Wednesday, December 28, 2016

The Big Question: How to Tell a Story Without Being There?

“Designing a presentation without an audience in mind is like writing a love letter and addressing it To Whom it May Concern.” - Ken Haemer, AT&T

“It’s not what you SAY that counts; it’s what they HEAR.” - Red Auerbach, Boston Celtics

In Finance, we create many types of presentations.
Results “Updates”
Recurring updates on state of the business, competitive position
Typically very short updates for high level consumption
Executives seek the “killer” one-page slide
Diagnostics
Presentation of “what caused what”, e.g. why was inventory up this month, or overhead?
More detailed/analytical but also short and to the point
Asking for Something Tactical
Capital requests, resource requests
Short why, what, how presentations; typically including financials and a timeline
Presenting a Broader Strategy
One time per year presentations to executives, BOD, or analysts
Longer presentations” require insights from multiple sources and tight storyline to follow
Presenting Project Recommendations
Multiple presentations on long projects, to various audiences
Inputs can come from several team members and sources, requiring synthesis and consolidation

Most presentation writing mistakes come from failing to adapt structure and content to the purpose or audience. 

Purpose or Audience
Common Mistakes
Important executive presentation to large audience
Too much detail (small font, bullets, graphs)
Too little detail (pictures with no insights)
Too long (count minutes per page, allow for Q&A)
Recurring updates to large audience
Too much detail for time allotted
Same thing every time (gets monotonous)
Doesn’t tell a story to hold audience attention
Tactical purpose, executive audience
Tactical isn’t a license to throw in everything without thinking! Common mistake not to distill detail into clear actions and visual representation
Can be misleading if done incorrectly
Group strategy plan or project recommendation
Information collected from many sources thrown together, and looks like it (no synthesis)

Fact: We are Not Usually the Speaker.  So How Can I Persuade Without Presenting?
Clarity of structure and reasoning
Translating logical clarity into visual clarity
Avoiding common mistakes which cause the speaker to mistrust the materials
Thinking ahead – what questions will be asked of the presenter?
Leave breadcrumbs – using source/footnotes and appendix

Solving a problem and thinking about how to communicate the solution are equally important and your teams should be spending time thinking about both.  Here are some expectations you should share with your finance teams to improve their deck writing.

Decks need to be CFO ready without spelling and grammatical errors. Decks are the product of all of your hard work.  If your decks are sloppy and contain errors, it doesn’t matter how hard you worked putting it together or doing the analysis.  All executives will see are the mistakes.

Where applicable, decks should contain a targeted message that stands on its own (meaning that someone could forward your deck to the CEO and answer all questions that the CEO might have despite not having spoken to you or the team.) 

Content should be easy to understand and read.  Regardless of format, graphs, tables, and text should be easy to comprehend.  You should be able to print your slide in black and white and convey the same message (e.g. your message should not rely on 3D artifacts to tell the story).  Iconography should match the context (e.g. cell tower for communication).

Elements should be consistent with PowerPoint standards.  If you do not have standards developed for your organization, consider adopting them. 

There should be a storyline to the deck (even if only a few pages).  The storyline of a deck is its narrative arc. If the purpose of a deck is to get our customers from point A to point B, the storyline is the roadmap for that journey.  A good storyline takes into account the reader - where they're starting, where you want to take them, and what you have to show them to get them there.

Your storyline is your opportunity to convey your logical thinking of the problem and solution.  Each page of the deck should have a clear purpose and play a role in advancing the storyline.  The first page, like a first meeting, is our chance to make a first impression. What is the first page trying to answer?  Why does the reader care?  When presenting to executives, the first page should tell the whole story. 

The essential elements or key "takeaways" of each page should be clear and supported by data. If a page does not meet these criteria, consider removal or relocation into an appendix.

Where applicable, use active headlines on each slide to convey the message of the slide (i.e., the headline should make a statement and prepare the reader for what the slide is about to tell them. They should be able to gather everything they need to know from that single opening sentence). A good headline or "lead" will concisely and efficiently a) capture the audience's attention, b) explain why the page is important, and c) show how the page contributes to the storyline.  Someone should be able to read your entire deck just from the headlines and get the same meaning without looking at the slide contents.

Every page that follows the first page should also have an active headline. Each page needs to answer “so what?” and “why do I care?”.  The content on the slide needs support the headline only (if it supports something else, either the headline is not correct or the content need to be cleaned up). The focus should be highlighting value-adding insights or supporting information.


General Rules for Bullets and Numbering
Ensure each bullet point is indented to .5 and wraps
Avoid unusually large or small fonts (usually 14 pt to 16 pt)
Ensure there is appropriate spacing between bullet points (typically .25 to 1.0)
Avoid excessively long bullets (try to limit to 1 to 2 lines maximum)
Keep bullet points to between 3 and 6 per page
Use arial black font for bulleting unless specific reason necessitates alternate color
In general, try to limit bullet slides to agenda and summary slides

Rules of Thumb for Content Slides
Use active titles to convey message of the slide, i.e. titles should make an argument
For longer recommendation driven documents, titles should flow from page to page like a story
All slide titles should be in Title Case (capitalize all words except articles and prepositions)
Ensure appropriate balance between data and visual content
Use takeaway boxes at the bottom to highlight key insights
Vary slide layout throughout to keep presentation visually interesting

General Tips to Avoid Clutter
Stay within margins of each slide (use blue line across the top as a guide)
On graphs, use the largest unit of measure possible ($5BN vs. $5,000,000,000)
Zeros should be omitted from axis scales and legends
No more than one decimal point of detail (exceptions exist, ie. gross margin rate)
Limit the use of talking points within graph area (unless space constraints necessitate)
Limit the data presented to only what supports the slide headline
Pay attention to both screen presentation and print/hard copy

Tips for Charts and Graphs
Always use brand colors
Never use 3-D graphs, gradient/shading
Choose the right chart for your message (e.g. growth = time series, breakdown = waterfall or pie chart)
Use shadow boxes (style 14 gray) behind the graph
Consider eliminating Y axes and format data labels (or use text boxes)
Data labels should always be horizontal
Never use data tables in (below) charts
Remove gridlines and plot areas
Always note the data source
Title every chart, and chart title should be smaller font than slide title, include units below title




Wednesday, July 25, 2012

Rationalizing SOX from the ground up

Rationalizing SOX from the ground up

We are coming up on the 10 year anniversary of Sarbanes-Oxley (enacted July 29, 2002).  Most companies have gone through at least one major rationalization effort to reduce the number of controls and understand the true cost of compliance.  However, there are important rationalization lessons that have been learned during the past 10 years; namely, that rationalization isn’t a onetime event, that it takes involvement from all stakeholders, and that you company has to be diligent in measuring the progress you are making around SOX.

Rationalization is an ongoing effort

Rationalizing your controls isn’t a one-time event.  For global companies with ongoing changes, it’s an ongoing, all-the-time proposition.  Businesses change and growth in one market may be balanced with a retraction in another market.  Annually, you should be revisiting your scoping based on what is material. This will guide you in which markets need more attention due to growth and which markets need less attention due to contraction.  For those markets that are getting smaller, it may be an opportunity to rely on more entity level controls and do less detailed testing of process controls.  For markets that are growing, use this as a time to revisit documentation and the control framework.  It could be that controls that worked for a $10 million segment no longer meet your control objectives if the segment is now $100 million. 

It takes a nation

As you look at your control framework, use this as a time to include all stakeholders.  Invite your external auditors to the table to gain consensus that the key controls you are identifying are the same key controls they are looking at.  If Internal Audit provides testing services, include those parties as they will be able to provide a ground eye view of opportunity areas.  Representatives from Information Technology should be at the table as they can provide insight into controls that can automated and alignment to ongoing and planned IT initiatives.  Of course, the control owners need to drive the discussion as they have ultimate accountability for the control environment. 

You can only manage what you measure

Understanding your true cost of compliance is a fundamental aspect of rationalizing your control environment.  Are you measuring how long it takes to scope your certification testing?  Are you measuring how long it takes to test each control?  With this data, along with data points around control types (manual vs automated, detective vs preventative, controls by cycle), you can start to build a picture of the true cost of compliance.  Further, this picture will help you develop a return on investment for spend when it comes to projects that automate existing manual controls. While it may be challenging to ask your staff to log hours testing each control, this data is critical to building the right picture to sell the business case for change. 

Moving Forward

What will your SOX efforts look like 10 years from today?  I hope your organization is much more efficient and lean, while providing even more insight around risk than it is today.  And with the realization that SOX is evolving through ongoing rationalization, continuous engagement of all stakeholders, and diligent measurement, I know that your organization is well on its way. 

Wednesday, February 1, 2012

Exit Planning


Several large banks have recently announced that they were either going to sell or exit businesses or geographies.  RBS announced earlier in January that they planned to exit their Cash Equities business.  It’s being reported that Bank of America has told US regulators that they may exit some parts of the US market.  The news is not only limited to the financial services sector. Esprit Holdings, a clothing retailer, plans to close all North American stores after failing to find a buyer. 

While there are many reasons for exiting a business, a thoughtful strategy for executing the transition will not only increase the chance of success, it will also increase the value of the business being sold. 

The benefits of proper exit planning include
·        Control of how and when the exit of the business is conducted
·        Dignity for stakeholders who are negatively affected by the exit
·        Maximizing the value of the business
·        Shorter due diligence and transition period
·        Have multiple transition options to choose from

Develop A Comprehensive Exit Plan

A comprehensive exit plan includes elements that address questions such as
·        Exit Objectives – What does the management team hope to achieve by exiting the business?
·        Exit Options – What is the preferred option?
·        Valuation of the business – What is a fair offer?
·        Stakeholder Analysis – Who should be involved in the exit planning?
·        Determination of value drivers and cash flows – How can you maximize the business value in the short term to negotiate better offers?
·        Implementation Plan – What are the steps to sell or dispose of the business?

Set Your Exit Objectives

The first step is to set the exit objectives.  What does the management team want to achieve?  The highest cash offer?  The quickest sale?  The objectives will depend on the reasons why the business is being exited in the first place.  An exit objective because the parent is bleeding cash is very different than an exit objective for a profitable entity which simply no longer meets the strategic objectives of the parent.

Determine Your Exit Options

Next, engage a team of experts that can help you develop a set of exit options.  Depending on the size of your firm, resources may be internal or you may need to hire external consultants.  Typically, these would include a CPA, attorney, and appraiser.  This might be one individual or a group of people.

Conduct a detail analysis of your exit options along with a rank ordering of the options.  These may include the sale of the business to a 3rd party, an inside transfer of the business to a management team, or liquidation.  As you refine these options, you may have to conduct the next steps (valuation and stakeholder analysis) and come back to finalize the preferred option in order to have a complete picture. 

Determine a value for your business

Use your team of experts to come up with a reasonable value of your business.  While there are a variety of approaches to utilize, the three main approaches are

·        Income approach – Using your current income stream and a discount rate to determine the present value of that income stream.  Discount rates used are typically related to the cost of capital (such as weighted average cost of capital or the use of a model such as the capital asset pricing model). 

·        Asset approach – This determines the value of your business based on the assets on the balance sheet (inventory as well as plant, property, and equipment).  The assets are adjusted to fair market value which means a valuation may need to be done on each asset class.

·        Market approach – This determines the value of the business based on other recent similar transactions (i.e. businesses that have been recently sold) that have occurred.  This approach typically uses public information (such as stock price, earnings of public companies, sales, and revenues to find comparable companies).

As part of determining the value of your business, it is also important to consider what the optimal deal structure would look like.  Is a cash sale preferred?  What a stock transfer be acceptable?  Determining these now will provide guidance as to which type of buyer would be best for the business.

Conduct Stakeholder Analysis

As part of looking at what your business is worth, you should also conduct a stakeholder analysis.  Be mindful not only of economic stakeholders, but also social stakeholders as well. To name just a few groups:

·        Staff
·        Customers
·        Shareholders
·        Suppliers
·        Business Partners
·        Local Interest Groups
·        NGOs
·        Media
·        Trade Unions
·        Regulatory Parties

Consider mapping the stakeholders against a matrix of ‘Interest of Stakeholders’ and ‘Influence/Power of Stakeholders’ to determine how to appropriately work with and communicate to each of the stakeholder groups.

Summary

Exit planning can be a trying time for everyone involved and needs to be carefully managed.  With proper planning, this can be achieved.




Thursday, August 4, 2011

Do You Have A Cash Culture?




The Great Recession of 2008 caused many companies to focus on cash above all else as sales and profits vanished. However, the 2011 CFO.com survey on working capital highlighted that companies are now sitting on record levels of cash. The implication is that finance executives are paying less attention to cash and focusing on other priorities. While some companies would look at the amount of cash on the balance sheet and feel comfortable, establishing a cash culture is more important than ever.

Why Is A Cash Culture Important?

Cash is an essential component of financing future growth. Inefficient cash management can result in a higher than necessary cost of capital and a reduction in the ROI to shareholders. Breaking apart the cost of capital and looking specifically at debt, having a strong cash position on the balance sheet can result in more options for debt financing. Risk is the biggest factor when determining a company’s cost of capital and having a strong cash position can significantly lower the risk of borrowing and therefore the cost of borrowing.
Turning from ROI to shareholders, The Association of Financial Professionals found that companies are sitting on large amounts of cash as a result of not knowing their cost of capital. The effect of using a higher than necessary cost of capital in capital budgeting can result in companies not accepting projects for growth that they would have accepted using lower cost of capital measures (i.e. a higher cost of capital will result in higher hurdle rates for capital investment projects). Therefore companies are choosing to sit on cash rather than invest it in capital improvement projects. The obvious effect of not taking on strategic projects for firms seeking growth is a lower ROI to shareholders.

Are You Managing Cash Effectively?

Assessing if you have a cash culture begins with an assessment of how effectively you are managing cash today. While there are plenty of quantitative measures available, including macro measures found in the 2011 CFO.com survey on working capital, a proper assessment should include qualitative measures including questions such as:
  • Is the focus of management purely on external financial measures (i.e. those reported analysts) such as sales, profit, and EBITDA?
  • Are divisions measured solely on operating profit rather than cash flows?
  • Is cash forecasting report produced and reviewed routinely? Is the information timely or dated? Is the information complete and accurate? Are actions from the review documented and tracked?
  • Is working capital managed? Similar to cash forecasting, is a working capital report produced and reviewed routinely?
  • How is the role of Treasurer defined? Is it narrowly defined such that the Treasurer is only responsible for the relationships with your bankers?
  • Are an overwhelming majority of funding sources for your business non-cash? Businesses with plentiful non-cash funding sources tend not to have a cash culture.

What Are The Attributes Of A Good Cash Culture?

After you have assessed your current organization, there are specific attributes of a future state that indicate if cash is part of the corporate culture.
  • Your organization should have clear responsibilities for cash performance and delivery at all levels, but in particular for those that manage P&L.
  • A good understanding by senior and departmental management of the cash levers within their business and what the current and historical metrics are against those levers.
  • Clear cash targets for the business and properly cascaded down to individual departments and individuals
  • Timely and regular reporting of cash and working capital performance
  • Regular cash forecasting and re-setting of targets
  • Good operational and financial controls over cash and visibility of when they are not working
  • Cash impact is considered for all key management decisions
  • Management incentive schemes include a significant cash and working capital performance element
  • Management structures which facilitate cash focus, e.g. cash committee

Summary

In summary, managing cash is not simply about a set of quantitative measures. Effective businesses develop a cash culture as part of their corporate culture. Developing the culture starts at the top. Does this sound like the organization you manage? 


Monday, July 25, 2011

What does the U.S. debt ceiling mean for CFOs?


As the U.S. government continues to wrangle of the issue of government overspending and limitation of the imposed debt ceiling, CFOs would be right in asking what does it mean for their organizations. 

The current state of the situation is this: the U.S. Congress has set a debt limit of USD 14.3 trillion.  The U.S. Government for years spent more than it took in tax revenues.  It has done this by issuing debt.  Should an agreement not be reached prior to 2 August, the U.S. Treasury department will have to make some tough choices.  The U.S. Treasury department is legally required to pay certain obligations and Timothy Geithner has stated that a default on U.S. debt is a very real possibility.

What does this mean?  The U.S. generally makes interest payments to its creditors.  Under the scenario where the debt limit is not raised, the U.S. would not make these payments, thereby being in default.  If this happens, the U.S. will have to offer its debt at higher interest rates since buyers will view the U.S. as a riskier investment.  In fact, Moody's, a major credit rating agency, warned that it would lower the credit rating of the U.S. Government if measures were not taken. 

Specific to CFOs, Treasury bills, also known as "T-bills”, are issued by the U.S. Treasury department as one of many ways to raise needed funds to cover the gap described above.  Should the U.S. credit rating be downgraded, T-bills might not be seen as a risk free investment. 

Therefore, as a risk assessment measure, CFOs should be aware of places and processes within their organization where they are currently using the T-bill rate as a risk free rate.  Three potential impact areas are loan covenants, securities/debt structures, and capital budgeting. 

The first action is to review your covenants for loans and debt instruments.  Covenants are specific requirements that protect the lender or buyer of the debt instrument from the seller from increasing their risk profile.  Typical covenants include minimum standards for working capital ratios, liquidity ratios and financial leverage ratios.  While it would be rare for a covenant to be tied to a movement in the T-bill rate, there may be an underlying measure that relies on the T-bill as a comparative element.  For example, if the covenants were written in such a way that compared the rate of a bond to Moody’s risk free rating of Aaa and Moody’s downgraded the U.S. from Aaa to Aa, it may require the issuer of the bond to increase a provision. 

Another area might the capital structure of the company.  60% of corporate treasurers currently hold some amount of U.S. treasury bonds in their corporate portfolios.  As we move closer to 2 August (the default date), finance execs might want to revisit their corporate investment portfolios and shift assets from U.S. treasury bonds to other assets.  While plenty of investments exist in the same asset class as U.S. treasury bonds (such as government bills from Germany), finance execs do not want to be caught off-guard.    

If your capital budgeting process relies on a risk free rate, and you use the short term T-bill rate as your measure of a risk free investment, then what happens in the next few months may be extra important to you.  As stewards of your shareholder’s assets, selecting investments that earn a return for your shareholders is part of your job description.  Further, selecting the right investments requires that you understand what risk is acceptable; the risk free rate you choose as a comparative would be part of that decision.  The Capital Asset Pricing Model (CAPM) is a common tool to determine the appropriate rate of return of an asset.  If you use this model in capital budgeting for investment projects, you may need to determine a new risk-free rate of interest. 

There are several areas within Finance that may be affected by what happens with the U.S. debt ceiling.  Regardless of what Washington does, finance leaders shouldn't be caught off guard.  Is a proactive review in order for your organization?  

Wednesday, June 15, 2011

Why Implement Enterprise Portfolio Management?

Challenges Typically Faced By Enterprises
In the modern age of business, we have seen extraordinary revenue and profit growth across all industries, followed by an exceptional economic decline. Global forces and fluctuating demand have generated volatile markets and placed operations and balance sheets under strain. Coupled with ongoing capital constraints worldwide, it’s essential to optimize investment decisions and lower operating costs to ensure a healthy growth in shareholder value.

As a result, most large firms are seeking growth in foreign markets which place additional demands on how corporate investments are being managed.  Working across multiple time-zones and multiple currencies presents unique challenges and introduces new risks to the enterprise. Having a clear understanding of how corporate investments are performing is paramount.

Specifically for CIOs and IT managers, it wasn’t too long ago that IT was seen as THE enterprise change agent and investment dollars flowed into the organization faster than the Mississippi River.   Due to the Tech Bubble and Credit Implosion, investments in IT budgets have been slashed and IT managers continue to be asked to do more with less.

Why Implement Enterprise Portfolio Management?
With today’s tough economic climate, companies need to find ways to ensure their investments are driving enterprise value, reducing costs and improving operational efficiency. Enterprise portfolio management can help companies make better investment decisions; improve program and asset management; and optimize resource utilization and capacity planning.

Enterprise portfolio management provides a platform and process for prioritizing and selecting these investments that have strong business case justification and analyzing them against available funding and resources. Portfolio performance can be assessed to identify investment gaps and potential problems, like negative cash flow.

Enterprise portfolio management takes its roots from traditional investment portfolio management.   Traditional portfolio management is based on asset allocation models, where a portfolio is viewed as a pie that can be divided according to an individuals goals and risk appetite.   Further, the portfolio can be analyzed according to any number of attributes. These analytical attributes — goals, risk levels, investment type, costs, returns, etc. — also serve as planning categories. For instance, if the set of goals within a financial portfolio are growth, income and capital preservation, then the first decision becomes how much of the overall portfolio to allocate to growth, how much to income, and how much to capital preservation. Only later do decisions come into play as to which financial products in each category to sell, retain or buy. These tactical decisions are much easier to make when constrained by their relatively minor role in the overall asset allocation model. For example, deciding which large capitalization financial services stock to buy is a relatively easy decision to make when such investments as a group comprise a small percentage of the overall portfolio.

Likewise, understanding how and where where your firm should invest is easy once you tie your enterprise portfolio to your enterprise strategy. 

Adoption challenges
So why haven’t all enterprises adopted a portfolio management approach to their capital budgets? 

Internal politics and the business culture are by far the biggest adoption challenges.  When a portfolio management process is put into place, the transparency on business strategy implementation is raised significantly.  It becomes difficult to justify pet projects and to politically manipulate how money is spent.  It also makes it difficult to hide mistakes and brings a level of detail and scrutiny that many senior leaders are uncomfortable with.  This is the reason why implementing a portfolio management process needs to be conducted as a change management exercise.  

Lack of executive sponsorship is another reason.  Organizational resistance and internal criticism is almost guaranteed.  Having an executive sponsor who evangelises the new process will help guard against the “we’ve never done it like this before” mentality.  The executive sponsor and the leadership team is further responsible for being aware of dissenters and non-conformists within the organization.  Do not make the assumption that a new portfolio management framework will magically win these type of people over.  Resistance is inevitable and you will need to continually preach the benefits and value of the new approach.  Tackling the resistance head-on with direct communication is the best approach.

Organizational maturity is another factor to consider as an adoption challenge.  Having mature processes and capabilities for program and project management governance and standards will help to ensure the success of the portfolio management roll-out.  In line with implementing a portfolio management process is the consideration of upgrading the skills of those that will be identifying initiatives that will be fed into the process.  Using the phrase “garbage-in, garbage-out”, if the business cases and financial numbers are not realistic nor backed by sound analysis, the most robust portfolio selection process in the world will be for not. 

Agreement on criteria for identifying and selecting projects within the organization is an important milestone.  Likewise, this can be a barrier to adoption if project teams will not adhere to a standardized, consistent approach.  

Disagreement on the scope and pace of adoption can be a barrier.  From the outset, senior leaders need to be clear on the scope and approach of the roll-out.  Will the roll-out be incremental or “big-bang”?  Will every division need to comply or only certain divisions?  

Summary
Portfolio management is not easy.  The mechanics are easy enough to lay out in a book but there is one key component that complicates the processs: people are involved.  A portfolio is made up of projects; projects are owned by people; people become emotionally attached to their ideas OR they are handed a white elephant by their boss and they don’t know what to do with it.  Because people are involved, getting them to think rationally about what projects make sense for the enterprise and what projects don’t becomes a political minefield.  In order to more easily navigate, portfolio managers need a structured approach that is battlefield tested. 

Monday, June 6, 2011

Conducting a Location Study


There is a growing realization that the days of cheap labour in China are over.  Foxconn recently announced that it was looking to move production to Brazil.  The key drivers being discussed are the rising cost of labour in China and avoidance of import tariff in Brazil.

As more companies consider a move from manufacturing in China to other parts of the world, a key question many will have to answer is where to locate.  The central component for deciding upon a market entry strategy is the location study.  There are several key areas that firms need to consider when deciding upon a location to place its operations.

Talent Pool

Many companies focus entirely on staff costs across locations.  However, there are also risks to mitigate around the employable talent pool as well as skills and language capabilities.  If you are considering locating a finance shared service centre, consider also the level of education and the number of certified accountants in the location.

Business Environment

Is the business environment conducive to doing business?  Does the work force culture/attitude align with your corporate culture?  In some countries, accepting multiple job offers and taking the best one without informing the other firms is the norm.  How stable are the political and social environments? Consider also any government incentives, commercial laws and regulations (e.g. data privacy). Finally consider the maturity of the industry in the candidate country.  For example, India is a mature IT Outsourcing country and likely has less risk than other countries.

Infrastructure and Real Estate

Consider the in-country infrastructure such as telecommunications, transportation, access to networks within country and globally, and utilities.  Determine if commercial real estate rental prices are stable, rising or falling.  What is the availability of commercial space and what is the proximity to residential locations?

Accessibility

Are you considering a hub-city with international and domestic transportation options?  Consider also VISA requirements and how they might be aligned with your home country (e.g. visa’s for US citizens for China are quiet expensive but they are relatively cheap for UK citizens).  Consider time zone differences between your locations. Finally, consider small items like hotel availability and affordability near your planned offices.

Quality Of Life

The intangible quality called “quality of life” may seem to be a low priority but it can be the make-or-break part of the whole site selection planning.  Quality of life factors are important when considering long term sustainability of talent pools.  Factors such as standard and cost of living, social infrastructure, law and order, pollution, natural risk, and essential provisions all play a role.  While they are not as quantitative as real estate rental prices, they do need to be included in the measurement criteria.  For example, what is the rule of law in the target country as it relates to intellectual property?

Summary

A variety of factors exist when deciding where to locate your operations, shared service center or identify your next market.  At the heart of this decision is a location study to determine if the location in question fits into your overall strategy.  By identifying factors above, weighting them, and applying the qualities of the location in question against them, you can determine if the location is right fit for your firm.