Doug Tatum 2009 Inc 500 Dc

1© 2006 4M Navigator, LLC All rights reserved.

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Should you stay small or go big in this economy?2009 Inc. 500 Conference in Washington, D.C.

Doug TatumChairman Emeritus Tatum LLC

Chairman 4M Navigator LLC


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Tatum LLC

1,400 Executive Partners and Professional StaffMore than 30 Offices throughout the NationServing:Entrepreneurial growth firmsPrivate equity firmsSmall public companiesLarge multi-national public companies


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4M NAVIGATORTM provides Clarity to Act Quickly

•Are we driving value in the business? Are we getting a good return on our investments in people and other assets?

•Where is the management team misaligned?•What are the most vital issues that we need to focus on?•How do our financials compare to peers?

4M Navigator Helps you answer:


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Gazelles- The Navigating the Growth ProcessThe Economy & No Mans Land


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Net Changes Mask Establishment Births and Deaths

11/2/2007


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Mid-Size Establishments Account for Most Jobs in 2006 NETS Database

11/2/2007


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Meeting the Growth ChallengeA Map through No Man’s Land - The Four Ms

Realign with your Market

Hire your Senior Management

Understand your Model

Raise your Money


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The Market Transition


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Meeting the Growth ChallengeA Map through No Man’s Land: Market Mis-alignment

EARLY STAGE/SIMPLE

RAPID GROWTH/SIMPLE?

EARLY STAGE/SIMPLE

CompanySimplicity

Customer

Company

Complexity

Multiple Customers

Market Mis-alignment is the natural progression ofEntrepreneurial Control


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Meeting the Growth ChallengeA Map through No Man’s Land: The Market Navigation Rule

The business as a whole must become good at doing what the Entrepreneur did well

with customers in order to successfully re-create Market Alignment


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4M Navigator X-RayTM Market


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The Management Transition


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Meeting the Growth ChallengeA Map through No Man’s Land: Management Navigation Rule

The founder must hire at the top first, not the middle, to successfully navigate

through No Man’s Land


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4M Navigator X-RayTM Management


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Attracting Management You Can’t Afford

France 2000 United States 2000 United States Now

Yes: Valuation Requirements No: valuation requirements Yes: Valuation Requirements

Yes: special Accounting treatment No: special accounting treatment Yes: special Accounting treatment

No: “qualified options” are not taxable to the individual upon exercise.

No: “qualified options” are not taxable to Individual upon exercise

Yes: “qualified options” could be taxable to an individual

upon exercise.

Yes: the company is directly taxed on the employee’s gain upon exercise of

“ non- qualified options”

No: the company is not directly taxed on the employees’ gain upon exercise of ‘non-qualified

options’.

No: the company is not directly taxed on the employees’ gain upon exercise of

‘non-qualified options’.


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The Transition in the Economic Model


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Meeting the Growth ChallengeA Map through No Man’s Land: The Model


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4SCORETM

•Are we driving value in the business?•Are we managing the business as an investment?•Are we getting a good return on our investments in people and other assets?


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The Case of the Freight Forwarding Industry

0%

1.0%

2.0%

3.0%

4.0%

$<50

0k

$500

k-1mil

$1mil-$

5mill

$5-10

mil

$10m

il-20m

il

$20m

il-50m

il

$50m

il-100

mil

$100

mil plus

Pre-tax Profit % by Five Year Average Firm Size


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Meeting the Growth ChallengeA Map through No Man’s Land: Model Navigation Rule

The business’s value proposition must be scalable (profitable at a higher

volume) to successfully navigate No Man’s Land


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Financials


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Financials (cont.)


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The Money


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Microeconomics of Growth

The following illustrations were

built from an economic model that

accounts for the typical asset growth characteristics of a rapidly expanding

business on accrual accounting and

transitioning through “No Man’s Land.”


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Illustration of “Capital Funding Gap”

Capital Funding Sources & Risks For Small & Emerging BusinessCapital Funding Level Business Category Capital Sources Business Risks

BUSINESSES IN

“CAPITAL NO MAN’S LAND”

-Limited Cash Flow-

(“Too big to be small; too small to be big”)

Start-up and Other Small Businesses

Emerging

Growth

Businesses

$1 million

$250,000

0

Investment Bankers(IPO Market/Private Placements)

Commercial Bankers

Private Equity Groups

Venture Capitalists

SBICs/SBA Loans

Very Limited Access to Capital(Angels/Factors)

High Cost of Account & Collateral Management

Business Borrowing Exceeds Personal Assets

Investment by Family & Friends

Loans Based on Personal Assets: Banks/Home Equity/Credit Cards/SBICs/SBA

LowerRisk

HigherRisk


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Meeting the Growth ChallengeA Map through No Man’s Land: The Money


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Meeting the Growth ChallengeA Map through No Man’s Land: Money Navigation Rule

The key to raising money is reducing real and perceived risk of the company


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4M Navigator X-RayTM Money


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General Thoughts and Conclusions

Think Strategically

Act Immediately

Doug Tatum 2009 Inc 500 Dc

Business

Transcript of Doug Tatum 2009 Inc 500 Dc