Category Archives: Articles

Strategic Business Analysis

“Raise your head above the parapet, take yourself off somewhere for a couple of days, leave the mobile device and clear your head”.

Brilliant advice received from the founder of a major international company dealing in high tech components for mobile devices. He admitted this was something he failed to do while his business was growing, then suddenly the growth stalled, a quick analysis highlighted that the company did not have clear strategic objectives and was consequently dissipating huge amounts of energy and resources on unproductive activity, which included him travelling over a hundred days a year.

Business People often get so wrapped up in the day to day business of running a business that working up a strategic plan is one those jobs that is always relegated to next week. It is not earning cash, its not looking after customers, its not dealing with the supply chain, logistics, sickness issues, staff motivation, cash flow or how your brain hurts. But, and it’s a big but, spending time out will help all these issues, including the pain in your brain.

It helps to have an experienced unrelated, (to your organisation) individual to mentor your thoughts. Being an outsider, they’re more removed and can help with your global vision and perhaps add a perspective which you might not have considered. It doesn’t matter what stage of development you are at, starting, early days, growing, mature, it’s a fundamental basic to have this in place and to review it regularly

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Pointless Stress Creation

Analyse your day. 

How many productive decisions have you made? 

How much time have you spent dealing with complaints, sorting out administrative mistakes, dealing with employee problems, production problems, customer/client issues, etc. 

How much time have you spent procrastinating about important task, avoiding it completely perhaps?

Why?  What delayed you?  Was it because you were nervous or lacking confidence?  Were you worried about new challenges.  Or perhaps you feel you have inadequate skills to complete the task to the required standard.  

Thinking we can do it all is where most of us cause our own problems  –  both in life and in running our businesses. 

The short answer, if we are honest enough, is that we know we can’t do it all.

Support is critical, and when we recognise this, the benefits are substantial – less stress and much greater productivity. 

The Difference Between a Leader and a Manager – Which are You?

Leadership has been defined as being about influence, and Management has been defined as being about authority.  Which is right for your business?

John Kotter, the Harvard Academic, maintains that Leaders are inspiring and successfully promote new directions whereas Managers take care of today’s business, getting things done by executing the directions.

People choose to follow Leaders who are seen as inspiring and people orientated but are required to follow a Manager who is seen as controlling and task focused!

But surely this view is over simplistic?!

The qualities required by both Leaders and Managers are not necessarily mutually exclusive for one or the other.

boss v leader

To be a good Leader or Manager both need to have a degree of inspirational skill.

Whereas, an inspiring Leader might move people to change direction, an inspiring Manager will move people to exert more effort to get a job done!

As a Manager you do need to be a leader to get things done and as a Leader you do not need to be a manager to motivate and get people to follow. Realistically it all comes down to the individual’s personality and how they interact with the people.

Leaders can inspire and get people to follow, however without the skills to get things done, everything will be just words.

Managers on the other hand, with or without the qualities of Leadership are still able to maintain the important tasks at hand.

One could argue that it is better to be a Manager with the qualities of a Leader, who will create the better task force – Leadership qualities being the added bonus to have, but you don’t necessarily need them.

The key element is the individual characteristics of the individual involved and how they influence their people and the people around them, and in turn how those people respond. 

Communication – the panacea of good, evil or misunderstanding! Part 3

The definition of communication is “the imparting or exchanging of information by speaking, writing, or using some other medium”.

Oxford English Dictionary

Most “issues” arising in an organization can be put down to one word – Communication”.

On the basis that each person’s perception of a communication may be slightly different, how do you ensure a consistency of message, clarity, and understanding?

Achieving this can be particularly difficult when a number of stakeholders are involved, each having their own “take” of what is being communicated and their view on a solution, if one is required.

LogoVisual Thinking or LVT uses the principle that one picture can sometimes be worth a thousand words to see what is being said or thought.

When an issue needs to be addressed and involves several stakeholders the LVT concept provides an effective way of clarifying the issue.

The issue can be anything from, developing a new strategic plan; introducing a new process or procedure; resolving conflict; a changed dynamic following the introduction of a new member to a team; planning a career move to give but a few examples.

Stakeholder being defined as anyone or object being involved where focus, responsibility and accountability is required to achieve a sustainable outcome.

The LVT process involves interactive communication between the stakeholders that leads to greater clarity, understanding and appreciation of others perspectives.

In particular, the unspoken concerns of individuals which may have arisen and inhibit the issue being resolved will surface and can be addressed.

Communication – the panacea of good, evil or misunderstanding!

Definition – “the imparting or exchanging of information by speaking, writing, or using some other medium”.

                                                                                       Oxford English Dictionary

Most “issues” which arise in an organization can be put down to this one word – communication.

Whether it is written, spoken or visual, various factors will all play a part and need to be taken into account if issues are to be avoided and communication is to be effective.

In written communication, the layout, the use of language – the tone, bolding, colour and visual presentation.

Similarly, with the spoken word, the voice intonation and associated body language.

Add to these the particular circumstances, the place, the situation of those involved at the time, all play a part in how the message is received and perceived.

Thus there are any number of factors contributing to the listener or reader’s perception of the message and which will play a part during “communication”.

These have to be considered if the message to be imparted is to be received as intended.

In addition, the reader or the listener will only register those elements of the message they feel are relevant to them.

Thus, it is not what is said, but how it is said which becomes of paramount importance in any form of “communication”

Unfortunately, there is no ”one size” fits all as every recipient will have a slightly different perception of the message based on the particular circumstances at the time.

When “communicating” always bear these factors in mind, no matter how basic the message you are trying to impart to whom and through whatever medium.

Why is a business plan necessary…?

Everyone who is in business (and most of those who aren’t) have heard of Business Plans.

To some people they are a mythical work of art, produced by the “elite” amongst businesses – a document they may aspire to have… but only if their business reaches the heady heights of “big” business.

Others may consider them an unnecessary exercise – produced only by people who “don’t really know their own business”.

To others they are an essential tool in the life and growth of their business.

And to most business people who don’t have one they are something they have thought about, considered completing, but never got round to doing.

A viable and current Business Plan is the most important document on which your company will spend time preparing.

Planning is key to a growing business – but a plan must not be set in stone, it must grow and develop with the business.

What is it that makes the Business Plan so important?

  • It helps you to keep focused
  • It focuses on your objectives
  • You can see when you’re going off track
  • You’ll need it if and when you need to arrange funding

So, what is a Business Plan?

A business plan is a written statement of your business. It is a plan of what you want to achieve and how you plan to go about doing it.

It should outline the structure of your business, the product or service, the customer, the growth potential, potential barriers to achieving your goals and how you will overcome them, and the financials.

However a good business plan is more than just information about your business…  It should inspire you, as the manager, and everyone else involved in the business.  This inspiration will form the foundation to the blueprint for your future.  It will give you, and everyone else in involved with your business, a clear understanding of how you intend to get there.

However, It is very important to remember that the world does not stand still and neither does business.  Business Plans must be “organic” and evolve over time.  You can’t control the future, and the outside circumstances, for example the economy or strikes, will have an effect on the shape and direction of your business. But a good business plan will give you a clear direction to aim for, and help you to plan for the unexpected..

Every business should have a plan whether it is to open a second shop or float on the stock exchange.

It is why you are in business. It helps you to define strategy and, if properly used, will help you involve and motivate key members of staff.

It allows you to work out how to make your business a success and can help you avoid failure by plotting the pitfalls along the way.  It should outline a realistic target for how that can happen while remaining flexible enough to make changes along the way. By setting out a plan and some targets, you can also monitor your progress and get the business back on track fairly quickly if anything goes wrong.

Can you survive without selling…?

The questions  we ask clients are, “do you know how many sales should be achieved”,  “how many were  lost”, “any idea of how many were missed” and lastly “what were reasons”.

Poor sales stats are usually the result of a  small number of missing components in an apparently well structured sales process.  Identifying these is usually not complicated.  Products and services are bought because of need or greed or if you prefer, desired.  Products and services are sold direct to individual buyers, business to business , public and  charitable organisations.  There are subtle differences in approach but the fundamentals remain the same.

No company survives without selling.

The primary objective is to sell a product or service as profitably as possible. Profit may include other criteria, however no company survives long without generating profits

Marketing and sales are often perceived to be one process. They should  always  be regarded as separate and distinct, Marketing increases public awareness of a company and its products and services.

Sales generates cash.  It may also be designed to improve goodwill, as a loss leader,  foot in the door,  etc.  All valid reasons if planned. Businesses don’t survive without profits or least covering all their costs.

Selling should include the following:

  • Identifying target prospects
  • Qualifying
  • Finding the decision maker(s)
  • Arrange a productive meeting
  • Record Keeping
  • Presentation
  • Listening
  • Buying Signals
  • Completing

Sales activity should not be based on misplaced hope and optimism,  the best salespeople learn this very early in their careers. They also know about documentation.

Learn these processes and enjoy your selling.

The Money-Go-Round (Credit Control)

We have previously discussed the problems that so many businesses encounter – poor cash flow and the effect that can have on the workings of your bank account. Good credit control can often be the key to avoiding this situation.

With good credit control the key is systems. A good system will lead to efficient credit tracking. If this is then added to a firm, but subtle and understanding approach you have the sound foundations for an effective credit control system.

The problems which many of the businesses who I encounter are that the owners (managers) have an inbuilt dislike of systems. I use the term dislike deliberately as they will usually confess that they see why systems are necessary and then cite the fact that they are too busy to implement one. Perversely, this avoidance of systems is often costing the business greatly – both in direct cash and also time (and therefore indirect cash)!

Poor credit control can, and often does lead to the failure of otherwise successful businesses. Don’t let yourself be used as a source of free working capital. The credit terms which your business offers must work for YOU as well as your customers.

However, don’t forget that if you are too hard on your customers they may become reluctant to place orders with you and go elsewhere instead – a supplier who will give better terms – so insisting on receiving payment with the order is not always the best course of action!

Find the happy medium.

When you take on a new customer, do you investigate them in respect of their credit history if they ask for an account with you? It may not be your policy if they are only purchasing a relatively small amount from you, and mostly new customers are trust worthy. However, some people abuse your trust and as a result end up owing you money! Perhaps, as has happened in the past to me, claiming that you were supplying your service to them for free – how many businesses are in the habit of supplying a service or goods to another for free so that that business can make a profit leaving you out of pocket? Not many! The moral of the story? Check out new customers carefully, even if they are recommended to you by highly trusted friends and colleagues – sometimes those friends have been fooled as well.

How can you check out new customers? Take up references from their other suppliers. Although you may fee that this is a little over the top, it is a fast and effective way of finding out if someone is genuine. If they are not a new business and they have no credit accounts with any one else why not? If they are genuine there will be a valid and justifiable reason for this, and they will be happy to explain.

If you meet with resistance at the idea of taking up a reference ask yourself why. This reluctance may well be because they are covering up a problem in their past that they would rather you don’t find out about.

If the new customer is a limited company it is possible to obtain a copy of the latest set of accounts filed by them from Companies House. However, although these can be used to highlight the creditor payment days that the business employs, the accounts filed are historic and may not be a true reflection of the trading situation of the company today.

Another effective way of tracking a new customers credit worthiness is to go to a credit reference agency and pay for a check to be made. These agencies can be found relatively easily in your local phone directory.

Obviously, you have to take the final decision on whether or not it is worth investigating a customer’s creditworthiness. Perhaps it may not be worth it for a small initial order, but as the size of orders grows… reassess your position in this area.

What about those accounts that become overdue? How can they be avoided, and if not avoided what can you do to ease the payment?

To avoid overdue accounts some businesses levy a credit charge of all accounts which are not paid with in the required time period – often between 2% and 5%. Or, alternatively offer a discount to those who pay within a given time period (usually a period significantly shorter than the full credit period. Often these are enough to encourage the majority of people and businesses to pay up in time. However, it is not always the case.

When the credit period is overdue you have a range of actions which you can and should take.

  1. Send out a polite letter with a statement of account to the client, and follow it up with a polite telephone call a few days later if you have no response.
  2. If payment is still not forthcoming follow up with a firmer letter requesting immediate payment, and another copy of the statement of their account. Ideally you should send this by recorded delivery thus removing any possibility of the customer claiming that they never received it. At the same time stop any further supplies (I never cease to be amazed by the number of businesses who continue to supply people and businesses who are already causing credit management problems!).
  3. If a customer is persistent in their non-payment, but always pays up eventually either remove their credit facilities or charge extra to cover your additional cost and efforts (they may not like it but ask yourself if you really need to do regular business with this type of customer).
  4. If you have a large number of invoices you may consider that the best form of credit management is to get a third party to do it for you. This can be done by factoring invoices. By entering into this arrangement the third party takes over the onus of the collection of payments in return for a fee. Whilst this can be an effective way of managing your invoice payment collection, ensuring you a more consistent cash flow, it does cost, and you should ideally aim to use it for a short-term solution until your own system is in place.
  5. The ultimate resort is to take the bad payer to court. This can be achieved relatively easily and without huge cost by going through the small claims court.

Good credit control is all about trying to prevent problems occurring as prevention is easier than the cure.

The Bank Manager and I

Bank managers…  a business’ friend or a business’ nemesis?

Often banks, and, more particularly, their managers, are viewed with caution, or even fear. Bank managers are viewed by many business people with suspicion and a potential reason for business failure. But do they truly deserve the reputation?

One man I met as a potential client spoke with venom as he blamed his bank for the failure of his business. Despite my attempts at investigating the true reason for the struggling enterprise he would tell me no more than that the manager would not extend his overdraft so he could not buy food for his poultry.

A sad tale?  Or was it?

The attitude of this man was one of defensive attack when questioned about his problems. He was unable to recognise that he had a hand in his business’ demise, instead blaming the easiest person – his bank manager.

When the opportunity arose his wife informed me that the “businessman” would drive 70 miles to London to deliver a tray of strawberries or eggs to a customer if they ran out between their normal daily deliveries. Good for customer relations? Yes, but not when you do it three days a week! The result was that his profit was wiped out, but he didn’t realise it, and worse still he refused to accept it when his business’ problems were pointed out to him.

Why do people blame banks for their problems?

Often the first person to make a business realise that they have cash flow problems is the bank manager. Usually the manager will contact the businessman and explain the financial situation to him. Sometimes the businessman accepts the advice offered, sometimes they don’t.

Banks usually identify these problems before it is too late for the business to save the situation. It is at this stage that the business needs to act, with the help and advice of their bank.

Remember bank managers are human… Yes, human. They can and will help the business to identify the cash flow problem and potential routes forward. They will also help to identify the most appropriate sources of advice to help the business identify the most suitable course of action.

Businesses don’t fail because of their bank… but they may fail in-spite of their bank.

The moral is to talk to your bank and to work with them. Use the manager as a source of information and advice. Work with them and reap the benefit. Usually a business which works with it’s bank can and will survive. However, in situations where the business cannot be saved working with the bank instead of against it will help the businessman to preserve the maximum amount of assets that are left for the owner after the business is closed and all debts are paid off.

And what of the strawberry and egg man? I did not take him on as a client and he lost more money through his failure to accept facts. Fortunately for him and his family the banks refusal to extend his borrowing facility meant that he was left with some assets  –  had his bank continued to lend he would of lost everything.

Banks do not like to see businesses go under. Banks are only successful if those who bank with them are successful therefore they try to help businesses. Banks also have a duty of care

The Money-Go-Round

“My bank is bouncing cheques on me just when I’m making more profit than ever before. Why do banks do that?”

Does that ring bells with you? Too many of the businesses I work with say just that to me when I first see them.

The business does on the face of things look good. It is profitable and plenty of work is coming in. Nothing could possibly be wrong… could it? It’s just the bank being awkward… isn’t it?

Well, obviously something is wrong, but what?

Firstly lets get one possible cause out of the equation straight away. It is highly unlikely to be the bank. Why? Because, whether you like it or not, banks are NOT in the business of being awkward to their customers. Quite simply that would not be good business for them. They need their customers to succeed otherwise they (the bank) cannot and will not make money. Cheques will be bouncing because of an under lying problem in the business not the bank.

If it isn’t the banks fault what is the cause of this problem?

Ask yourself the following questions…

  • Do you always open your bank statements and check the payments and receipts that you think you made against the ones shown on the statement?
  • Do you offer credit terms? What are they? Who do you extend them to?
  • When do you send out your invoices?
  • How do you chase up late payers?
  • What are your credit terms?

All of the answers you make to these questions can have potentially damaging implication on the cause of a business’ problem at the bank. The all affect a business’ cash flow.

You need to be proactive in your approach to rectifying and issues that arise from your answers to these questions.

If you don’t open your bank statements, how can you identify a problem at that is on the horizon before it hits you like the intercity on its way to London? If you don’t have time to open them now, you will soon have plenty of time on your hands when your business closes!

If the figures in the statement don’t agree with what you think they should, why don’t they? Investigate!

If you offer your customers credit terms, ask yourself does YOUR business benefit from them or is it just your customer who benefits?

Do you send out your invoices regularly and check up to see that they are paid on time? Too busy? You soon won’t be!

Do you receive credit terms from your suppliers? Are the terms better or worse than the terms you offer your customers. If you are regularly paying out for goods and services before you are paid you are most surely heading for trouble?

You can have a profitable business, but have poor cash flow. The world has seen many profitable businesses come and go when, with care they would have thrived.