Back to the future – how community spirit will add value to your business

We recently ran some articles on the importance of succession planning to add value and to protect against the impact of serious physical health decline of its owners.

But what about that other key aspect of corporate wellbeing – the sense of community spirit?

As mentioned recently, my family originated and developed a strong confectionery business built around the famous Maynards brand name. Maynards was one of a group of quaker families that spearheaded the growth of the UK confectionery market. Names such as Cadburys, Rowntrees, Mackintosh, Bassetts…and Maynards all belonged to such families. Now their products are owned by faceless conglomerates and production has been sourced away from original locations. You will no longer find confectionery products being made at Rowntrees’ old factory in York, any more than you will find Winegums being produced in Maynards’ old factory in Hanngey, London.

I recently visited the Haringey site, thanks to a local businessman who is writing a historical chronicle of the area. The factory is still there, together with iconic chimney stack. But the site is now a warehouse for oriental carpets – sad and somewhat derelict.

My contact showed me some aerial photos of the site in the 1920s and the factory rises majestically from a sea of greenery and garden allottments. Hardly a house in sight. And then he gave me a copy of the History of Maynards from 1896 to 1982.

This contained something amazing by today’s standards: in 1946 on the 50th anniversary of the Company, the Directors were ‘surprised and slightly embarrassed’ to receive an illuminated scroll from all staff (‘warehouse, office and shops’) ‘rejoicing’ in the opportunity to place on record their ‘sincere appreciation of the ability of the Board of Directors in conducting the affairs of the Company and of the many kindnesses to employees’.

Blimey! The history shows why they were so grateful. They received regular, well paid employment in an impoverished area. From the 1920s, the Directors paid bonuses in cash and shares; there was a thriving Sports & Social Club; in 1947 the Company launched its staff contributory pension scheme and in 1949 extended it to include welfare – well ahead of any political drive for such radical policies.

Maynards was not alone in this – Cadburys is world-famous not only for chocolate bars, but also for the village of Bournville that provided accomodation for its employees. The only contemporary example of the partnership community culture is probably John Lewis, which has been consistently successful partly because its Director-Partners have stuck to the same social principles upon which it was founded.

Would it not be great if we could recover part of that lost heritage? And in case anyone sees this as antruistic, how often does one encounter situations where there is a need to invest in a stronger internal sense of community to enhance the valuation of a business prior to exit? ‘Succession planning’, ‘Staff Incentive Schemes’, ‘Leadership Managament’ are just some of the labels that focus on these critical issues – all too often it comes a bit too late.

Smaller businesses have the best opportunity to make such investments in staff welfare, and the costs are not all that significant if handled in the right way, and the rewards can be high. But the will has to come from the Directors in the first place.

New Years Resolution anyone?

Extending your Brand or Product to Create Growth and Exit Value

Large corporates have always been good at adding new products to their offer and in the last 20 years or so have embraced brand extensions to add further  growth and value to their company. Smaller SME’s have only more recently become adept at furthering their value this way and there are still untapped opportunities for most. How can you add value?

Building your brand, that is your company name being known and trusted in your chosen operating sector, is still not something that comes naturally to many smaller companies. This involves understanding your market, developing a clear identity and offer and having a strategic plan to meet these goals.

Also, once these are reached, many companies simply continue along the same lines only raising their financial goals each year. With many companies there is the opportunity to do more.

  1. Product extension – Sometimes a product is being sold into a defined market place and could be sold into another market with minor revisions, or sometimes just with a new marketing strategy. It is easy not to see the potential of a product when you have been working with it for a long time. A fresh pair of eyes can often see new possibilities.
  2. Product development – Some companies have a brand position that would enable them to develop a new product to sell into their current market and they might have the capacity to develop it themselves.  They may also have the capacity to sell a product to their customers made by another company, or manufacture a product for others. Exploring these opportunities can help bring growth or extra value when you want to sell your company.
  3. Brand extension – Fashion companies really led the way in this by licensing their name to be used by fragrance houses and on other fashion accessory products such as handbags and sunglasses. This has now developed into a major area of business for all brand owners across many sectors including food, travel, automotive etc. This is where you can extend your brand name into a new product area. Often another company might approach you, as it sees the potential for selling a product you don’t make but with your name on. The advantage to the brand owner is that they don’t need to invest in scaling up for a new product area but gain a specialist partner to do this for them and in exchange get a percentage of all sales. You do need to have achieved a recognised brand status for this option and it’s important that you have a clear strategy so you don’t over extend the brand into areas or with partners that might devalue your brand. 

In all of these options, if undertaken correctly and with the right fit, you will be adding growth to your company and adding value for the time you exit. You may decide not to do this but just want to put plans in place that can be developed by the next owner. In all of these cases you should protect your brand by registering the trademark etc and where suitable register this in other classes that might suit your brand. This becomes clear when putting together a long term strategy with an advisor who has experience in this area. It also happens in areas you might consider a service rather than a product.

Some examples of big brand successes and failures include Bic who had extended from biros to razors and lighters successfully but then added underwear that flopped. Virgin whose Cola did not take off as well as their airline and their Virgin Bride stores which were not a happy pairing to their successful overseas weddings and honeymoons holiday division. Pierre Cardin was early into brand extension but went into too many products areas and swamped the market so their high level brand became market fodder. Everyday we often unknowingly use products with brand names on that have not been made by the brand owner and this sector of business diversification continues to grow and offers consumers more opportunities to enjoy their favourite brand whilst offering companies new routes to growth.

If you want advice on growing your business in this way please contact Susan Flinders or call 07510 692969 She has extensive experience in product  development and brand extension in the UK and internationally.

How can Elmer Wheeler help me sell my business?

Helping you sell your business

In the 1930’s Time Magazine suggested that Elmer Wheeler was the most successful salesman in the world, a big claim, but one that had more than a grain of credibility. But can he help me sell my business?

Who is Elmer Wheeler

Perhaps Elmer’s best know saying was “Don’t sell the sausage – sell the sizzle” he knew that the secret to successful selling is not to advertise the sausage, after all the list of ingredients in the typical sausage is far from appealing, but advertise the sounds and smell of cooking a sausage.  That’s how to get the juices flowing!

I would be the first to accept that this has a great deal of relevance in marketing, but how will it help sell my business? Clearly the benefits and attributes are part of promoting your business, and aspirational and exciting messages are important.  Does it however have any relevance when it comes to selling your business?

When it comes to selling your business the sausage, itself, I feel is now equally crucial – if not more so – than the sizzle.  In the world of social media, where sharing and storing information that influences the buying decisions and desirability of products, services, even businesses. Potential buyers are now influenced more than ever by recommendations and factual data from trusted sources, especially from new social feeds and platforms. No matter how attractive all your forms of marketing are the potential buyers can now easily validate the product or service claims across a wide selection of options. If the excitement and attraction, is not as claimed, it is now almost inevitable the review process will reveal all and is likely to result in a negative outcome.

So in this new, connected, world in which we operate how do I sell my business?

Here at CMC Partners we have created a checklist, to help ensure the maximum value for your sale: Sell my business

  • Maximise trading profits and if possible show a rising trend over 3 years
  • Improve recurring revenue – purchasers regard contracted business as more secure
  • Reduce undue reliance on a small range of customers, suppliers and employees
  • Establish clear processes and management responsibilities – demonstrate that the business can function without you
  • Demonstrate that decisions are based on sound information and management accounts
  • If necessary, initiate an annual business planning process.
  • Ensure that there is clear ownership of any critical intellectual property
  • Sell any non-relevant assets, such as property
  • Ensure any industry/supplier accreditations are in order and up to date
  • Ensure HR practices are fully compliant with current regulations

By following the checklist, and ensuring that all the actions have a proof point and can be validated you can ensure that your sausage will have a list of ingredients that will be acceptable to any potential buyer.

All you have to do now is get out there and create some sizzle!

If you would like to discuss how CMC can help you prepare for a successful sale you can arrange an informal meeting with Richard Lloyd by calling on 07973 415351.

Grooming your business for sale

To get anywhere in business, you need to know where you want to end up. Concentrate on your personal objectives, and your business objectives, in order to prioritise your business strategy and make sure that your business grows so it’s in a good position for you to sell at your chosen endpoint.

Most business owners keep the notion of selling their business in the back of their mind until it’s too late to make a good job of structuring and preparing it for sale. It can take at least five years to make a good job of grooming a company for sale and maximising the value of the business. By including some preparation for selling your business in your current planning, you can avoid some of the pitfalls and make your business attractive to potential buyers without having to delay your plans to sort out problems that only appear when it comes to selling your business.

What to Look at

Finance – Does the business have a good financial record? Buyers prefer a record of smoothly increasing profits with good growth potential.

Strategy – Are strong, credible plans in place with realistic strategic goals?

People – Are the basics in place to make the business attractive? Buyers like well-organised businesses with a strong management structure, and succession lined up.

Sales & Marketing – Attract strong business development people, who will stay with the business. If you’ve been the only source of new business, and you want to leave, buyers will shy away.

Processes – Is the business a streamlined operation, with simple efficient processes which will continue to operate as intended under a change of owner?

You need to look at your business through the eyes of these buyers – they will want the business solely for its asset value. Some things will undermine the sale or reduce a potential sale price, others will add a premium. Treat the money you spend on making necessary changes to boost the company’s asset value as an investment, much of which will be repaid in the increased selling price you receive in the end.

You will also need to create a strong team around you when it comes to selling your business. Your current accountant or lawyer may not have the experience you will need when dealing with the due diligence that surrounds selling a business, so take note of possible contacts and networks where and when you can.

Grow your start up business

As an owner of a start up business starting to grow, what would it feel like to work with your local CMC Partner? 

Well, let’s start with what it doesn’t feel like.

  1. We will not want to collect a lorry load of financial data – most small businesses that we start working with are desperately short of the right information. The book keeper is hired to do the VAT Return and the Annual Corporation Tax return – they have never run a business and don’t know what is needed to manage a business. We will highlight the most important information for you and your business.
  2. We will not work on Business Plans when your concern is about paying the wages and the suppliers next month. The Business Plan can wait! Get the monthly accounts right and the sales pipeline and a few other key pieces of information and do a Business Plan when you really understand how the ‘numbers’ in your business work for you.
  3. We are not dictators – we don’t tell you what to do – equally we are not wishy washy. We work the issues through with you. Based on facts we will get your understanding and we will jointly agree the actions.
  4. We will not want to spend your money. It’s important that your money is used wisely to generate the cash flow, helping move your business forward. In most businesses the cost is in the people and we will work with the people you have. Small adjustments in roles and responsibilities can make a big difference to next months’ figures.
  5. We will not wear rose coloured specs in looking at your people. It is a very difficult thing to have worked with someone for a number of years and for the business to have outgrown their skills. ‘Square pegs in round holes’ cause a massive amount of stress, not least to the individual. Releasing people who are no longer right for a growing business is tough, but invariable the rest of the team can move on at a pace and not be held back.

Don’t think about us as being experts in your business sector – more often than not we will not be familiar with your business sector. We are interested in what you know about your business sector.

If you are relying on us to know you won’t be able to afford us! If you don’t know you will be bust pretty soon.

A good Non Exec knows you, the Business Owner – not the business sector. Your Success is Everything.

So, what do we do?

We add value by helping you to make your business decisions on topics such as:

What are your  revenues – margins – overheads – profits – cash collection – key accounts – sales pipeline value– reputation – good will – business processes – sales ability – account development ability – negotiation skills – terms and conditions – business procedures – key people – recruitment of people – motivation of people – etc etc –

These are the bits in your young, growing business that can easily be overlooked as you rush to get the next order away or answer the next customer enquiry. A couple of hours a month – ‘on your business’ and not ‘in your business’ gives you the quality time you need to think about your business.

Talking to your local CMC Business Partner means you are sharing 23 years of experience having –Your Success is Everything.

Call us now on 01844 319286 for a free confidential appointment

Maximising Your Business Value

Many business owners are primarily concerned with the day to day functioning of their business, and ensuring it generates sufficient income to cover the operating costs and meet their personal financial needs. This is of course appropriate, but it is also prudent to consider the inherent value that they are building in their business. Whilst they may not have any immediate plans to leave their business, creating sustainable, transferrable value is a long term project – and an effective insurance policy in the event they have to stop running their business earlier than anticipated.

So what are the factors that enhance the value of a small business?

Succession Planning

This is often the most significant item when considering the transferrable value of a business. Many small businesses are totally dependent upon the owner, who has exclusive knowledge of critical processes and retains control of all major decisions. There is a saying that an effective manager will work themselves out of a job. This is particularly true for the owner – manager. If the business cannot operate in the absence of the owner, its value to a potential purchaser is very low. The objective should be to move to a situation where the business can continue to perform in the absence of the owner: which requires the establishment of an effective management structure. There is of course a cost consequence associated with the development of the organisation, which must be factored into the growth plan for the business. When successfully implemented, the owner has the freedom to enjoy time away from the business, and concentrate their efforts in work on those aspects or projects that provide the greatest personal satisfaction.

Predictability of income

One of the biggest uncertainties associated with the acquisition of any business is future performance. How reliable are estimates of future income? Continuing, long term contracts or “rental” type income are the most valuable, as they are most predictable. If the business uses this type of model, maximising the number and duration of such contracts will add to the value. In other types of business, being able to demonstrate a consistent, positive trend in income and the accuracy and reliability of forecasting will provide assurance to a potential purchaser, and therefore enhance the price they will consider paying. Ensuring that the business is not heavily dependent upon a limited number of large customers will reduce the potential risk associated with future income.

Accuracy of business information and documentation

Part of any acquisition process will include a due diligence exercise, where the company’s information and documentation will be scrutinised by external professionals. It should be remembered that from the purchaser’s perspective, any difficulties identified could cause them to abandon the proposed purchase or seek to renegotiate the price. It is therefore in the seller’s interest to ensure that all aspects of the business will stand up to rigorous scrutiny. Whilst some problems can be rectified in the preparations for a sale process, others cannot. For example, it is not always possible to obtain cover for a historical gap in evidence of adequate insurance. It is therefore important that on a continuing basis, all information and documentation is prepared and retained such that it can withstand external scrutiny.

Demonstrating the security of any essential business components

Many businesses will be dependent upon some type of limited resource. It may be a particular raw material where quality or quantity are, or can be, limited; the business may be reliant upon the scarce skills and knowledge of particular employees; there may be an item of equipment that would be difficult or costly to replace. No business owner can control external factors, but it is important to be aware of these vulnerabilities and take whatever realistic actions can be taken to limit their potential impact.

There may be other aspects that are particular to individual businesses, but the important point to recognise is that many of these “value enhancing” factors are associated with the day to day operation of the business, rather than a specific exercise to be taken immediately before starting a sale process. There are many examples of business sales that either fail, or result in a value considerably lower than the expectations of the owner because the necessary preparations have not been made, or started at the right time. In those situations where the proceeds of the sale are the owner’s pension fund, the impact on lifestyle can be literally life changing!

Maximise your business value

CMC Partners have extensive experience of working with owners to maximise the value of their business. We have found that it takes a minimum of three years to ensure the average small business is effectively prepared for a sale process. The earlier the preparations start, the more effective the outcome. To arrange a free, informal conversation with David Brassington to consider the implications for your business, call 07837 903180.

Recruiting strategy for small business . . .

Most small businesses have plenty of market to go at – they typically serve markets in which they have very low market share.  Broadly speaking, staff in small businesses are already busy – they follow the example of the owners and tend to work hard.  But, while busy, staff are not always doing work that is appropriate.  It is quite common in small business for skilled people to end up doing work for which they are over-qualified.  So, growing the business means releasing your more senior people to do the work to which they are better suited and bringing in juniors to back fill the admin and the more routine tasks.

Fortunately, this is a win/win scenario.  By freeing up your more able people you can expect to deliver increased productivity, either as a result of more efficient use of their time or by enabling them to do business development work that will lead to incremental revenue. And, secondly, you are hiring at the lower end of the salary scale, so the fees and the risks are also reduced. This model also has the virtue of creating a “built-in” succession strategy.

One of the pragmatic lessons you learn, and routinely re-learn, working with owner-managed businesses is that the people are key.  So it is better to get the right person – someone who is a natural fit with the team – than be too pre-occupied with the percieved best practice of job descriptions and people specifications.  You should still go through these steps but if you find someone who has real talent – then you need to be prepared to be flexible.

Conversely, hiring senior people to the “top table”, especially those with a corporate background (no matter how brilliant their cv), is fraught with challenges and risks – and fails more often than it succeeds.

Whenever you can, grow your own.  They will be more loyal.


How do you scale your business profitably?

As a business grows and expands so does its associated needs. These needs have to be managed correctly to achieve long term success.

Our top tip for you to remember is your business will not be able to grow successfully by doing everything yourself. You are not a superhero, no matter how much you wish to be! You will not be able to scale up your business whilst carrying on doing the same role as you did when you started off. You need to give some of your work to other people – delegate.

Over the last 25 years we have grown many small businesses into profitable businesses. Read how we worked in partnership with a design agency owner to double the turnover in 4 years. Read the One Ltd Case Study

Using our experience we have compiled a few pointers to help support your business growth avoiding the common pitfalls.

1. Team Leaders /Middle Management

At the start up phase of your business you undertake every job. As your business grows further and you take on additional staff, you still need to monitor every function. However when you grow beyond 10 employees, it becomes too complex for you or your founding team to keep managing all staff members. At this point you face a choice – to continue trying to run things directly, and risk spreading yourself too thin, or to recruit a middle management or team leader level.

If you decide to continue as you are then you will limit the growth of your business. You will be overworked, stressed out and likely to make poor decisions.

If you don’t like the idea of your business becoming too hierarchical, you could promote a team member to a team leader. These team leaders can then take some of the day to day decision making and staff management load off your back, as they have the collective expertise to consider all aspects of an issue and take broad decisions.

2. Internal Recruitment/Promotion

We would always recommend you look internally when delegating or recruiting. Is there anyone internally capable to handle the day to day operations and lower level management issues who has the capabilities, skills and enthusiasm?

The advantage of internal delegation or job changes are endless – they understand the vision, part of the culture, no delay in settling in, motivating for the staff member, demonstrates career progress within the company. Of course, if there’s no one suitable then you may need to think about recruiting externally.

3. Effective delegation

As a small business owner, it can be emotionally difficult to step back and delegate. You need to allow your management level/team leaders to use their judgment and avoid saying things like ‘I wouldn’t have done it that way’.

To ensure this is effective you need to think about:

  • What work/decision/responsibilities you are passing on
  • What type of people do you need
  • How are you going to select them – internal or external
  • Does this involve job changes/description/pay increase
  • Train and develop
  • Set objectives, measure the output and give appraisals
  • Decide on appropriate level of ongoing reporting

4. Knowing where you add value

Setting up a one or two team leaders will take the pressure off you, allowing you to effectively delegate the day to day operations. This will then allow you to slot into the role where you are adding the most value to the business – this is often a higher level role that make you direct money such as the sales/marketing function or relationships with customers.

Whatever you focus your time on, make sure you enjoy it – else it will become a burden.

5. Monitor closely your cash flow

With an increase in staff costs you need to increase your sales to finance your team. You need to focus more now on business development, marketing, client profiling and pricing to increase your sales. This is where many of our clients struggle and how CMC can really add value to business owners. We can mentor, coach and support owners in their decision making, providing them with the knowledge and skills required.

Cash flow is the lifeblood of your business. Ensure you keep a close eye on your cash flow on a daily/weekly basis. A cash flow forecast will give you a good idea of how much money you have coming in and out of the business. Click here for tips on how to tighten you’re your cash flow . Growing too fast and not having the cash flow to support the growth will have a negative effect.

6. Raising finance

If your cash flow is getting tight then act quickly before it’s too late. Ask your bank manager before you need it, instead of when you need. Banks hate surprises!

Too many business owners we talk to have been disappointed in their efforts to raise cash– but often this is because they’ve asked the wrong people the wrong question. It is crucial that you are clear about why you need to raise money and then match this to the right type of funder.

Click here to read our raising finance guide to help provide an overview of your options and the process.

If you wish to grow your business but find the above daunting then please do get in touch as we will be able to help you increase your profits. CMC have partners throughout England, giving you a local adviser in your location. All our partners have hand on experience of running a business as they are all running their own business within a business.

Call us on 01844 319286 to arrange for a free confidential appointment at your business or in your local area.