When accelerated growth requires capital

Additional capital would allow you to take advantage of certain strategic opportunities that you simply don't have enough cash to pursue on your own.

As an example from a private equity fund, their client was in old age care:

Senior Home Care, a Florida-based fast-growing home healthcare company facing strong demand for its services. However, to meet that demand, the owner knew that he would have to make an investment.

It would take the owner both time and money to recruit more nurses in a very tight labor market and then to train them extensively. Once his new employees were in the field, it might take a month before his company could bill for services -- and up to three months before getting paid.

To the owner, however, the opportunity was clear. He knew that hiring more nurses would generate additional profits. By taking on a private equity partner, he was able to staff up, take on new customers, and realize additional revenues -- without losing control of his business. Though in this case, Senior Home Care's growth was internal, other companies may find that acquisitions represent their best path to growth, and private equity capital can help fund these strategies as well.

4 Steps to pilot a product - part art and part science

Remember the first iPod had that spinning wheel to tip and turn? It was an incredible feature which grabbed an entirely new group of customers and if you have been reading the book on Steve Jobs, you will know he delayed the launch in order to build in this feature. So how can you bring the focus and excitement to your new products? Andrew Brown has researched a powerful article in Financial Post and here is what I liked:

Products with tremendous potential are launched too early or designed in ways that don’t capture the imagination of would-be customers.  The consequences can be severe: losing credibility with customers and exposing important points of distinction to competitors. Furthermore, such “failures” reduce the appetite to experiment and lead to adopting cumbersome processes that squash the ability to innovate rapidly.

To overcome these pitfalls, successful product innovators pilot their products. Just as with any business  process, piloting a product is part art and part science. Here are four piloting practices that consistently generate insights that lead to profitable products:

Limit the scope of the pilot. Keep the scope of the pilot focused. Leaders from every department bring their wish list of features and functionalities that they want included. The result is a product whose benefit to the end-user is buried or lost.  According to Chris Perretta, the CIO of State Street, which provides financial solutions to sophisticated institutional investors, “given the complexity of our clients’ needs, when we do pilot a product, we have laser-like focus on prioritizing features. At the same time,  we discuss with clients what is planned for future versions of our products so that they have a clear sense of immediate and upcoming features.”

Ensure quality. When customers participate in any pilot project, respect their time and candid insights by creating a positive experience.  According to Michael Wexler, VP at Radialpoint, “customers assume the reliability and quality of your pilot product reflects what your company is capable of delivering” The Montreal-based company, which provides remote technical support is constantly honing its sophisticated software. Nevertheless, according to Wexler, “When we pilot products, we only pilot those features that function at 100%.”

Choose hardcore users. One of the critical benefits of piloting products is to help companies identify faulty assumptions about current and prospective customers. 

To find out the rest, READ HERE 

Shareholders jumpy? Think Private Equity

If you are like many business owners and management teams, you may reach a crossroads where taking on capital makes sense. Business owners and management teams chose private equity to address either a business or personal objective.

When early shareholders want to diversify

Many people think about private equity solely in terms of company financing, yet it can also enhance entrepreneurs' personal financial security. That's because founders and early shareholders often hold much of their personal wealth in the company. As a result, they are wealthy on paper but don't necessarily have a diversified personal balance sheet or ready cash for large, personal expenditures. An infusion of private equity can allow founders, owners and early investors to take some of the rewards off the table, while reducing their investment risk through diversification.

Providing liquidity for early shareholders can also help entrepreneurs meet related business objectives. For example, back in 1998, the management of Keystone RV Company, a manufacturer of recreation vehicles, were concerned that they were  majority owned by a group of individual investors. The investors had provided cash at the company's start-up, but many of them wanted to exit their investment in Keystone and realize profits. At the same time, Keystone's CEO was looking for a way to provide ownership incentives to his team of key executives.

A private equity investment allowed Keystone to cash out early investors, while also establishing ownership stakes for the management team. By making managers shareholders and rewarding them for maximizing the company's value, Keystone was able to accelerate its growth rapidly after the investment. Keystone grew to become one of the leading companies in its industry and in 2001, the company was acquired by Thor Industries for more than $150 million.

The only competitive advantage is to have better people who understand the business better

*There is no 'winning strategy' that will boost your earnings. The only competitive advantage you can get is to have better people who understand the business better and who seek the future with a passion.*
 source: The power of strategy by J.Loewen


A client quoted this from one of my books. I thought it was spot on and then realized it was my book being quoted. Thank you to my client!

When to Consider Private Equity

The decision to take on private equity is a difficult decision for most business owners. Why bother with the effort and risk?
There are a variety of reasons but in my career working with business owners, I have found it generally comes down to these four reasons to look at private equity partners:
1) The founders' increased need to shore up their personal financial security, 
2) To finance further growth, or  
3) To help prepare a company for a future IPO within 3 years 
4) To prepare for partial or full sale within the next 5 years.