Sales

Taking Control of Business Growth

The first thing to say is that for most small businesses, business growth is a very realistic option. My logic for this bold statement is based on observation and common sense. Firstly, most small businesses only have a tiny share of the market they serve – howsoever they choose to define their market.

Secondly, and just as importantly, the vast majority of the small businesses do excellent work and have very happy customers.  The least risky growth option for any business is simply to do more of the stuff they already do well – what marketing people call “sticking to the knitting”.

Business Growth Essentials

So this is the obvious starting point for absolutely any business that wants to grow. Before doing anything else the owner must address a number of fundamentally important questions:

  • Why do I want to grow the business?
  • How much growth do I want and how quickly do I want it?
  • Where is the new business going to come from?
  • Are the marketing and sales plans in place to generate the new business?
  • Does the organisation have the capacity to cope with the increased level of activity?

Why do I want to grow the business?

You need to have a good reason for embarking on a business growth path – to know what you want to achieve. Growth means change for the organisation and the team. It will put the operation under more pressure and almost certainly involve spending some money – and it involves some element of risk. So, having a bigger revenue number only makes any kind of sense if the profit grows at the same, or preferably faster rate. A bigger business may enable the company to serve larger clients, attract better staff, achieve higher efficiency, buy more advantageously – in fact a whole host of different outcomes.

How much and how quickly?

Good management is all about setting specific, measurable targets. Both businesses and people need targets to provide a focus for activity and to provide the motivation, reward and recognition for their efforts and commitment. The answers to these questions enable you to anticipate and plan the resources you will undoubtedly need. Knowing what you want achieve enables you communicate your vision to the people around you and, most importantly, lets everyone know when you have been successful.

Where is the new business going to come from?

New business can come from a variety of sources. Perhaps most obviously by selling more to the existing clients or by finding entirely new customers. Based on my earlier premise, that small companies have plenty of market to go at, there is always a lot of ways to answer this questions so some decisions are needed.  The plans and resources required will depend on the choices you make.

Are the marketing and sales plans in place to generate the new business?

Stuff doesn’t just happen. You cannot continue to do what you did before and expect to get a different result – you have to do new things, or extra things or change the way you have always done things to produce a better outcome. You need a proper plan – not just the intention to try harder!

Does the organisation have the capacity to cope with the increased level of activity?

The more I work with small businesses the more convinced I become that the solution to most of their problems are the result of insufficient “capacity” or making poor use of the capacity they do have. A phrase I use is the ‘businesses ability to do stuff.’ Small businesses are commonly full of very busy people. They are also very commonly full of duplication, inefficiencies and incomplete or imperfect processes. The result is that some significant proportion of the businesses “capacity” is simply being wasted. This shows up in lots of different ways and is often only apparent from the outside. Setting out to improve business growth without being certain you have the capacity to service the new demands is a recipe for disaster.

Was that helpful?

A lot of the ideas mentioned here are explained in considerably more detail in the white paper – Growing Your Business – the People Dimension which can be downloaded from the resources section of this website.

Will my firm benefit from an apprentice?

Many of our clients ask, how will my firm benefit from an apprentice?

The Government has promised 3 million new apprenticeships by 2020, funded by the recently introduced apprenticeship levy.

Employers today are waking up to the benefits of apprenticeships. This can either be employing a new member of staff as an apprentice or encouraging an existing employee to further their career by taking an apprenticeship.

How the funding works

If you’re an employer with a pay bill over £3 million each year, you will have been paying the 0.5 % apprenticeship levy from 6 April this year. Firms subject to the levy will receive a £15,000 annual allowance, to be offset against the bill. This effectively means that employers with an annual pay bill of £3m or less pay no levy.

Firms not paying the levy, who offer apprenticeships to 16 to 18 year olds, will receive 100 per cent of the cost of the training from the Government. Employers will have to pay 10 per cent of the cost of the apprenticeship training for those aged 19 and over and the Government will pay the remaining 90 per cent, up to the maximum funding bands.

For non-levy businesses with less than 50 employees there will also be a new £1000 incentive towards apprenticeships for taking on someone aged 16 to18.

Details of the workings of the apprentice levy can be found here.

With all the focus on the funding the question moves on to ‘will my firm benefit from an apprentice?’

Benefits of apprenticeships:

  1. Apprenticeships provide skilled workers for the future

Apprenticeship training helps employees to improve their skills, which will benefit the firm in the long term.

An apprenticeship will also ensure that the skills developed are matched to the firm’s future needs. This will help fill any skills gaps and allow the business to source future managers and leaders from within.

  1. Apprenticeships increase staff loyalty and retention

Employees who have been trained in-house tend to be highly motivated, committed to the firm and supportive of its objectives.

An apprenticeship encourages employees to think of their job as a career and to stay with the firm for longer, which reduces recruitment costs. Offering an apprenticeship to an existing member of staff shows that you see them as an integral part of the workforce and are happy to invest in their future.

  1. Apprenticeships increase a company’s bottom line

Investing in staff trained through apprenticeships has a positive effect on a firm’s finances, making it more competitive.

Furthermore, as companies receive funding for each apprentice they take on, it means they don’t have to spend as much to recruit new staff.

  1. Apprenticeships free up existing staff time

As a firm grows, staff often find their time is taken up by smaller tasks when they should be concentrating on their key areas of work. Delegating basic jobs to an apprentice allows them to learn and take responsibility. Freeing up the time of your more experienced staff.

  1. Apprentices can revitalise a company

Apprentices often bring a fresh approach and a positive attitude into the workplace. Which can have a knock-on effect on existing staff. By embarking on an apprenticeship, they are showing themselves to be willing to learn and can bring new ideas into the company.

As apprentices come from a range of backgrounds – including high-calibre candidates who do not want the costs of going to university – they can bring fresh insight into your business activities.

In conclusion, a firm that is willing to benefit from an apprentice is showing a positive approach to Corporate Social Responsibility, which is good for attracting both customers and future high-quality staff.

 

Sales

Are you approaching employing people in the right way?

Thinking about employing people?

One of the most difficult steps in starting up and growing a small business is the taking-on of employees.  Just thinking about who to take on and recruit can seem very daunting, after all they are going to be working with you for the ‘duration’, you will want to trust them, you will want to rely on them in tough and challenging times, you will want them to be able to work on their own, and you will want them to do things that they might not have originally signed up for..

The reason that you are looking to recruit someone is likely to be that you are working to full capacity; you have a strong order book that seems difficult to fulfil; and you are thinking of turning business away because you are that busy.

So, who do you recruit?

  • Do you employ someone who is straight out of school or university, who will be easily affordable, but is likely to take up a fair amount of your time? Or,
  • Do you employ someone who has been working for a few years, so that they can be left to fend for themselves for most of the time? Or
  • Do you bring in someone that is highly experienced, but that can be expensive and they may be used to working in certain ways?

This is a challenging decision, and who you take on will inadvertently affect the next person you look to recruit as you build a team.  If you bring in someone inexperienced, who do you bring in next and at what level? Will that then diminish the prospects and enthusiasm of the first recruit?

What you shouldn’t do

One of the biggest mistakes is to take on person you know or have met and then fit them into the business somehow.  This may be because they are a friend or acquaintance who seems like a good person, who you think will be reliable and you think you know him.  This can lead to mis-managed expectations and ill thought-through plans and potential conflict.

In my dealings with small businesses this ad-hoc approach seems to be more and more common where taking on someone you know seems a good cosy and easy short cut.  However, whether it is the perceived expense of the recruitment process [recruitment agency]; the ‘it’ll be alright on the night’ syndrome; the time it takes to specify exactly what type of person you want; or the time and effort to go through the recruitment process, it is not a good idea.

Stand back and create a job description

It is far better to stand back from the day to day firefight and think rationally as to what type of person can help you; what tasks can be delegated; what tasks need to be delegated; what skills are required to carry out these tasks, and create a job description that will help the prospective new recruit understand what they are going to be required to do and how they are expected to behave.  It should also enable you focus on ‘the important stuff’.

You will also need to set up expectations [contract] so that understand the working practices, holiday requirements, levels of flexibility required; the definition of overtime; what they are expected to do when you are away etc.

Prepare the ground for employing people

There are many issues associated with growth and the scalability of small businesses, specifically when it comes to employing people.  If you need help in preparing the ground for employment in your business, I would be very happy to meet up and discuss.  For more information or an appointment to discuss preparing the ground for employment please complete the form below.

How can an exit strategy benefit your future?

Like many business owners, you have devoted immeasurable amount of work and resources on developing your business. When your busy with every day operations, it’s difficult to find the time to think about your retirement plan and when to exit your company. Developing an achievable exit strategy is an essential task and too few owners give it proper consideration. It can help you realise your businesses full potential whilst maximizing its sale value.

74% of entrepreneurs in the UK risk long-term business success by not giving proper thought to their exit strategies’ Deloitte Entrepreneurship: UK 2008

With all that you have invested, doesn’t it make sense to plan an exit from your business to protect your future?

What is an exit strategy?

An exit strategy is a plan on how you intent to leave the business. We know this is not as easy as it sounds. Your business has been a significant part of your life and dreams. Contemplating a future apart from it can be difficult to visualise. As hard as it may be, you need to start thinking about your own goals, targets and timescales to ensure your exit is within your control.

What should an exit plan include?

Your exit plan can be a simple one page document but should include:

  • Deal Structure
  • Timing
  • Preferred buyers
  • Business valuation considerations
  • Actions

The key is to understand that an exit is a process that may occur over many years and there’s more exit options than simply selling your business. For example you may choose to set up a management team in order to take a back seat while receiving a regular income.

An exit strategy ensures your vision of the desired outcome is achieved and helps to minimise the risk of failure or disappointment.

Carefully planning your exit from your business has huge benefits:

  • exit your business at a time of your choosing, when the business is doing well and the market conditions are advantageous
  • mould your business into the ideal shape for your chosen exit option – maximising the value you get from it
  • prepare successors if they’re coming from within the business, this could be a family member or part of your management team
  • prepare the 2nd tier management team, if you wish not to sell but draw a regular income from the business
  • make your business more appealing to potential buyers, if you wish to sell

If you don’t have an exit plan in place, we would recommend you think about creating one now, even if you expect to work for another 10 -15 years. Preparing a exit strategy is good practice and can help shape your business to achieve your future plans for life beyond your business.

Take control now to get the maximum value out of your business by contacting us to arrange for a free appointment.

White Paper – How healthy is your sales process?

How confident are you that your sales process is in good shape?

Download this short checklist to give you an indication of how healthy your sales process is, whilst giving you ideas of how to improve it.

This 16 question checklist includes:

  • Generating new customers
  • Sales opportunities
  • Communication with clients
  • Inbound enquires record
  • Pricing decisions
  • Discounts
  • Customer base
  • Top customers
  • Measurements
  • New ‘wins’
  • Product/service developments
  • Lost customers
  • Commission

Download your copy of ‘How healthy is your sales process?’

Simply complete the form below and a copy will be emailed directly to you.

Induction & On-Boarding Checklist – How can you help new employees become productive sooner?

Are you thinking of recruiting new staff or have you experienced challenges when introducing a new team player?

Helping new staff members to feel ‘at home’ as quickly, and easily as possible has multiple benefits for yourself as the employer and your new employee.

Download this short checklist to make your induction and on-boarding process more effective and less disruptive for yourself and your team


Key takeaway in this checklist:

  • Role and Structure
  • Training needs
  • Expectations
  • Introductions
  • Development diary
  • How to keep the rest of the team happy

and more ……

This checklist contains sensible and pragmatic advice, based on a wealth of business experience.

CMC Partners help to realise your full business potential.  We provide growth and exit strategy development for business owners. Helping to solve your business problems with a range of practical advice and perspective by experts with a track record or success.

DOWNLOAD your copy by simply completing the contact us form below. A copy will be emailed directly to you.

How to profit from profitability

Sounds odd, doesn’t it? But it’s amazing that business owners sometimes do not know what profit is. And how crucial is that in attaining your Business Plan objectives? Much has been written on the subject, but they tend to plunge into technical accounting terms all too quickly. We hope to clarify more within this blog.

A few simple thoughts for starters who wish to understand more about what profit actually is.

Being profitable is not the same as making a profit

Your business may be capable of generating profits on paper (and this is where the accountancy stuff can confuse), but making true profits (i.e. exploiting the Company’s profitability) is down to good management, pure and simple.

Cash is not the same as profit

Some folks feel that they are making a profit just by looking at the bank balance. If it shows a healthy surplus, they may assume that they are coining it. This ignores the fact that payments arrive at different times unrelated to related expenditure invoices.

Invoiced sales may show up as being profitable in the monthly Profit & Loss account, but should always be viewed in conjunction with a monthly Cash Flow forecast.

Control of cash flow is vital. Only if you know your inflows and outflows will you avoid a nasty shock somewhere down the line.

Net Profit is not the same as Net margin

This sounds pedantic, but Net Profit is a cash figure and Net Margin is the percentage expression of that profit as part of total revenue. Bank Managers are seldom impressed if a business owner does not appear to realise the difference!

Net Profit is not the same as Gross Profit

Sometimes, we hear business owners saying that they are profitable when they are not. This is because they see Gross Profit as the ultimate measure of profitability, when in fact it only measures the profit after deduction of the direct operating cost of achieving sales. Lurking further down lie all the other overheads, which must be deducted to arrive at a true Net Profit measure.

Debunking the fears surrounding ‘EBIT’ and ‘EBITDA’

These terms are sometimes confusing as they can prompt business owners to think that there are other measures of profit that they ought to know about; when in fact they just consider profit in a slightly different way. They are useful when comparing different companies in the same industry, as they strip away costs that vary from company to company – often handy when making comparisons with competitors when assessing relative strengths and weaknesses – not to be regarded as Something Completely Different.

Definitions:

EBIT is the operating earnings of the firm before interest and tax. It is a measure which indicates the firm’s earning capacity from regular operations and is helpful in analysing the company’s operational efficiency, ignoring interest and income tax expenses. As these two variables differ from firm to firm, it provides an ideal measure to compare performance with competitors.

EBITDA is an acronym for Earnings before Interest, Tax, Depreciation and Amortisation. It signals a company’s profitability and performance on the basis of operating decisions, ignoring the impact of non-operating factors like cost of capital, non-cash items and tax implications. As these factors vary from company to company, it allows the users to analyse the profitability of the company using an ideal performance metric. In this way, the comparison can be easily made between different firms of similar size and nature.

The true profit of a business is the only measure that matters when it comes to long-term success and – ultimately – successful exit, when it is the crucial valuation measure. Important to get it right from Day One.

Why business owners make the best salespeople

Good-SalespersonBusiness owners are often very keen to delegate sales responsibility to qualified salespeople – but is this the best choice for their growing business?

As the business grows the owner increasingly needs to let go of the detail and concentrate on doing those tasks which add the greatest value for the business.

It is very commonly the case in small businesses that the owner, the person who actually started the business is a practitioner – an engineer, a scientist, a marketing or design guru, a recruitment specialist and all the rest. They usually do not have any kind of sales training so their understanding of the sales process and selling activity is limited or non-existent.

Consequently, there is often a very strong desire on the part of the owner to delegate responsibility for sales – and often as soon as humanly possible!

But, however much the owner may dislike selling, it is often the owner who is the best sales person for the business – and usually by a very long way. This may at first glance seem quite counter-intuitive. Here is a person with none of the training and none of the skills, trying to do a job they would rather not do be doing – how can they possibly be successful?

Core competencies

The answer is fairly straightforward. Almost every study of buyer behaviour highlights the fact that buyers value certain things very highly – and that competence in these “core areas” is key to securing their trust and confidence. The core areas are:

  • Confidence in their offering
  • Sound and detailed knowledge of their product or service offer
  • The ability to listen and correctly interpret the client’s requirements – and propose an appropriate solution
  • A good understanding of the competition
  • Knowledge of the marketplace and best practice

The trust and confidence of the buyer are clearly crucial if you want the win business. You do not need to be a rocket scientist to recognise that the person who started the business will have at their command a better understanding of all of the points above than any newly appointed salesperson.

Passion & Objection handling

There are two additional factors to take into account with this analysis. Firstly, the owner is passionate and committed to the success of the business; their enthusiasm is compelling and infectious – it is his or her livelihood after all.

Secondly, the owner has dealt with rejection and disappointment as a natural and necessary part of getting the business established.  A push back or an objection from a client is unlikely to come as any surprise to the owner – they have heard it before and will usually know how to turn the argument to their advantage. Dealing with sales objections confidently and knowledgeably comes very naturally.

The right salespeople, at the right time

Of course it make sense to take on salespeople and start them on the journey of acquiring this knowledge and understanding as soon as possible. And there are lots of sales tasks that can be delegated to them along the way. But for the big strategic deals – the ones that you must win – the owner has to lead the charge.

In companies where the owner delegates responsibility for the sales too soon, all sorts of problems and difficulties can arise. The owner with little or no formal training in sales, who has never hired a sales person or never managed a sales team is almost certain to make a lot of mistakes. They will take on the wrong person, not appreciate what resources and support the sales person will require, lack the understanding to set and measure appropriate performance targets. And, a lot more besides.

What started out as delegation is nothing less than abdication – a complete loss of control – and things can, and often do, go horribly wrong.

If you’re struggling with sales or sales staff or if anything in this blog resonates with your own experience, feel free to call Bob on 07940 526801 or email him for a FREE initial consultation.