NOTE: The following text, for all slides, is adapted from the video transcript. Introduction: Welcome, for those of you who do not already know me, my name is and I am this firm's ADP representative. Today s CPE presentation will be on Small Business Growth Strategies. ADP has partnered up with SmartPros, a leader in providing CPE to accountants, to design this course. Although the content was created by SmartPros, I feel confident in facilitating the presentation because this topic is relevant to my current role at ADP. In order to best position ADP s products & services to my clients, I need to have a clear understanding of today s small business needs and growth strategies. Due to the importance of this topic, I receive on-going training in this area. In the event you have any questions that fall outside my area, I ll be more than happy to reach out to SmartPros in order to get the answers that you are looking for. Does anyone have any questions before I continue? 1
REVIEW THE AGENDA: Presentation Group Discussion on Review Questions Review of Program Reference Material Review Instructions to Complete Course on ADP s Accountant Website 2
Comment: Growth is one of the most common objectives of many small businesses today. Ask & Solicit Response: Would you agree? Is growth something you address with your clients when meeting with them? Comment: The general principles we will discuss today will not only apply to your clients but also to you as a small- to mid-size accounting firm. Review Content From Slide: Today we will discuss the key areas of business growth: I. Preparing for Growth II. III. IV. The Benefits & Obstacles Opportunities for Growth Key Factors to Success Implementing a Business Plan Helpful Tips Growth through Internal Development Advantages & Disadvantages Growth through: Products & Services Geographic Expansion Growth through Acquisitions Advantages & Disadvantages Uncovering Acquisition Targets Steps of an Acquisition Group Discussion 3
Review Content From Slide: Upon successful completion of this segment, you should be able to: Analyze how small businesses can grow successfully Distinguish the relative advantages & disadvantages of growth through internal development and acquisitions 4
Ask & Solicit Response: What are some of the benefits that you associate with growth? Review Benefits From Slide: Broader Access to Markets Enhancement of Reputation The Opportunity to Work with Larger Channel Partners 5
Ask & Solicit Response: What are some of the obstacles that you associate with growth? Review Obstacles From Slide: Raising Additional Capital Recruiting Additional Staff Supervising & Managing a Larger Organization 6
Comment: Keeping current on trends and spotting opportunities ahead of the curve is crucial to successful growth. Some natural ways of doing this are: Reading trade publications and other periodicals Attending industry trade shows Networking everywhere you go Surveying the following: Customers Employees Suppliers Give personal examples of how you exercise some of these avenues to help grow your business 7
Comment: It is important to quickly identify opportunities for business growth and the environmental forces that affect these opportunities. Review Content From Slide: Forces that Provide Opportunities for Growth Technological Forces: Equalized opportunity and competitive advantage Streamlined business operation Innovation - new product and service offerings Socio-cultural Forces: Changes parenting culture, telecommuting workforce and/or aging workforce Political Forces: Trade agreements, income tax laws and/or outsourcing labor to other countries Comment: The key is to properly monitor these forces and select opportunities compatible with the business s strengths and distinctive competencies. 8
Ask & Solicit Response: Now that we have discussed some of the benefits and obstacles associated with growth, what do you think are the key factors to success when growing a business? Review the key factors: Create a Business Plan Seek Good Advice Develop a Strategy that is Compatible with the Firm's Strengths & Distinctive Competencies 9
Comment: One of the most important exercises in growing your business is a written business plan for the following reasons (Review Content From Slide): Implementing a Business Plan Forces a Business to: Analyze current & future business activities Determine if the growth strategy is realistic Be consistent with the company s overall mission Be compatible with internal strengths & external opportunities Include examples of your own personal business plan and how it helps you reach your goals this fiscal year. Ex: President s Club, Stock Options, Stock Purchase and/or Bonus 10
Comment: There are many resources available to assist a small business during growth. Let s review some helpful hints that you and your clients should consider when preparing for growth. Review Content From Slide: Seek Advice: Professional Advisors As you know, accountants can provide valuable information to small businesses looking to grow Attorneys can offer many services to help during a period of growth Volunteer Advisors Bankers can often assist in financial matters Non-competitive business owners can provide valuable insight Give personal examples of how working with these channels have helped with your own business 11
Comment: After implementing everything we have just discussed, it is important for your clients to benchmark their success as they grow. Review Content From Slide: They can benchmark their success by: Periodically comparing their products & services to others - this will help ensure the quality of their internal processes & methods Networking with non-competitive businesses to compare and share best practices Duplicating their best practices & incorporating the best practices of others Provide personal examples of how you benchmark your success 12
Comment: When trying to grow a business there are many roadblocks that make millions of small businesses fail each year. It is important to be aware of what could stand in the way of success. Review Content From Slide: Balance Entrepreneurial Stress Average business owner works 50.8 hours per week Average business owner works in 1.4 different locations Don t Grow for the Wrong Reasons Bigger is not always better Avoid taking advice with potential ulterior motives 13
Comment: The first type of growth we ll discuss is growing your business from the inside, or through internal development. This is often the easiest and most cost-effective way to approach growth. Review content from slide: A Small Business Can Grow & Develop Internally by: Developing and/or building new products Extending existing product lines Increasing sales of existing products Expanding to a new location Provide examples of how ADP practices growth through internal development Developing and/or building new products TLM and/or General Ledger Interface Extending existing product lines- EasyPay to EasyPayNet Increasing sales of existing products- Promotions or Bundles Expanding to a new location Opening new offices in more remote areas Emerging Markets 14
Review content from slide Internal Growth & Development Relies on a Company s: Competencies Expertise Technology Employees 15
Ask & Solicit Response: What do you think are some of the advantages of growth through Internal Development? Review Content From Slide: Advantages of internal development include: Incremental and even-paced growth Maximum quality control and cost Preservation of organizational culture Encouragement for internal entrepreneurship: Gives employees a chance to grow within the company Creates promotional opportunities 16
Ask & Solicit Response: What do you think are some of the disadvantages of growth through Internal Development? Review Content From Slide: Disadvantages of Growth Through Internal Development Incremental and even-paced growth may mean slow growth The need to develop new products and/or enhance existing products may increase A capital investment in a failed effort may be difficult to recoup from If growth adds to industry capacity, it may force competition, leading to less industry profitability 17
Review Content From Slide: Basic ways to grow businesses internally through products and/or services: Increase revenue & sales by improving an existing product or service Increase market penetration Extend product lines by offering new or value-added products and/or services 18
Review Content From Slide: Ways to grow businesses internally through geographic expansion: Ensure the performance at the headquarters location is good Establish the legitimacy of expansion locations Not all communities represent the same opportunity for growth Understand and acknowledge the following: Expansion locations may require the same or more attention than HQ location Expansion locations may or may not be as profitable as the HQ location 19
Comment: Now that we have talked about preparing for growth and growth through internal development, let s talk about the last form of growth: acquisitions, and its advantages and disadvantages. Ask and Solicit Response: Have you or any of your clients been involved in an acquisition? If yes, what was your experience like? Ask and Solicit Response: What do you think are some of the advantages of growth through Acquisitions? Review Content From Slide (when reviewing weave in examples of the advantages ADP has gained through acquisitions): The Advantages of Acquisitions Include: Competitive Elimination Product Line Expansion Access Proprietary Technology & Technical Expertise Access to Additional Distribution Channels Client Base Expansion Expanding Geographic Reach Natural Economies of Scale Diversification of Business Risks 20
Ask and Solicit Response: What do you think are some of the disadvantages of growth through Acquisitions? Top Management Risk of losing key employees Corporate Cultures Operations and/or Processes Technologies Review Content From Slide: The Disadvantages of Acquisitions Include: Incompatibility- Increased- Assumption of Debt Paying too much for acquired company Business Complexity 21
Comment: There are several key characteristics to look for when considering a company to acquire. The following are a few (Review Content From Slide): Operations in a Growing Industry Proprietary Products & Services Market Positions that are Established Key Third-Party Consent Bankers & Creditors Suppliers Employees Customers 22
Comment: There are several basic steps involved in almost any acquisition. They are as follows (Review Content From Slide): Steps Involved in an Acquisition: 1. Conduct initial negotiations with a target 2. Assess the situation When will the target be ready to sell? How does the target value themselves? 3. Identify & budget sources for funding 4. Obtain all shareholder & third-party consent 5. Make an offer to purchase 6. Negotiate non-compete agreements with key personnel 23
Review Summary: In today s presentation, we examined the following: Preparing for Growth Growth Through Internal Development Growth Through Acquisitions Ask and Solicit Response: Does anyone have any questions or comments on what we reviewed in today s presentation? Comment: Now let s have a short group discussion on some of the key topics discussed today. 24
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NOTE: AT THIS TIME, PLEASE HAND OUT THE ACCOUNTANT CPE CARD DOCUMENT and PROGRAM REFERENCE MATERIALS FROM THE CD-ROM. NOTE: Please remind users that they can access all study materials online, including the original author s complete video presentation of this topic. 30