2015 - Business Strategy Guide

2015 ANNUAL BUSINESS ASSESSMENT AND

BUILDING GREAT BUSINESSES FOR A GREATER PURPOSE

STRATEGY GUIDE

WWW.TryC12.COM2015

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The purpose of this questionnaire is to provide a systematic overview of the existence and maturity of key business processes within your company. Business

owners and senior company executives can use this tool to identify underdeveloped areas for possible focus to improve business performance in 2015 and

beyond. This self-assessment is organized into the following nine primary functional categories:

- Core principles of the business

- Strategic planning

- Human resource management

- Financial management

- Key purchasing practices

- Customer relationships

- Operations management

- Ownership structure

- The ministry accomplished through your business

- Are the mission/vision/values of the business defined and written?

- Have your core principles been communicated to the stakeholders?

- Do employees know them by memory?

- Are they routinely used to make decisions?

- Do they relate the ministry goals of the business?

- Do these core principles drive supporting operating objectives and

Key Performance Indicators (or KPIs) using ‘SMART’ goals?

- If yes, are the ‘SMART’ goals written?

- Are they ‘cascaded down’ into the organization?

- Are results measured and compared to the goals?

- Are regular reviews held to discuss results and reassess goals?

- With full management team and with other employees?

YES NO

- Does your team employ a specific strategic planning process?

- If so, how much time is invested in this process, and when?

- Have you defined the target markets you serve?

- Have you estimated the size of these markets and your market share?

- Do you know the projected growth of your markets?

- Do they support the growth objectives of the business?

- Have you modeled what would happen if such growth occurred?

- Do you know your competition well (strengths and weaknesses)?

- Have you assessed your own company’s strengths and weaknesses?

- Have you assessed your threats and opportunities?

- Has your strategic plan been incorporated into your organization’s

annual plan (and budget) and shared as accountable goals?

YES NO

2SECTION ONE: Your core principles - In order to be valid, core principles must have

been developed in a manner reflecting the top leadership’s heart and commitment

while resonating as true with stakeholders.

SECTION TWO: Your strategic plan - The strategic plan represents an organization’s

deliberate process of defining its direction and making decisions on how to best

allocate resources to pursue this strategy.

YES NO

3 - Have you identified the key HR needs of your business?

- Do you perform candidate and employee assessments to identify

strengths, weaknesses, behavioral profiles, core competencies?

- Do written job descriptions exist, describing key responsibilities,

skills required, training and educational requirements?

- When hiring a new associate, are the following procedures used?

Compatibility with Company Core Principles?

Personality profiling, credit, criminal history checked?

Personal, professional, educational references checked?

Multilevel interviews (such as supervisors and peers) conducted?

New employee orientation process and probationary period?

- Is employee performance measured against written criteria?

- Are employee performance reviews conducted at least annually?

- Are action plans developed to address areas of deficiency?

- Are employees equipped/encouraged toward decision-making?

- Do you promote team-building and enforce team behaviors?

- Are pay/benefit levels competitive with local industry levels?

- Is voluntary employee turnover a challenge for you?

- Do you use ‘performance pay’ compensation approaches?

- Are succession plans in place for key positions?

YES NO

4SECTION THREE: Your organizational development and human resources

management - Recognizing that our people are our most valuable asset in our

businesses, we must constantly strengthen this vital resource.

PAGE TWO - 2015 BUSINESS STRATEGY GUIDEProduced by C12 Tarrant, LLC

- Can/does the company generally pay its obligations when due?

- Do you know your company’s critical economic drivers and are these

key performance indicators (KPIs) regularly discussed and ‘driven’?

- Is accurate and timely financial reporting provided at least monthly?

- Are bank accounts reconciled monthly?

- Is it done by someone without access to receipts and disbursements?

- Are annual operating budgets, prepared in conjunction with those

responsible for implementation and are they properly utilized?

- Are financial results shared with employees?

- Do you know your contribution margin and breakeven point?

- Are short-term and midterm cash flow projections prepared?

- Is accounts receivable and accounts payable aging data readily

available, along with accurate inventory records, and are they used

to help manage working capital and cash flow?

- Do you benchmark performance against others in your industry?

- Are actual costs compared to budgets for projects/jobs/products?

- Is product line (or service offering) profitability monitored?

- Is profitability by customer and by project monitored?

- Are cost reductions actively pursued and celebrated?

- As God’s steward, are you certain that you are producing a solid

economic return on the financial assets employed in the company?

SECTION FOUR: Financial management - Careful financial review and analysis shows

us the “reality” of our situation in our businesses. We must have the basic systems,

practices and process in place to lead our companies properly.

YES NO

6 - Are your sales and marketing staff true operating partners,

accountable for demand forecasts, timely orders, reasonable

promises, and profitable pricing?

- Do your prices properly reflect the value you provide customers and

does sales compensation vary with profit (instead of simply sales)?

- Do you know your target market customers and their attributes for

each of your company offerings?

SECTION SIX: Customer relationships - In order for our companies to build customer

value through managed relationships, we must understand their wants/needs,

improve interactions and nurture their trust through our performance.

YES NO5

- Is vendor performance monitored (i.e., cost, delivery, quality)?

- Are multiple quotes obtained for items over a certain value?

- Are vendor references checked for performance and stability?

- Are authorized purchases documented via POs and contracts?

- Are insurance certificates obtained to verify that vendors have

adequate liability coverage for general, product and workers

compensation exposure?

- Are vendor relationships reevaluated by getting new competitive

quotes and assessing relative performance against best-in-class

suppliers least annually?

- Are key suppliers true operating partners that help you

strategically rethink your business model to improve cost, lead

time, inventory and quality?

YES NO

SECTION FIVE: Purchasing - We are responsible for the establishing and maintaining

the proper purchasing processes and practices that allow our companies to optimize

potential cost savings while increasing the quality of products and services.

PAGE THREE - 2015 BUSINESS STRATEGY GUIDEProduced by C12 Tarrant, LLC

- Do you monitor your sales to identify positive and negative trends?

- Do you have specific criteria to measure customer satisfaction?

- Are regular meetings held to discuss/rectify customer satisfaction

issues and identify additional sales opportunities?

- Do you know why your customers buy from you?

- Are you easy to find for each target customer segment and do your

marketing materials tell your story well to overcome objections?

- Do you know customer turnover or defection rates and why?

- Have you evaluated your performance during each customer

“moment of truth” of customer contact (e.g., quoting, ordering,

delivering, paying, field service, etc.)?

- Do you include customers in a strategic process (focus groups,

surveys, retreats) to identify how you can better serve them?

- Have you identified your total business potential with each

customer and channel of distribution you currently have?

SECTION SIX: Customer relationships - Continued...

SECTION SEVEN: Operations Management - This is an area of management concerned

with overseeing, designing, and controlling the process of production and redesigning

business operations in the production of goods or services.

- Does the operations team have daily or weekly clarity on customer

expectations and priorities that tie to your official monthly plan?

- Have metrics been developed to help drive continuous improvement

in operations (i.e., cost/quality/delivery)?

- Does the company have a standard way of planning, managing

and reviewing project performance?

7YES NO

YES NO

PAGE FOUR - 2015 BUSINESS STRATEGY GUIDEProduced by C12 Tarrant, LLC

- Does company leadership openly share its Christian/Biblical faith?

- Have you integrated Christian core values into the way you deal with

people, issues, priorities, standards, etc.?

- Has top management embraced and encouraged ministry?

- Which of the following have you seen occur through your company:

Service: Gifts, financial giving, practical help in Christ’s name?

Sanctification: Believers equipped and encouraged?

Salvations: People coming to faith in Christ?

- Are employees encouraged to participate in ministry activities?

- Do employees help identify and own such opportunities?

- Does the company provide ministry resources?

- Does a ministry team or oversight effort exist?

- Does the company and/or teams have a ministry plan and goals?

- Are ministry results measured/reported/celebrated like other KPIs?

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- Does this year’s plan have operations staff pursuing stretch goals

(e.g., against previous costs/standards, industry benchmarks, past

best performance)?

- Is waste (e.g., cost of poor quality, rework, obsolete inventory,

poor execution) measured and reported?

- Are quality problems identified using internal and external

(customer) reporting, and countermeasures implemented to

eliminate the root causes?

- Is material usage tracked by job/process vs. budget/standard?

- Are schedules and workflow carefully planned to eliminate

unnecessary changeovers?

- Have order lead-times and inventory turns been compared to

‘best’ possible performance?

- Have employees been trained in “lean” principles?

- Has management adopted defined approaches for recurring tasks

(e.g., project management, decision-making, problem-solving,

brainstorming)?

SECTION SEVEN: Operations Management - Continued...

8 - Does the business have multiple owners, partners or shareholders?

- If yes, do formal agreements exist for the transfer of ownership?

- If no, do plans exist for ownership transfer?

- Do plans exist for the transfer of key responsibilities?

- Before the Lord, are the firm’s equity owners “equally-yoked”?

SECTION EIGHT: Ownership - Ownership structure, expectations and working styles

of partners and accurate, comprehensive documentation of all related agreements

will make up the foundation of your business. YES NO

- Beyond simply making a paycheck, are you generating a solid

return on investment (ROI) and building a company with value?

- Is your goal to ensure a future generational transition to

like-minded leadership that will sustain the Christian ministry that

currently occurs through the business?

SECTION EIGHT: Ownership - Continued...YES NO

YES NO

SECTION NINE: Ministry - The Bible is very clear that the purpose for our work life is

to reflect Christ in and through our lives. “Whatever you do, work at it with all your

heart, as working for the Lord, not for men, since you know that you will receive an

inheritance from the Lord as a reward. It is the Lord Christ you are serving.”

PAGE FIVE - 2015 BUSINESS STRATEGY GUIDEProduced by C12 Tarrant, LLC

Your mission statement should clearly state thereason why you are in business. Why does thiscompany exist?

MissionStatement

An effective mission statement for an organization should fulfill the following characteristics:TimelessInspirationalShort and concise

Personal or visceralEffective decision-making toolConvey a clear sense of ministry

ON

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The vision statement for your company willdescribe what your business will look like if themission of the company is fulfilled.

VisionStatement

The vision statement for your company should fulfill the following characteristics:

Evokes passion and convictionVery specific (geographic, numeric, financial or ?)

God-sized: Beyond your ability to achieveIf achieved, this vision will be God-honoring

Your core values represent the character traits andsynergistic qualities that you need in order to fulfillthe mission and vision of your organization.

EstablishedCore Values

Our core values are the fundamental beliefs of the organization and its leaders. These values are the guiding

principles that dictate our behavior, our actions and act as an internal compass for decision-making. The values

underlie our work, how we interact with each other, and which strategies we employ to fulfill our mission.




CompetitiveAdvantage Your unique selling proposition (USP), defines your company’s unique position in the marketplace. A strong

USP lets you to stand apart from competitors and actively focus your energy on creating things that cater to

your customers. In other words, having a unique selling point is a competitive advantage that allows busi-

nesses to avoid the trap of trying to please everyone or becoming a commodity, simply distinguished by price.

The competitive advantage can be described asyour unique selling proposition. This advantagemust be real, well-defined and sustainable.

This should describe how your company willachieve its vision in a way that is consistent withthe stated mission and core values of the organization.




OverallOrganizational Strategy

Your organization-wide strategy should fulfill the following characteristics:

Characterizes your competitive advantage(s)Describes how the company will achieve its vision

Only changes if competitive advantage or vision changesOften can lead to an effective “tag line” or brand promise

When everything is in alignment, the direction, purpose, and goals of an organization can be achieved through targeted performance consistent with our overarching core prin-ciples. This purposeful and productive effort moves the organization forward. If efforts are poor or inconsistent with our overall direction and values, the company will flounderand squander many of its opportunities. As we begin a brand new calendar year with 2015, let’s review our overarching goals and objectives that form the basis of a firm’s strategy.

PAGE SIX - 2015 BUSINESS STRATEGY GUIDEProduced by C12 Tarrant, LLC

What you can’t measure, you can’t teach, reward or manage. Every business has key metrics or key performance indicators. These numbers indicate the health of theactivities of the business and help drive the general prosperity of the organization. Theses factors make up the economic “dashboard” of a company and are the keydrivers of your “economic engine”. They need to be continually discussed and driven over time (including trend charting, comparison against benchmarks or goalsand brainstorming). Over time, these key metrics (or KPIs) should be updated to reflect the long-term needs of the business. Depending on the nature and dynamicsof your company and industry, these numbers should be checked weekly, monthly, quarterly, semiannually or yearly.

Every business should have a combination of lagging & leading indicators included as a part of their key performance indicators. Lagging indicators measure activities thathave already taken place. There is no ability to change the outcome of past activities, however, regular monitoring at intervals allows future outcomes to be improved.Leading indicators give insight into the future activities of the company. Timely monitoring allows the projected outcome to be affected in a positive manner. Examples oflagging indicators include profits per units sold, customer satisfaction factors and return on investment (ROI). Several good examples of leading indicators wouldinclude an order backlog, unbilled revenue and the quantity of qualified leads. Projected targets for company metrics should be balanced and aligned across the variousbusiness components within the organization. Too much emphasis given to one component of the business will lead to a stressed work environment and a futurebreakdown in the work flow and may threaten the success of the company. When multiple target metrics have been established, they also need to be aligned withother target metrics and the company’s core principles. C12 calls this process the “Five-point Alignment Matrix”. Its use is further defined in the Strategic Objectives andGoals sections below. The five components and examples of their activities are as follows:

TYPE SAMPLE SOURCE FREQUENCY EXAMPLE

OF METRICS INDICATOR OF DATA OF REVIEW OF TARGET

Raw Numbers Number of Customers CRM database Monthly50 new customers by

end of year

ProgressMarketing Plan 75%

CompleteProject plan Quarterly

100% complete by end

of quarter

Change Percentage

6% Increase in

Revenue Over Last

Quarter

Profit and Loss Report Monthly

15% total revenue

increase by end of

year

FINANCIAL CUSTOMERS INTERNAL PROCESSES PEOPLE MINISTRY

Revenue Growth Sales Production Process Human Resources Charitable Giving

Cost Reduction Marketing Support Activities Learning and Growth Acts of Service

Asset Utilization Customer ServiceResearch and

Development

Training, Education and

Certifications

Turning Lives Over to

God

PAGE SEVEN - 2015 BUSINESS STRATEGY GUIDEProduced by C12 Tarrant, LLC

Use this worksheet to identify and list a minimum of three leading and/or lagging key performance indicators (KPIs) in the various business components which aremost applicable to the health and fruitfulness of your business. To be meaningful, they must be objectively quantifiable and tracked on a regular basis by the leadersand key team members of your organization.

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PAGE EIGHT - 2015 BUSINESS STRATEGY GUIDEProduced by C12 Tarrant, LLC

S W

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HELPFULTO ACHIEVING THE OBJECTIVE

HARMFULLTO ACHIEVING THE OBJECTIVE

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STRENGTHS (Capitalize on the internal):

As a company, what do you do well?

What unique resources can you draw on?

What do others see as your strengths?

What unique process is not fully utilized?

WEAKNESSES (Internal things to shore up):

What could you improve?

Where do you have fewer resources than others?

What are others likely to see as weaknesses?

What strengths could shore up the weaknesses?

WEAKNESSESSTRENGTHS

THREATSOPPORTUNITIES

OPPORTUNITIES (External things worthy of investment):

What good opportunities are open to you?

What trends could you take advantage of?

How can you turn your strengths into opportunities?

What ‘opening’ can you capitalize on in the market?

THREATS (External issues that must be identified):

What trends could harm you?

What is your competition doing?

What threats do your weaknesses expose you to?

Are there opportunities that can offset the threats?

SWOT ANALYSIS: What makes SWOT particularly powerful is that, with a little thought, it can help you uncover opportunities that you are well-placed to exploit. Andby understanding the weaknesses of your business, you can manage and eliminate threats that would otherwise catch you unawares. More than this, by looking atyourself and your competitors using the SWOT framework, you can start to craft a strategy that helps you distinguish yourself from your competitors, so that you cancompete successfully in your market. Strengths and weaknesses are often internal to your organization, while opportunities and threats generally relate to externalfactors. For this reason, SWOT is sometimes called Internal-External Analysis and the SWOT Matrix is sometimes called an IE Matrix.

INTERNAL (Primary) DATA EXTERNAL (Secondary) DATA

CAPABILITIES RESOURCES PROCESSESBUSINESS

ENVIRONMENT

INDUSTRY

PERFORMANCECOMPETITIVE DATA

Focus groups, customer and employee surveys and review of internal

data will reveal strengths and weaknesses of our:

Applicable data that we cannot control which may reveal certain

opportunities as welkl as threats.

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STRATEGIC OBJECTIVES: After completing the SWOT Analysis on the previous page, review your Competitive Advantage and your Organization-Wide Strategy to see ifadjustments should be made before moving on to the development of Strategic Objectives. At their broadest, strategic objectives serve an organization’s ambition. Yourcompany’s ambition is found in its mission and vision statements. These statements together describe the main thrust of your company and its ultimate goal, a goal that canonly be reached by successfully carrying out business. Strategic objectives are the steps and accomplishments that your company will complete to realize that ultimate goal.Strategic business objectives are goals deemed most important to the current and future health of your business.

Often, the first step is to prioritize these objectives through a thorough analysis of business practices such as the SWOT analysis on the previous page. Though prioritizationof strategic objectives is unique to each individual business, common objectives do often exist. Five of the most common areas to focus strategic business goals are in theareas relating to customers, financial resources, workforce (or people), internal processes (or productivity), and business ministry.

Workforce

or People

Internal

Processes

Financial

Resources

Market

Share

Sample Strategic Objective Considerations

MISSION, VISION

AND CORE VALUES

AA

CC

BB

DD

Business

Ministry

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MISSION, VISION

AND CORE VALUES

MISSIO

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AA INTERNAL PROCESSES: ProductivityProductivity for any organization means fine tuning our business processes to achievethe best result for a customer while increasing profit. As an example, a manufactur-ing organization that fine tunes a process could reduce waste, reduce productiontime, and in the end, make a better product that gets to the customer faster. A ser-vice business that changes the way customers are handled can decrease call timesand increase customer satisfaction and loyalty.

CUSTOMERS: Increase Market ShareIn order to grow, our business needs to increase its share of competitive markets.Marketing plans start with the overall strategic business plan of our company, butexplains and details further how specific aims will be carried out. Marketing plansaddress this through defining product or service offerings, researching target mar-kets, analysis of competition, then strategically placing, pricing and promoting ourcompany’s offerings.

BB

FINANCIAL: Strengthening ResourcesIncluded in the growth objectives of an organization is the availability of capital re-sources to invest in future expansion projects. If our company’s financial resourcesare strong, capital could conceivably come from cash reserves. For many organiza-tions, strengthening financial resources means to build cash flow or increase assetsin order to attract investors and court creditors to fund growth as well as marketexpansion.

CC

PEOPLE: Performance ManagementThe people within our organization are often our most important resource. The de-velopment of an employee performance management plan may be paramount tothe success of our companies. In addition, programs that align employees’ compen-sation – merit increases, bonuses – to their performance have proven to be veryeffective. Motivating, rewarding, and retaining top performers is a key business objec-

tive for any company that seeks to successfully maintain or exceed growth expectations.

DD

PAGE TEN - 2015 BUSINESS STRATEGY GUIDEProduced by C12 Tarrant, LLC

IMPLEMENTATION: The Action PlanOur businesses cannot move forward without defining specific action steps to take them toward their goals and identified business objectives. Action planning involvesidentifying the top objectives for our organizations, then developing specific, actionable objectives. Based on our three-to-five year Strategic Objectives that were establishedin previous exercises, it is now time to develop our one-to-three year Organization-wide Goals (Action Statements). There should be at least one goal for each StrategicObjective. Each goal should start with a verb (increase, reduce, provide, etc.). Remember, each of our goals should pass the “SMART” test meaning that each one must be:

SPECIFIC MEASURABLE ACTION-ORIENTED REALISTIC TIME-PHASED

CLEARLY STATED

GOAL OR OBJECTIVE

CHALLENGES IN

ACHIEVING THIS GOAL

METRICS USED

TO TRACK PROGRESS

RESOURCES NECESSARY

TO REACH GOAL

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In order to make each objective truly attainable, it is important to include information such as the people responsible or resources necessary for implementing the overallplan. Also consider the ideal frequency of reporting and how to best update others regarding the progress of entire action plan. Methods of communicating with teammembers or consultants could include regular email reports, weekly or periodic status meetings, strategic planning meetings, real-time KPI dashboard reports, etc.

Based on this regular review cycle, take action to achieve success by implementing one or more of the following: A.) Celebrate successful milestones B.) Adjust time C.) Add/Change Resources D.) Incentivize and/or encourage E.) Increase awareness of Goals, and F.) Hold responsible persons accountable.

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2015 Business Strategy Guide Summary: At the end of the day, there are easy and hard ways to accomplish most things. This truism often proves itself as we lead thecompanies entrusted to us by God. Using the assessment and planning processes included in this guide, we should be ready and fully prepared for the challenge ofcreating and maintaining alignment across our entire company for the new year.

A final challenge: As stewards and servant leaders for Christ, our role involves providing a two-layered foundation for those who would follow us. First, we mustcommunicate the vision which continually helps to clarify our organization’s path forward. Although we may engage our team in developing certain aspects of this vision,leaders are called to lead as the primary vision-givers, head cheerleaders, and direction-setters. We should consider the counsel of others, but can never fully delegatethis primary responsibility. We’re called to be stewards of all God entrusts to us and are expected to maximize God’s investment from an eternal perspective. Greatleadership in God’s kingdom is based on His purpose and principles that transcend our daily issues and circumstances. To lead effectively in the here and now, we mustremain connected to what’s eternal.

Secondly, we’re called to define good performance within the context of pursuing this vision. This involves operationalizing our vision, purpose, and values so that roles,responsibilities, methods, recruiting, training, promotion, and compensation directly reflect these clearly-held principles. In other words, we need to ensure that alignedperformance is understood and honored. All workplace activity flows out of these two basic building blocks so vital to unified team performance: establishing vision anddirection, and defining good performance along the way. Clarity in these two foundational areas is essential!

Have you persuasively communicated to your team your heartfelt beliefs and standards with passion and commitment? Do you reinforce them and clearly live them out?Have you developed your organization with these core principles in mind? Have you taken the time to clearly answer the three foundational questions to develop a teamwith common understanding?

- Where are we going?

- How do we plan to get there?

- Why should we bother… for what purpose?

How can you communicate these things to your team in a manner that will help them to imagine the future, develop buy-in and trust, and see their involvement in thissuccess as a win-win proposition? Ask God to reveal to you the truth in each of these areas. He will show you as you pray and study His Word. Sometimes He will answerthrough people who know you well, such as your spouse, close friends, or perhaps your C12 group peers.

Not in a C12 group? Give it a try in 2015 and you can make this absolutely the best year in your life. C12 is a unique, faith-based, executive peer advisory board made upof CEOs and company owners that meet each month to study and share excellent business practices and solutions from a Christian perspective. As a C12 advisory board,members learn how to better grow their businesses, to improve execution and to challenge, encourage and hold each other accountable as they become better leaders.

Check out our website (www.TryC12.com) and register for an upcoming, free introductory breakfast or luncheon. At this brief lunch, you’ll meet some great people, learnmore about C12 groups forming now in the Dallas/Ft Worth area and have a terrific meal on us. We hope to see you soon!

Joe Petersen, C12 Chairman(817) 602-7035 - [email protected]