• Most importantly, create communication rhythms (regular or informal meeting routines) such
that the people are heard.

 

Failure to Engage Outside Perspectives

Whether formally via a Governance, Advisory, Customer, Partner, or Supplier Board/Panel or informally through primary market research, competitive intelligence, or mystery shopping; obtaining and adopting outsider perspectives is
paramount to success in today’s complex and challenging business environment.

Environmental monitoring is a time-tested strategy; moreover, given today’s Internet paced world being aware of all the business surroundings: macro, industry, competitive, and internal has taken on new meaning as the speed of decision-making has become a requirement for effective leaders and success.

 

 

Little or No Scalability of the Business Process or Cost Structures
“Scalability” is the capability to add more revenues and production in a “J Curve” effect (i.e. 1+1=3) rather than a linear curve; i.e. 1+1 = 2.

Key Success Factor: Decreasing costs on a percentage basis as income rises, is a requirement to create wealth.

There is a fundamental economic reason why small services businesses average less than $200k of annual revenues per
employee, compared to mid-market enterprises approach half a million in revenues per employee; and the reason is
largely attributable to scale. Creating scale requires efficient business processes, effective systems and
playbooks, branding, positioning, and density inside a geographic region or vertical(s) concentration.

The simplest measure of operational scale is Revenue-Per-Employee & Profits-Per-Employee Compared to Industry Averages (other measures include: accounts per manager, manager-to-employee ratio, time from new employee onboarding to maximum efficiency).

“No services business will succeed with Direct Sales (including founder’s contributions) is greater than 60% of the revenue. Alternative Distribution including Partnering is key.”

 

 

Poor Business Performance Blamed on “More Sales and More Revenue”

Inefficient go-to- market models, poor product/value propositions, ineffective business models, lack of scalability typically manifest themselves as a “Sales Problem.”

An organization’s first priority is to acquire customers and improve the way it serves its clients.

Second, is creating is an economically efficient business model and business process. If all of these are not in alignment then of course the company needs more revenue.

 

Clearly: this economy will ensure that “all boats will not rise in high tide”! Therefore a consistent and predictable Revenue Generating Business Model must include the following attributes:

1. Economically efficient customer acquisition model (An economically efficient model that has been benchmarked against competitors and is more efficient)
2. Cost-effective demand generation (creating a sales opportunity is cheaper that it costs competitors to create)
3. Brand equities that drive enhanced margins and more cost-effective lead generation
4. Client management: Best of Breed client maturation processes
5. Retention is monitored, managed, and performing in the top-quartile
6. Client satisfaction is known and the impact of client referrals generates substantial new revenues
7. Alternative Distribution (Channels, Joint Ventures, and Strategic Alliances) is established and creating consistent
   new monthly revenues (i.e. these revenue channels are 1: Many versus 1:1 Direct selling)
8. The NLTV (Net Lifetime Value) and Market Size for each target market (customer segment) is mapped and known.
9. Market and Competitive Intelligence as well as analytics are in place and lead to real time
   decision making.
   

 

Getting Started >>For additional information, or a pragmatic assessment of your situation, please contact us at polus[at]polusgroup.com