Perspective - the key to unlocking business growth?

Perspective is about the "eye of the beholder" - pretty artistic theme you might think.  When we use perspective in relation to business the same holds true but we are generally dealing with more complex concepts than 3D geometry. 

If you are standing outside a business - and looking in - your judgements about a whole set of issues and topics will probably be markedly different from the judgements of those working inside the business.  Take an apparently simple question, such as "Is this a good business?"

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SME Finance behaviour - the facts . . .

In the Internet age, data is ubiquitous but essentially worthless.  Finding anything useful on the Internet too often requires us to sift through endless amounts of garbage.  Analysis on the other hand is relatively rare and generally worthy of attention.  Good solid research always makes interesting reading - which brings to mind a report I came across today about SMEs and their behaviour/experiences related to finding money for their businesses and summarises the data for 2012. 

Have a look at bdrc continental where you can download either the full report or just the management summary - which is well worth a read.  There is much here that the directors or owners of an SME will find interesting - whether it has to do with success rates applying for overdraft renewals or the percentage of SMEs who have decided to never seek external finance - a group that is both significant and growing.  It also looks at owners' willingness to personally finance their business.  There is lots more and it is all good stuff.

Even if you only use the report as a yardstick by which to benchmark your own company's attitudes to finance - and success rates when it comes to applying for finance - you should derive considerable value from the exercise.  The report highlights that there is a significant spread in terms of adoption and success across this whole area.  

In our view this underscores the need for SMEs who have little personal experience in this area to seek specialist help when they are looking for external finance.  CMC are in the process of preparing a white paper for business owners "thinking about raising finance for their business" which will be available from our downloads section shortly. 

Here be dragons!

The management shelves of your local business school library are filled with examples of businesses who believed that success in one market was a sure fire guarantee of success in another.  They were wrong and they usually paid a very high price for their error!

Sometimes the new venture is a completely random departure - there is no rational linkage between the exisiting business and the new opportunity.  It is the product of an excess of enthusiasm or a lack of critical judgement - or more likely a fatal combination of both.  Sometimes, the step is so small as to appear almost inconsequential - an obvious, logical progression.  An example might be moving from selling a product to renting the same product instead, or selling what appears to be an obviously complementary product. Both are fraught with peril - a step into completely uncharted waters.

This is one of those situations when asking someone in the team to play "devil's advocate" - is not just desirable but an absolute necessity.  All the assumptions need to be thought through, laid out and then challenged and tested.  The evidence, if there is any, needs to be reviewed and re-evaluated - is the analysis accurate, is there an alternative explanation for the observed behaviour, how significant and/or representative was the sample, do we have the right skills and the right people.  Most importantly, do we have enough cash to fund this new venture?

The danger is greatest, when the person championing business diversification is the boss.  MDs take note.  This is where you can demonstrate genuine leadership.  Develop a rigorous process to test and challenge new business ideas.  Then, make it absolutely clear that your own ideas will be subjected to the same level of scrutiny as anyone else's.  

It is far better to trash an idea in the board room than let it escape into the market - where the financial cost will no doubt be far higher but the damage to reputation may be incalculable.

Life after Work?

The simple truth is that I meet far too many business people who have given no thought to what happens when they no longer want to, or are perhaps no longer able, to run their business every day.  Those who have given the subject some thought have often concluded that there is plenty of time to do deal with this in the future - but, not surprisingly, have not actually gotten around to doing anything concrete to make an "exit" a viable possibility . . . 

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Satnav for your business?

At CMC Partners, our proposition is fairly simple.  In our view, running a business without an exit strategy is like jumping in a car and driving - but with no planned destination.  The analogy is both accurate and appropriate - let me explain . . . 

If, we suggest, you know where you are going four things become a great deal easier:

• you will be in a position to make sensible decisions about the route you should take
• you can avoid obstacles or detours that would otherwise disrupt your journey and delay your arrival
• you will have a clear idea of how much further you have to travel
• you have a real chance of recognising when you have arrived

And finally, to stick with the model for one last observation, every journey has a starting point.  Our approach to helping owners map their future journey starts with exploring and agreeing the owners goals and objectives and achieving a clear understanding of the situation in which the business currently finds itself.  Only by understanding the starting point and the final destination as defined by your personal objectives can you set down the strategy and the plan which will deliver the outcomes you require. 

QED