White Paper – Taking Control of the Cash in Your Business

Do you feel in control of the cash in your small business?

For small businesses cash is the lifeblood to keep daily operations running. Too many business owners struggle to manage it effectively or recognise the importance.

‘92% of business owners surveyed experienced problems from time to time or consistently.’ CMC Partners Survey 2016

It is normal to have cash flow inconsistencies but being in control is essential.

This whitepaper covers:

  • Basics of accounting – what is profit, determining business viability, cash to cash cycle
  • 7 steps to follow is cash becomes tight
  • Checklist of ‘red flags’ to identify the problems causing cash issues
  • Why too much surplus cash in the business is not a good idea
  • Preventative actions
  • and more

This whitepaper is designed to help business owners minimise the impact of the peaks and troughs experienced during a financial year. This freeing up your time to focus your attention on managing and/or growing your business.

Learn how to manage your business ‘by numbers’.

Download your cash whitepaper by completing the form below

Selling your business

Increasing business profitability with 4 simple steps

As a general rule, I find that people have a tendency to make things more complicated than necessary. This is especially true if the problem they are trying to solve seems to be difficult, or the objective they want to achieve is elusive. Under these circumstances I think we all quite naturally look for complicated answers. Increasing business profitability is a good example of an issue where it is easy to overlook the straightforward and simple answers.

I will go into each in a bit more detail below but my four “no-brainer” tips to increase business profit are:

  1. Never give anything away . . . ever!
  2. Look for ways to reduce costs – and do this routinely!
  3. Upsell or cross-sell at every opportunity!
  4. Send the invoice and collect the cash promptly!

1. No Freebies

Most small businesses would be horrified by the suggestion that they give stuff away – but most do. The discount that wasn’t really necessary, the training course that should really have been paid for, the accessory that should have been sent with the original order but had to be shipped separately, the second visit to the customer when the problem should have been fixed on the first occasion. Every single example quoted above – and dozens more besides – are just different ways of giving stuff away. Stop being so charitable and the profits will improve.

2. Reduce Costs

Reducing costs is absolutely the easiest way to improve profitability.  And yet, most small businesses seldom analyse their direct costs or review their overhead spend. The only way to do this properly is to adopt a “zero-base” mentality and challenge each and every item of cost on a line-by-line basis.

Surprisingly, one of biggest and most common areas where small businesses sustain and tolerate inflated costs is in their payroll or wages bill. This might sound crazy when everyone appears to be “so busy”.  Busy they may be, but are they doing productive work, in an efficient manner? In small businesses there is often a reluctance to address the issue of poor individual performance or staff discipline. The result is low levels of productivity or, in other words, higher costs than necessary.

The other big, and usually hidden culprit, in most small businesses is poor quality. Every time you get stuff wrong – and have to do it again – you drive down profit (and you damage your reputation which makes the next sale harder . . . and therefore more costly. A double whammy!).

3. Upsell and cross sell

A lot of the cost in any typical business is down to all the marketing and selling activity. The simple version of the story is that finding a new customer costs a lot of money and usually so does the effort involved to close each deal.  If you can persuade the customer to buy more of the things they need with each transaction your sales operation becomes more profitable. The classic example that is always given is the tin of shoe polish you are offered each time you buy a new pair of shoes.

4. Send the invoice and collect the cash

The last point requires no explanation – just sound business practice. Even so, it is surprising how often credit control is most commonly the function that nobody considers to be their job.

Do you need help increasing business profitability?

These ideas for increasing business profitability have two important things in common. Firstly, it is usually far easier to identify the problem from outside and secondly fixing the problem will usually require a change of behaviour. Two very good reasons to work with a mentor you can trust.

FREE Seminar: So you are thinking about selling your business?

FREE SEMINAR

Date: Thursday 8th March 2018 

Time: 4.30pm-7.30pm

Location: The Dudley Canal and Tunnel Trust, 501 Birmingham Road, Dudley, West Midlands, DY1 4SB

 

 

Attend this evening seminar and leave with an understanding of the actions required to prepare your business for sale, how to maximise the attractiveness and sale price of your business, mitigate risks and avoid common mistakes.

Selling your business is likely to be the largest and most important financial deal you will ever make so it is important you get it right, attracting a price that will support your planned retirement lifestyle.

You will also have the opportunity to participate in a complimentary wine tasting to finish the evening.

Book HERE

Event Organisers


Who should attend

Business owners and spouses should attend if –

  • You are seriously considering selling, or transferring control of your business, in the near future – or any time over the next few years
  • You have not yet given serious thought to what happens to your business once you no longer want to run it every day – or if you should no longer be able to run it every day
  • You would like to understand how a typical business sale process works, who might buy your business and how they might arrive at an offer price
  • You already understand the basics but you wish to understand how to maximise value and minimise avoidable risks
  • You do not really know how to go about developing an “exit strategy” that will deliver on your personal objectives

Businesses with multiple owners are all welcome to attend. In addition, spouses or partners are also welcome as we appreciate that selling your business can be a personal matter as well.

If you do not like high pressure sales tactics that many bigger brokerage companies employ then you will enjoy this seminar.


In this event you will learn

  • How best to prepare for your exit – creating an exit strategy
  • How to value your business
  • Steps to maximise your business value in the sale run up
  • Making your business more attractive to buyers
  • The 6 step selling process
  • Why businesses fail to sale – avoiding those pitfalls
  • Legal guidance
  • Tax issues relating to the sale

About the speakers

Bob Brown – CMC Partners

CMC partner, Bob Brown has been providing practical help and guidance to business owners for over 20 years. He has helped a range of businesses from engineering and manufacturing to hi-tech and professional services.

Read more about Bob

 

Nicholas Lee – Succession Group

Financial planner, Nicholas Lee has over 20 years experience in helping people to recognise their personal financial priorities and enabling them to implement and maintain sensible financial plans. His goal is to help as many people as possible to live the life they deserve.

Read more about Nicholas 

 

Kevin Jones – Silks Solicitors

Kevin Jones, Director at Silks Solicitors has over 30 years hands on experience of looking after business and their owners. He has the technical expertise, long experience and ‘can do’ approach making Kevin   the first port of call for owners who need help with legal aspects.

Read more about Kevin 

 

David Wright – Nicklin Chartered Accountants & Business Advisers

Chartered Accountant and Business Adviser, David Wright has been qualified since 1994. He works extensively with owners of small and medium-sized companies. David enjoys helping clients to set up reporting systems that enable clients to control their companies, measure the development of them and protect the financial wealth that is created.

Read more about David 

 

Richard Lloyd – CMC Partners

CMC partners, Richard Lloyd provides growth and exit strategy development for business owners in Derbyshire and East Straffordshire. With over 30 years business experience, Richard has gained a wealth of knowledge enabling him to create value for his clients.

Read more about Richard

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.