Start by looking at the operating cash flow. This immediately tells us how business operations can finance the everyday operations of the business. Remember: Cash is King. How much of that cash is not tied up in capital expenditures? This is the free cash flow. This is operating cash flow minus the cash invested in capital expenditures. Next look at sales and acquisitions of businesses - the investment cash flow, we want to see how much the company is spending on new businesses, and the financing debt capital. If a company is not raising enough cash through the operating cash flow to cover their investments, they will have to go to financing or get financing equity capital. That’s when companies raise cash flow from the capital markets.
Mark Kuta’s book “Think Like a CEO”, provides The Wall Street Selling Methodology™, which is a step by step process to get the sales team to completely understand the profit strategies of the CEO of their prospective client.
Mr. Kuta reminds us that “if you are selling parts or capital equipment to McDATA, a manufacturer of storage devices, you want to help them understand their customers. If you are calling on a C- Level contact within McDATA you will gain a great deal of credibility and an edge in positioning if you discuss the Profit Strategies that EMC, IBM and HDS are pursuing”.
Companies do not occur in isolation. You have to look over their industry and how they relate to and compare to other companies in their industry. This will allow you to understand the possible challenges that the executive is facing. It is important to look beyond the current operating challenges and try to broaden the scope of what the executive could be facing.
Once you have identified the specific industry, you want to understand the competitors that the division faces in that industry. The information that you can gather from publicly traded companies allows you to map several competitors to your investigation. It is important to understand how specific companies line up in the competitive space as well as on a corporate level. Think like a CEO will help you achieve your companies goals by examining these factors. Companies that are publicly traded companies compete not only in terms of sales, but with each other in the equity market. It may be appropriate to look at the individual operating trends of the competitors in the industry. Oftentimes, poor performing markets cut across the competitive landscape, hurting all of the companies competing.
To call on the CEO or the C-level executive, you have to understand his organization and the challenges that he is facing. What is his profit strategy? Understanding a company’s Profit Strategies will allow you to "Think Like a CEO".