1. Growing a successful business in challenging times Booth Ainsworth: Dave Wilson Smart Fox Solutions: Trevor Budd & Jason Gaunt Tuesday 10 May 2011

2. Growing a successful business in challenging times A series of seminars You get what you plan for, so plan for growth Subsequent sessions to include Customer acquisition, retention and value maximisation strategies Alternative growth models: mergers, acquisitions, joint ventures etc 2

3. Growing a successful business in challenging times – a case study Fred Bloggs Ltd A fictitious reference point for the seminars Aggregation of key learnings and insights across Booth Ainsworth and Smart Fox Solutions Based on real situations 3

4. Aim high: set stretch targets 4 Year 0 Actual Year 1 Objective Year 2 Objective Fred Bloggs had a current year plus 8% objective £4.8m £4.4m £4.1m Revenuetargets

5. Aim high: set stretch targets 5 Year -1 Actual Year-2 Actual Year 0 Actual Year 1 Objective Year 2 Objective Fred Bloggs had a current year plus 8% objective It was the same 8% objective he missed last year and the year before that Historic Growth Objective £4.8m £4.4m £4.1m £4.1m £4.0m Revenuetargets

6. Planning for growth 6

7. “It is not necessary to do extraordinary things to get extraordinary results” Warren Buffett “If you do again this year what you did last year, expect the same results” You get what you plan for 7

8. What do we see? Vague or uncertain business direction Struggling to grow and develop Senior management, directors or partners pulling in different directions Businesses hitting a glass ceiling as they outgrow their internal capabilities Owners struggling to manage an inexperienced sales and marketing team Ultimately all of these impact on shareholder value 8

9. Why many attempts to grow fail Poor leadership No (or poor) research & analysis undertaken Lack of planning Full range of opportunities not considered Lack of communication Lack of training Business not ready to grow Poor execution Existing customers neglected Lack of measurement and review 9

10. Dispelling some myths... Growth cannot be achieved in periods of recession Growth can only be achieved by spending more Focus on zero sum budgeting not just budget plus 10% 50% of sales & marketing spend is wasted . . . just not sure which 50% Often it’s higher, but all spend can & should be measured Look in the mirror rather than out of the window Sales & Marketing activity are at odds with each other All business development activity should be seamless 10

11. Planning for growth 11

12. Grow Model 12 Goals Reality What next? Options

13. Getting from A to B Work out the components 13 Please refer to full version in the hand out

14. Planning for growth 14

15. What is growth about? Employing more people? Owning more plant and machinery? Having more customers? Being in more regions/countries? Having a bigger market share? Or is it simply... Growing a sustainable profit stream for your business 15 G

17. Win competitors customers

19. Increased revenues from existing market segments

22. New products in to new markets

23. Brand extensionDiversification 16

24. Aim high: set stretch targets Fred Bloggs had a current year plus 8% objective It was the same 8% objective he missed last year and the year before that 17 Year -1 Actual Year-2 Actual Year -0 Actual Year 1 Objective Year 2 Objective Historic Growth Objective £4.8m £4.4m £4.1m £4.1m £4.0m Revenuetargets

25. Aim high: set stretch targets But...what he really wanted was 25% YOY growth 18 Year -1 Actual Year-2 Actual Year 0 Actual Year 1 Objective Year 2 Objective In our experience 20-30% YOY growth is achievable in 4 out of 5 SME’s £6.4m Historic Growth Objective £5.1m £4.1m £4.1m £4.0m Revenuetargets

26. Planning for growth 19

27. Where are you now? 20 R

28. In-depth analysis In depth understanding of current customer base Sales per customer Gross profit per customer Average lifespan of clients Leads . . . . . . and conversion rates Focus on larger customers – 80/20 rule Take the time to understand your target market Especially factors influencing the purchasing decision Create a snapshot in time .. your baseline 21 R

29. In-depth insights 22 R What benefit does our product or service deliver? How do my customers rate us vs. the competition? Who are my most profitable customers? How can I know what my customers want before they know what they want? What factors influence buying decisions? How is my market developing? Why did that customer leave us – what changed? Which areas offer higher growth and higher margins? What else could we supply to our customers? How did we win these customers originally? What does the purchasing process look like? What are my competitors up to? Please refer to full version in the hand out

30. Fred Bloggs - Baseline Last financial year, total revenue generated £4.1m £3.6m from existing customers £0.5m from new customers Customer base 1,000 leads which generated 125 new customers 900 retained customers Average tenure of 4 years . . . . so lost same as gained Total sales & marketing spend of £390,000 (incl. people costs) 23 R

31. £0.3mshortfall £4.4m Objective £0.5m new revenue Fred Bloggs - The challenge 24 R £4.1M Last year actuals £3.6m retained revenue last year

32. Planning for growth 25

33. Are you ready for growth? Consolidate your existing performance Ensure core business is still running well Do not neglect existing customers Understand your target customer groups Timing is critical Can your business cope with expansion or is it at capacity? Do you have the resources and systems to carry on existing business whilst targeting expansion? Anticipate the bottlenecks and pinch-points R

34. How are your foundations? 27 Financial Operational People R Cashflow Premises Quality Facilities Working capital Capability Capacity Cost base Capacity Systems Funding availability Loyalty Processes

35. Planning for growth 28

36. Focus on the key drivers 29 1 Growth in sales and profits can be achieved in 6 ways Number of customer leads x Conversion rate % = Number of new customers + Number of existing customers x Attrition rate = Total number of customers x Number of transactions x Average sales price = Turnover x Margin = Profits 2 3 4 5 6

37. Look at some numbers . . . Number of customer leads x Conversion rate % = Number of new customers + Number of existing customers x Attrition rate = Total number of customers x Number of transactions x Average sales price = Turnover x Gross margin = Profits 30 500 x 25% = 125 + 1,025 x 12% = 1,027 x 2 x £2,000 = £4,108,000 x 30% = £1,232,400

38. With just a 10% increase 31 550 x 27.5% = 151 + 1,025 x 10.8% = 1,065 x 2.2 x £2,200 = £5,154,600 x 33% = £1,701,018 Number of customer leads x Conversion rate % = Number of new customers + Number of existing customers x Attrition rate = Total number of customers x Number of transactions x Average sales price = Turnover x Gross margin = Profits 500 x 25% = 125 + 1,025 x 12% = 1,027 x 2 x £2,000 = £4,108,000 x 30% = £1,232,400

39. Profitability calculator A 25.5% increase in turnover An incredible 38.5% increase in gross margin Even at 5% improvement, the overall increase in gross margin is 18% 32

40. Seminar 2: Driving Sales & Marketing activity 33

41. Planning for growth 34 It’s a systematic process So understand the components in that process Know where you are going Aim high and set stretch targets Understand your current business Customer insights = competitive advantage Are you ready for growth? Anticipate pinch points and operational requirements Focus on your key customer drivers Incremental improvements much more achievable

42. Questions and Answers 35 Remember the ‘Oracle of Omaha’: “It is not necessary to do extraordinary things to get extraordinary results” Warren Buffett