When Your Financial Target is Way Off
A client of ours—let’s call him Pete—recently took on the most challenging role of his career. He has spent the past ten years in various finance and M&A roles with a large company, and over time has become one of the CEO’s go-to executives. He recently led a major acquisition of a high growth start-up, and was put in charge of managing the new business.
As usual, the financial targets that were assumed as an outcome of the acquisition were overly aggressive, and the business is now trying to determine a more realistic set of growth goals. But any way you look at it, the business has audacious revenue growth targets in the near term. Everyone’s bonus (and maybe even their jobs) is at stake.
Pete asked for some guidance. So we rolled up our sleeves, sat down in a conference room, and started from scratch. We put the names of all 35 of the acquired company’s employees on a whiteboard, with the premise that starting the following Monday they had no "day job" and were fully available to contribute to achieving the audacious growth goals. We had to "start from scratch" and make sure every individual on the team was fully devoted, without distraction or biases, to achieving our collective objective. We created a list of priorities for reaching the goal:
1. Hire five people that have already been approved by the board
2. Build a formalized reporting and project management tool (in Excel) to better manage the day-to-day business
3. Focus our six sales resources on the highest-potential customer opportunities
4. Build an execution plan to develop our sales channels within the next three months
5. Get board approval for additional hires
6. Continue to build an improved product and service offering
The discussion helped us to determine that some employees were focused in the wrong areas, so we reassigned them on higher priority customer opportunities. More importantly, the exercise helped us to clarify exactly what the organization was doing to reach its growth goal and identified the specific near-term milestones we needed to hit to show we were headed toward the goal.
We will surely have to adjust roles and responsibilities as we move along, but we now have a much clearer view of how Pete and his team will achieve the goal and put the business on a path to long-term success—which gives them much more confidence in their ability to succeed.
KARL STARK AND BILL STEWART | Columnist | Co-founders, Avondale
Karl Stark and Bill Stewart are managing directors and co-founders of Avondale, a strategic advisory firm focused on growing companies. Avondale, based in Chicago, is a high-growth company itself and is a two-time Inc. 500 honoree.