I was a CEO for 25 years. I had many great years and several bad years. When those bad years come along, it may be time to reevaluate your business strategy. The bad years were the hardest. I want to share with you the things I learned from my bad years so you don’t repeat my mistakes. Mistakes in business are very expensive. Let me help you avoid them.
First, make sure you have a great measurement system so you really understand the health of your business. While each business will have key measures that are unique to that business, there are a few that apply to every business.
The king of all measurements is cash flow. The number one reason companies fail is they run out of cash. You should always know how many months of cash you have left.
Revenue and Profit Growth
You want to have a clear forecast of revenue and profit growth. Be conservative with your forecast and continually update it.
Develop the Key Performance Indicators (KPIs) that Matter the Most to Your Business
Examples of KPIs
- Net revenue retention
- Marketing funnel conversion rates
- Product downloads
- Number of new meetings with prospects
- … and many more
When your key measures indicate that things are working, you want to study your business to understand what’s working and how to do more of it.
For Example, When One of My CEOs was Growing More than 100% They Kept Asking a Few Questions of their Team:
- Why are we doing so well?
- What’s the greatest threat to our continued success?
- How do we sustain this success?
- How can we do better?
The CEO acted paranoid when they were doing well. They didn’t want their team resting on their laurels. They didn’t want luck to be the biggest reason they were succeeding. They didn’t want to overhire and assume that all would be good forever. They wanted the team to be really smart about understanding the reasons for success. They wanted everyone to learn from success.
It’s when you don’t like what your KPIs are telling you that you will step in to reevaluate. Sometimes it’s just a feeling. Maybe a few customers take a little longer to return your calls. Prospects start extending their buying cycle.
Then it shows up in the data. Your revenue forecast is down from last week. It’s a small change, but it’s still a change. When this happens you go on high alert.
It’s time to carefully evaluate all your KPIs. It’s time to remove the overly optimistic forecast information from your forecasts. It’s time to dive in and understand what is happening.
It’s possible that the problem is in your operations. You may have a problem with sales leadership. You may have a messaging issue. You may have product execution problems. If your slowdown is operational, you need to address the operational challenge. Your strategy may be fine. But let’s assume your issue isn’t operational.
If the problem isn’t in operations, then it’s likely to be found in your strategy.
When this Happened to My CEOs, I Encourage them to Ask a Different Set of Questions:
- What is my sales team hearing and experiencing?
- What do the people interacting with customers see happening?
- What do my customers tell me is happening in their business?
- What do I hear about my competition?
- What do our leading indicators (e.g. number of meetings, number of proposals, number of downloads) tell us?
This is a time to listen carefully and deeply. This is a time to be honest with yourself. You are listening for the changes in your market that will indicate a change in strategy is required.
You may not like what you hear. When this happened to one of my CEOs, they heard that their client’s customers were slowing down their buying. Then they heard that customer budgets were being reevaluated. Eventually, they heard (or saw) that customers’ spending was being reduced.
When your market changes, you need to change. You may need to change who you are selling to. You may need to change what you are selling. You may need to change how you are marketing and selling. You may need to change the people in your organization who are involved in product or sales or marketing.
These changes can be very painful. The pain can come from seeing your strategy fail. The pain can come from thinking you were close to seeing success, but never quite got there. The pain can be from the impact the changes you’ll make will have on your organization.
However, when the market changes, don’t hesitate. You need a new strategy and plan and you’ll need these quickly.
Contact an Experienced CEO Coach
Once you’ve decided it’s time to develop a new strategy and plan, talk to a CEO coach. Talk to a person who’s lived through significant changes before so they can guide you through. A great CEO coach will help you survive and thrive with your new strategy.