problems – markets - responsible

Are Your Revenues Stuck in Neutral?

How to Get Out of the Flat Revenue Rut

DevelopmentCorporate
problems – markets - responsible

Are Your Revenues Stuck in Neutral?

How to Get Out of the Flat Revenue Rut

Does this chart look uncomfortably familiar?
Things You–Have
problems Tried
markets to Change the Trend . .
- responsible

√ Hired and Fired 3 VPs of Sales

√ Invested $750,000 in a Website Redesign
√ Conducted 293 Email Campaigns to 1,329,865 Prospects
√ Spent $1.5 Million Re-Branding & Re-Positioning the Company
√ Got Rid of Field Sales and Went Entirely to Tele-Sales
√ Spent $825,000 to Get Into a Gartner Magic Quadrant
√ Built ‘Son of Fusion’ and Wondered Why Nobody Upgraded
√ Got Rid of Tele-Sales and Hired Elephant Killers
√ Opened an Office inAre Yourand
London Revenues
Hong KongStuck in Neutral?
√ Implemented SalesForce.com
√ Channel ProgramHow – Youto Get
Built It .Out ofNobody
. . But the FlatCame
Revenue
. . . Rut
Does
√ Hiredthis chart
Social look
Media uncomfortably
Wonk & Launched onfamiliar?
Twitter, Facebook . . .

DevelopmentCorporate
The Results, Unfortunately Were All The Same
 After All These
problems Years -Has
– markets Your Team Forgotten How to Win?
responsible

Pirates 1993-2008

Year Won Lost

2008 67 95
2007 68 94
2006 67 95
2005 67 95
2004 72 89
2003 75 87
2002 72 89
2001 62 100
2000 69 93
1999 78 83
1998 69 93
1997 79 83
1996 73 89
1995 58 86
1994 53 61
1993 75 87
 After All These
problems Years -Has
– markets Your Team Forgotten How to Win?
responsible

There are no magic bullets when it comes to reversing long term flat to
declining revenue trends for tech companies. Companies get ‘stuck in
neutral’ for a reason. Most of the time it’s a market problem versus a
‘people’ problem. Breaking out of the rut, however, takes courage and
decisive action.

The balance of this presentation presents an overview of three strategies

your company could consider. There will be follow on presentations that
explore each strategy in significant detail.
problemsIt’s
After All – Time
These for
Years
markets -HasSome Significant
Your Team
responsible Change
Forgotten How to Win?

The dogmas of the quiet past are
inadequate to the stormy
present. The occasion is piled
high with difficulty, and we must
rise with the occasion. As our
case is new, so we must think
anew and act anew
Technological change is like
an axe in the hands of a
pathological criminal.
Change will not come if we wait
for some other person or some
other time. We are the ones
we've been waiting for. We are
the change that we seek
 After All These Years -Has Your Team Forgotten How to Win?
“Shift” Your Way Out of Neutral in 3 Steps
problems – markets responsible

1st Gear 2nd Gear 3rd Gear

Optimize Buy a Invest in

Existing Revenue Long Term
Revenues Wedge Growth
 After All These
– 1. Years -Has Your Team Forgotten How to Win?
problems Optimize Existing Revenues
markets responsible
• It’s never popular but it’s the easiest place
to start. Optimization is a nice term for
programs to maximize revenues out of existing
customers
• Some Classic Revenue Optimization Programs
• Billing Audits – Are all of your customers
setup for the correct billing plans?
• Maintenance Price Increases – When was
the last time you raised maintenance
prices?
• Price List Policy Enforcement – Do you sell
add-on products? Do you require customers
to keep maintenance on the base product to Properly executed
get maintenance on the add-on product? revenue optimization
• Test/Disaster Recovery Licenses – Do you programs can generate
sell test/DR licenses 2% to 4% year over year
• ‘Bottom Dweller’ Programs -- Convert low increases in revenues
value month to month customers to
prepaid annual subscriptions
 After All These Years -Has Your Team Forgotten How to Win?
problems 2. Buy a Revenue Wedge
– markets responsible
• Lowest risk, highest probability strategy to grow
revenues year-over-year is to acquire a small,
but complementary business.
• Target companies that are about 3% to 7% of
your total revenues
• Small companies limit risk to your overall
business
• Can typically be financed from cash
reserves, untapped credit lines, and earn outs
• An acquisition of this size will ensure that your
firm can post some year-over-year growth
• Key requirements A ‘Wedge’ acquisition is
• Target company’s customer base is a close not intended to solve
match to your firm’s target market (High revenue growth
potential to cross sell your offerings to them) problems. It buys time
• Some opportunity for profit improvement and provides cash flow
through consolidation of overhead functions for your true revenue
(HR, Accounting, I.T., etc.) growth initiatives
 After All These Years -Has Your Team Forgotten How to Win?
problems 3. Invest in Growth
– markets responsible
• Using a portion of the profits generated from the
incremental revenues from revenue optimization
programs and a wedge acquisition to fund your
company’s version of a Y-Combinator / SeedPhase
/ Startup Riot
• Create a local/regional competition where
entrepreneurs pitch product/service ideas to
create products / services for your company’s
existing / prospective customer base
• Reach out to local entrepreneurs
• Allow selected senior employees from your
firm to participate Companies get ‘Stuck in
• Focus on ‘capital-light’ solutions that leverage Neutral’ because
Web 2.0 technologies / principles traditional product
• Pick 3 opportunities to ‘invest in’ management doesn’t
• $50K to $75K initial funding generate break through
• 3 months to get to public beta stage ideas. A fundamentally
• Host the teams in your facilities to reduce new approach is needed
costs
 After All These Years -Has Your Team Forgotten How to Win?
problems 3. Invest in Growth
– markets responsible
• Give the founders attractive compensation
• 15% of total revenues
• 15% of operating profit
• Equity in your overall company if revenues
>$5 million in 18 months
• That’s a better deal than they would ever get from
VCs who would cram down their ownership to
<15% in three rounds of funding
•Huge benefits for your company:
• Great publicity and traction with analysts,
press, investors, existing and prospective
customers Companies get ‘Stuck in
• Re-establish the entrepreneurial passion that Neutral’ because
built your company to begin with traditional product
• Real chance to leverage modern Web 2.0 management doesn’t
technologies in a capital-light manner to generate break through
bring organic revenue growth back to your ideas. A fundamentally
company new approach is needed
 After All These Years -Has Your Team Forgotten How to Win?
problems Cultural Resistance
– markets responsible

When a company is ‘Stuck In Neutral’ it is difficult for everyone – employees,

managers, executives, investors, and even customers. Everyone tries hard, but
at the end of the day revenues, profits, and valuations are flat to declining.
Change is hard. People perceive admitting that the company is ‘Stuck in Neutral’
is a threat to reputations and their continued employment. Politics versus
entrepreneurial passions rules the day. If you want to get out of the rut you are
in you will have to lead your team on a journey they probably do not want to
take.
 After All These Years -Has Your Team Forgotten How to Win?
problems Break Some Glass . . .
– markets responsible

If your firm is ‘Stuck In Neutral’ it’s been there for a while. While the business
climate is simply horrible now, eventually it will turn and the economy will
recover. When the recovery begins organizations will have funds to invest in
solutions to improve their business. If you start executing the three strategies of
Optimizing Revenues, Buying a Wedge, and Investing in Growth you can get out
of neutral and be positioned to participate in the revitalized economy