Managing Volatility in Business

With 2018 set to be another challenging year, managing volatility will be a skill all business leaders will need to nurture. Here is our checklist for helping you to review your business to ensure it’s as strong as possible. In this post, we focus on the elements that you can control especially from a cash flow perspective:

Review current activity

Put the customer at the centre of your efforts, make sure your customer relationships are solid. Remember it is easier to maintain what you have rather than win additional new business.

Review and map out the main processes in your business (e.g. sales processing, order fulfilment, marketing etc.) get your team members to suggest and challenge their efficiencies.

Review your budgets and set realistic and achievable targets. Use ‘bottom up’ budgeting where everyone in the office gives input on areas over which they have control – target a 10% cost saving.

Review your realistic staffing needs over the next 12 months…

Get your members of staff involved in a discussion of likely trading conditions and get their input on reducing costs and maintaining revenues.

Review your list of products and services and eliminate those that are unprofitable or not core products/services. Any services identified as ‘non-core’ can be outsourced.

If appropriate, review banking facilities and discuss future needs. If you are going to require additional funding ask for it at least 3 months before you need it.

Measure, Measure and Measure again.

Bring your planning time horizon in to the short term, establish your key performance indicators (KPI’s) and measure them on a weekly basis e.g.

Sales leads generated

Sales fulfilled

Cash balance

Stock turnover

Debtor days

Gross profit

Net profit

The weekly review should include setting objectives and reacting early to trends, managing volatility is a hands-on activity and is the primary responsibility of the business leader. For more advice on which numbers to focus on read our blog on Keeping Control. 

Manage Cash

In challenging times, whatever size of your firm, there is one immutable truth – cash is king.

Identify and get rid of won’t pay customers, review debtors list and chase up overdue invoices. Make sure your terms of business contain explicit payment terms. Offer existing debtors inducements to pay early. Offer all debtors flexible ways to pay and assign responsibility to one individual for invoicing and collections.

One last thought…

In conclusion, in volatile times things never go as planned. Some business leaders are inclined to want to reflect and plan for contingencies. Others will wait and then react as problems arise before dealing with it. We have seen both work – when managed properly. The important thing is for the business leader to pick one style and follow it through!

 

 

7 Deadly Sins that Stop Businesses Growing

I have worked with many businesses of different sizes and at different stages of their ‘life’, e.g.  early stage start-ups to mature businesses handing over to the next generation or exiting via a trade sale and ‘growing their business sustainably’ is always on the agenda.

All companies need to increase sales and improve their performance on a continuing basis if they are to survive.   However companies lose between 10-20% of their customers per year due to bankruptcies, mergers and simply because the customer stops buying.

Studies show that the vast majority (more than 66%) of companies consider that sales and marketing are the key issues for their business right now.  But they are less likely to do something about it than cutting costs.  Here are the 7 deadly sins – mistakes that many companies make in trying to improve their performance.

  1. Get out and do more sales calls
    This is the normal reaction of most sales managers. When the sales teams are not performing well they will require redoubling of efforts in either sales visits or telephone calls. But doing more of the same thing will necessarily get more of the same result: below target performance. A review of their target customers, messages and better understanding of benefits is more likely to achieve results required. They need to work smarter not harder.
  2. Discounting
    Discounting is an invidious way to get more sales – but most times it will not work. Yet many sales people will resort to this as a way of closing and trying to increase sales. It is easy for the lazy sales person and it is frequently a panic measure brought about by the first deadly sin. If you have not correctly positioned your product no amount of discounting your product or service will persuade your customer that it is even better value for money.
  3. Don’t bother to train you sales staff – ever!
    The average number of days spent training sales people in the UK is 1 day per year! In the US it is more like 2 days per month – and the results show. To become top performers sales teams need to be trained on technique, process and the benefits of the products again and again. Many companies consider the training budget to be a cost but they should look at it as an investment.
  4. Do not target customers
    Allowing your sales people to do what they like, or go where they like to get orders will result in an increasing number of low value customers that will not contribute significantly to your bottom line. Your costs will increase as sales people will travel anywhere to get orders, no matter what the value of those orders whilst your competitors will meanwhile grab the biggest and best customers at your expense.
  5. Do not set your targets for your sales team.
    By not setting targets your sales team will not know what is expected of them, nor will they know which customers to target and the sales manager will find it difficult to motivate them to a better performance. Sales people who are not comfortable with targets are just that – comfortable. They stay within their comfort zone and do not rock the boat. Generously, you could say they are order takes not professional sales people.
  6. Do not bother with all that ‘fluffy bunny’ motivation stuff!
    Selling is a tough occupation and motivation needs to be a regular part of the sales/business manager’s activities. Identifying what the right sort of motivation is for each of the sales/accounts team and then working on that will help turn average sales people into stars. But start with your own attitude. Attitudes are contagious. Therefore ask yourself, is yours worth catching?
  7. Never ever, ask for the order
    More than 70% of sales people do NOT ask for the order! They may well qualify the prospect right, identify the benefits for that particular customer, do a fine presentation, answer all the objections, but then do not complete the sale. Often fear of rejection is at the root of this issue. But by not asking for some form of commitment they are leaving the door open for the client to say “I’ll think about it.”

Just having read through the above 7 deadly sins should have given you some pretty good food for thought about your own company.  Ask yourself, how many of these sins do you think your customer facing team commit on a daily/weekly basis and is there anything that you can do to improve their overall sales performance?

If you need support in growing your business sustainably, book your FREE confidential meeting by completing the ‘Contact form below.

Growth Video Testimonial: IT Solutions Provider, Peak Support Services

How CMC helped this owner to increase profitability within 18 months:

Listen to the Managing Director of this successful IT Solutions provider on how his local CMC Partner, Richard Lloyd helped him to increase the profitability of the business and be in control of the business destiny.

Business: IT Solutions Provider

Number of employees: 15 people

‘In 18 months of working with our local CMC Partner Richard Lloyd, we achieved £60,000 profitability that we wouldn’t have done without his help…..I believe we are now in control of the business destiny and will continue to grow with the assistance of Richard’. Rob Broatch, Managing Director of Peak Support Services.

‘Richard is results orientated, he’s got fantastic vision and as a benefit he is a delight to work with so I highly recommend any company wishing to grow to work with him’. Rob Broatch, Managing Director of Peak Support Services.

Do you need help with your business growth? Contact us today to arrange a FREE confidential meeting 

 

managing your business

Are you managing your business?

or is the business managing you?

Most business owners believe that they are managing their business well, and many are. But it is all too easy for ‘the boss’ to feel that, so long as he is giving the orders, he knows what is going on and all will be well…Until things start to go wrong.

At that point, the doubts creep in and one needs to conduct a searching re-evaluation of what is going on. Not always easy to do without feeling a loss of reputation or credibility with staff and customers.

Fortunately, there is a simple checklist – some questions that a business owner can ask himself. If the answer to any of these is ‘NO’, then there exists a clear need to review the whole process of managing that business.

10 Questions to help you manage your business

 

1. Do you hold regular (monthly) Management Review/Board Meetings?

Getting all the key players in your business together once a month is the best way of managing business effectively, ensuring that everyone understands the latest position and priorities.

2. Do you review a full set of management accounts at those meetings?

This should include the latest Profit & Loss statement and year-end profit forecast. It is always good to share such information and sharing it with trusted senior managers is the best way of gaining full understanding of what needs to be done and who is taking responsibility.

3. Do you also review the order pipeline?

Having the clearest possible fix of prospects for new business is the first measure of the business climate, and can lead to more meaningful discussions with customers and the launch of relevant marketing promotions.

4. Do you undertake periodic customer surveys?

Many business owners think they ‘know’ their customers. The occasional independent survey will validate that, as will talking and listening to the Customer Services team. Furthermore:

5. Is there a formal complaints reporting and response process?

This is the best barometer of customer opinion and the front line for maintaining a positive reputation in the marketplace.

6. Do all staff have job descriptions and is performance reviewed annually?

This is especially relevant in understanding your staff and building their confidence.

7. Do you review responses to your website; is it updated regularly?

Nowadays we all think we understand the power of social media. But there is a need for sustained marketing investment (however modest) which cannot be ignored.

8. Do you issue regular newsletters/blogs to customers and staff?

Customers and staff really appreciate such communications because it shows that the business owner is really aware of their needs and is listening.

9. Do you have a rolling new product development plan?

If your product or service is dating because it faces increased competition, you need to upgrade it. This programme should also be reviewed regularly to ensure that ‘mission creep’ does not delay the vital launch of a new initiative.

10. Do you have a three-year business and marketing plan?

The three-year cycle is important in ensuring that the longer-term goals of the business are not forgotten. In a ‘short-term-ism’ age, this is easily done!

For many businesses, such changes represent a considerable change and challenge to ‘the way we were’. But our experience shows that answering ‘NO’ to any of the above represents a longer-term business under-performance and, ultimately, a weakened exit valuation. No business owner wants to see his lifetime work undervalued when the time comes. So it’s worth making the change now.

CMC Partners work with business owners to realise their full business potential, providing growth and exit strategy development. To book your FREE confidential meeting, complete the form below.

Long term success

12 key tips to aid entrepreneurial long term success

As an aspiring entrepreneur the thought of starting up your new business is exciting, challenging and, nerve racking.  You have the perfect business idea. You have identified a gap in the market, you have the skills and passion to differentiate yourselves from others. Now what?

The mechanics of setting up a business are fairly straightforward with thousands of people doing it every year, but 1 in 3 business start-ups fail in the first 3 years. How can you improve your chances of setting up and operating your business for long term success?

CMC Partners since 1989 have successfully supported business owners, helping to realise their full business potential and helping to provide growth and exit strategy development.

Our partners have applied their years of business experience in setting up and growing businesses to develop these key tips to aid entrepreneurial long term success.

These tips will help avoid the common start-up pitfalls and achieve long term business success.

1. Get started, the finer details will develop

One of the most common mistakes made by first time start-up businesses is spending too much of their time pre-launch focussed on the intricacies of their product or service.  This is both quite natural and understandable. After all, starting a new venture is a big step and it is important to get it right.

2. Talk to potential customers to gain valuable market research

We have often observed a reluctance by aspiring entrepreneurs to actually start talking to potential customers. Admittedly, this is a challenging step for people with a great business idea but who have little or only limited experience of selling. One consequence is an almost inevitable tendency to rely far too heavily on their own personal perspective. The alternative is to take a much more market-orientated view of the world – one that strives to put the needs of the customer right at the heart of the business. Adopting this approach means the sooner you engage with potential customers – ask questions, share your ideas, listen to their opinions and adjust your ideas in the light of market research the more robust your business plan is likely to be. As military strategy suggests “No battle plan survives contact with the enemy”.

3. Craft a clear value proposition to connect with your target audience

This is the clear articulation of why customers should choose your product or service rather than a competitors. Read more about why it’s so important here

4. Develop a structured business plan to take your business forward.

Business plans are not just for banks. All businesses should have a plan. How else can the owner or the employees understand how the business is going to move forward?

5. Build a support network and ask questions

Your support network could come from a variety of sources – friends, people in the same industry, other local business people, mentors, and/or business advisers. You can build a local network by attending and/or connecting online with networking groups in your local area. Use your network to ask questions. The only stupid questions is the one you don’t ask.

6. Really look after your customers

 Customer service should be the heart of your business. Exceeding customer expectations can help attract and retain customers. Always deliver a quality product or service, on time and within the agreed budget.

 7. Be on time with invoicing and keep a record of outstanding amounts

 Your customers should always pay promptly, but every now and again you may need to remind them. Do this politely and clearly. Invoicing software can be a great addition to your business by allowing you to send invoices while at home or on-the-go, helping you get paid faster.

8. Hire the right people into the right job

 One of the most difficult steps in starting up and growing a small business is taking on employees. You need to think rationally as to what type of person can help you, what tasks can and need to be delegated, what skills are required and then create a job description. This blog may help you approach employing people in the right way. 

9. Be clear on what profit is and measure it

 The true profit of a business is the only measure that matters when it comes to long term success and ultimately a successful exit when it is the crucial valuation measure. It’s important to get it right from day 1. Examine the profitability of your business and test your pricing and cost assumptions to destruction. Read more on what profit actually is.

10. Be agile for long term success

Be willing to learn, adjust and adapt. Agility is a very important trait for the successful entrepreneur.

11. Protect yourself with a robust shareholders agreement

Start-ups understandably focus on positive outcomes; but take advice early and ensure you have a robust shareholders’ agreement in place from the start.  Founder shareholders often fall out and establishing clear ‘good leaver’ and ‘bad leaver provisions’ helps avoid pain, cost and resentment if it becomes necessary to part company at a future date. Discover more about shareholders agreements

12. Get an exit strategy, it’s never too early

In order to maximise the ‘life time’ value you get from your new business, it is essential to start to consider how you may exit or leave it at a later date. By carefully planning your exit strategy early you can shape your business into the ideal position for your chosen exit option. Ideally include it in your business plan and review annually. Read more about exit strategies here

 

These tips are very much focussed on starting and growing your business onto the next level in line with your personal business objectives. Starting up a business is the easy bit, it’s the growing for long term success that presents challenges.

CMC Partners are trusted experts at helping business owners to grow a profitable business, solve business problems by helping you make important decisions and increase value. We provide a personalised and local service with a range of practical advice and perspective. As business owners ourselves, with a proven track record of success, we give trust and confidence that we can make the difference. We may be able to help your business.

Get in touch to book your FREE 2 hour confidential meeting.

Too busy operating your business to even think about growing your business?

Growing your business?

When talking to owners of established small and medium sized businesses, I have found one issue to be remarkably common: Owner-managers having to focus on the day to day running of the business to such an extent that thinking about managing and growing your business is neglected.

Why is this problem so prevalent? The recent economic climate has led to as many costs as possible being stripped out of small businesses leading to a skeleton work force being run with an ‘all hands on deck’ approach to carrying out lower level duties or operational tasks.

This approach inevitably results in the owner perceiving a necessity to themselves become embroiled in the day to day operational issues to ease the running of the business.  This is at the risk of neglecting the overall strategy and their personal objectives.

It is all too easy for this inability to see the wood for the trees, to become a spiral from which it is challenging to escape.  This vicious circle can lead to the owner manager feeling in a ‘catch 22’; though aware that the tasks they are carrying out should be delegated, the seeming urgency of the situation means that delegation is not an option.

What is the net effect?

These are just some of the detrimental effects of such a situation:

  • Every day-to-day decision making depends on the owner manager.
  • The strategic view of the business risks being de-prioritised or even lost
  • Employees feel less empowered with regard to decision making
  • Employees reduced authority leads to a decline in job satisfaction levels
  • The staff not only become, but also feel, less valued
  • The company is distracted from fulfilling its growth potential
  • There is no specific focus on growing your business
  • The value of the business is not fully realised.

That the value of the business will not reach its full potential is the prevailing effect of such a situation.  When trying to exit and sell, the business’ consequent dependence on the owner manager’s knowledge and on the owner manager as a resource within the business is infinitely less appealing to a prospective buyer.

Stand back, review the situation and focus on managing and growing your business

Removing the business’ dependence on the owner manager is key to allowing them to take time to stand back from the business, to review the strategy (and exit strategy) and consequently increase the asset value of the business.

Whilst not having to channel all your energy into the day to day running, you, the owner manager are now free to focus on key issues that are an imperative to successfully managing your business and growing your business, such as:

  • The key numbers and accounts
  • Sales Targets
  • Marketing & opportunities
  • Staffing and Resource management
  • Processes
  • The organisation
  • Facilities
  • The strategy and vision of the business – strategic planning

img-grow4

The owner manager can then get back on track with clear plans and personal objectives, enabling a less stressful, more effective role within a healthier business.

Stuck in the operational issues of the business? Neglecting the bigger picture? Very busy but going nowhere?

If this feels familiar and you would like discuss the working approach please contact CMC via the form below.

business sale - Brian Baker

Case Study – Successful Business Sale and Secure Retirement

Successful Business Sale to Provide Secure Retirement for the Directors – Graefe Ltd

CMC provided expertise, experience and guidance to the capable directors in successfully selling their business for a price beyond expectations. Find out how CMC Partners helped with this business sale by downloading the full story below.


The Challenge:

  • To sell the business
  • Achieve sufficient capital gain, allowing comfortable retirement for the directors
  • Complete the sale within 2-3 years time frame
  • Little disruption to the operation of the business

The Benefits:

  • Increased business value, allowing directors to retire comfortably
  • Exit/sales process completed within 2 and half years
  • Quick and efficient transfer of business ownership

When selling a business, finding someone with the knowledge is important but finding someone you can trust is paramount. We trusted CMC and we knew they were on our side. It was not a process they applied to us, but a journey that we took together. Brian Baker – Former Managing Director of Graefe Ltd

 

Selling your business

White Paper: So you are thinking about selling your business?

The decision to thinking about selling your business is one of the most important and emotional business decision you will ever make. It’s life changing with no room for error.

Thinking about your exit strategy early will give you the time to maximise the return on your investment for when you choose to sell your business. If you wait until events overtake you, the outcome may be disappointing.

This white paper will provide you with the knowledge on exit strategies and the process of selling your business, if that’s the option you wish to take.

What this ‘thinking of selling your business’ white paper covers:

  • The importance of planning your exit strategy
  • How to calculate your business worth
  • The 6 step selling process – how long it will take to sell
  • Basic business health checklist
  • Factors that can improve your business valuation
  • Tax planning
  • After the sale

We couldn’t have gone through our business sale without CMC. We knew what we wanted to do but we just didn’t know how to get there. CMC knew the selling process and was able to advise us each step of the way. Brian Baker – Previous Managing Director of Graefe Limited.  Read how we sold Brian Baker’s business for £3.2m here 

Download your copy by simply completing the form below

We shall then email a copy directly to you.