Advice for CEOs

These days there is much talk about the low growth rates in the US and other developed economies. Measures proposed to enhance GDP growth include fiscal policy, border adjusted tax, tax code simplification, corporate rate reduction, repatriation, regulatory relief, trade, workforce training and enhanced capital access.

A financial model should analyze the complex relationships between costs, volumes and revenues that lead a company to be profitable. It should provide an early warning that profitability is deteriorating so that management can take action. What are some early warning indicators that a company is becoming less profitable as its grows its top line—and might even risk growing itself out of business?

Early stage companies naturally gravitate to budgeting as a way to control their spending and measure performance against their plan. They are less likely to see the need for an economic or financial model that is forward-looking in predicting how the company’s will respond to changes in circumstances and assumptions. We asked our partners to explain how a financial or economic model of the business differs from a budget or forecast.

Entrepreneurs who start to achieve success can expect to be approached by investment bankers who want to create a relationship with them, anticipating the possibility of doing a transaction down the road. Question: What are the pros and cons for a company early on to establish a relationship with an investment banker, even if a transaction seems to be years in the future?

A private company is more than an economic entity. It is an integral part of the founder’s individual and family life. All entrepreneurs face the issue of how to manage their business aspirations in harmony with their personal goals. Question: How important is it for entrepreneurs to set and update personal goals for themselves including for their business, their families, and their lives?

What are some inexpensive best practices you have seen that companies can use to train their sales force and keep them informed about product strategy and market trends? How do they generate collaboration between sales folks who often tend to be competitive with each other?