Start-up mindset

How to develop a start-up mindset, again…

It is great to see a return to economic activity in parts of Europe. Inevitably my mind turns to what relaxation of ‘lockdown’ may look like for the UK. Many of us will be struggling to visualise what that may look like for our firms. This blog will help you find your ‘start-up’ mojo.

Remember, positivity will be the antidote to this crisis, and that applies to the fact that business resumption will happen in the UK in the coming weeks.

In recent conversations with clients and other business contacts, I am seeing a dramatic shift this week in our mindsets.

The key topic is fast becoming business resumption. It is refreshing and inspiring to see how agile and innovative clients are being with their planning process. Remember when you were a start-up? There were lots to consider; how many staff will I need, what products and service will I offer?

Based on conversations I have had with clients over the last week or so, we are all start-ups again, albeit well established and with a good track record. Here are the key headlines coming out of our discussions:

Managing the ‘Furlough’ effect.

How will we re-motivate employees who have been ‘furloughed’ (a term most of us had not heard of last month!)? That is no mean feat – the longer it goes on, the more a large proportion of the workforce will start to become demotivated and start considering their options. So, how do you re-engage them and then accelerate their output and performance when business resumes? This requires planning now, with sound management of the teams currently in work too. Turning off both active and furloughed employees will have a dramatic effect on overall motivation, compounded with the new remote world we temporarily find ourselves in, you run the risk of turning employees against you permanently. Get behind them.

Cost v Growth

How do you plan and develop a strategy? With differing parallels of tight cost management and accelerated turnover growth (you will need both to survive and thrive through the rest of 2020). Growth planning must be started today, with the COVID-19 exit plan likely to happen just as fast as the lock-down itself. For that reason, none of us can afford to put growth planning on the backburner. When you were a start-up you had a plan, well, those budgets and targets will need to be recast. Staff cannot be expected to make up for lost time. Reforecast everything for the rest of 2020 or a six-month window depending when your sector comes out of lockdown. With new targets, costs, etc. These can be used to refocus the team and shows good objective leadership.

Look after your team and create the right start-up mindset

A growth mindset categorically filters down far more positively into your employees than a cost management mindset. Separate your teams to ensure that cost management (which undoubtedly is needed in detail through this period) does not cross over into your growth teams. Hunters need to be 100% focused on the task in hand.

Protect your business development budgets at all costs

Previous economic history points heavily to companies who survive and thrive during a recession having maintained a heavy (if not increased) focus on business development and marketing, and not making the error of cutting marketing spend as a non-pay cost line. Think very wisely on this subject. In my previous blog ‘Sales Strategy for Revenue Growth’, I discuss your options.

Timing will be 100% the key to success

At what point do you activate the plan? When we resume, the speed of lock-down will be replaced by the speed of resumption. If you leave it too late to have a robust plan in place your business’s growth plan could simply arrive well behind the curve, leaving your profit in tatters and your competitors getting the cream.

Here at CMC Partners, we feel more duty-bound than ever to be there for companies and decision-makers going through the planning process, offering you a helping hand (and ear) through this turbulent period.

I am here for no-obligation consultations over Teams or Zoom. Contact me: Richard.lloyd@cmc-partners.co.uk to arrange a call

One final thought.  A clear vision, no matter how absurd that may sound right now, is a mission-critical business component everyone should be taking heed of.

 

What lies ahead for leadership

Leadership in turbulent times

The spread of the novel coronavirus (COVID-19) impacts many businesses. In a fast-changing situation, it’s important to have a plan in place. Your approach to leadership will prove to be crucial in how your firm navigates the route to success.

Here are my five practical suggestions, providing a guide for your firm.

LEADERSHIP

The staff will look to you for guidance and advice. Be a leader.

Many staff will be concerned about the health of their family and themselves as a priority. In such situations make sure you have a full and open dialogue with all team members, be visible in the firm.

Follow the World Health Organisation, governmental and public health official updates – and keep employees updated, do not speculate, stick to the facts.

Discuss the plan of action for your firm, both short term and as importantly, longer-term. Help staff see past the current turbulence.

EMPLOYEES

Look after employees and their families, good business leaders should demonstrate high levels of emotional awareness.

Ensure you can contact your staff and share information at short notice. Have a business continuity plan which enables remote working.

Consider technology to enable this, such as video conferencing, through the company or personal computers.

If necessary, split teams across multiple sites or rotate office-based staff with those working remotely. Divide each team into Reds and Blues, and rotate the days Reds and Blues attend the office

 CASH

Cash flow is the lifeblood of any firm. This is your number one financial priority to ensure business continuity.

Prepare for changes in market conditions including demand, price, and foreign exchange volatility.

Stress-test your working capital, as flows of goods and services are interrupted and consider any support you may offer your suppliers.

Speak to your bank and HMRC about immediate support and building resilience against potential disruption.

 ONGOING BUSINESS CONTINUITY

Plan every aspect of your business including suppliers, revenue, cost, and logistics. Identify areas of potential weakness and develop a plan

Review your supply chain from end to end, identifying your suppliers’ supply source down to component level and understanding who your customers sell onto.

Identify and connect with alternative supply options, right down to the component level.

Map your dependencies, ensure you have visibility, and a plan for disruptions – for example, using air freight in the event shipping is restricted.

Anticipate disruption to service providers – from legal services to customs checks.

Consider implications right across your operations – from sourcing to production to distribution.

 RECOVERY

This will end, and opportunities will arise, show great leadership and you will thrive.

Plan your actions for when any restrictions are lifted, the firms that react quickest will undoubtedly have an advantage.

Develop a clear proposition for clients that focuses on their ‘new normal’. What was appropriate last week may not be right in the future.

Have a communications plan for when ‘normality’ returns, experience tells both Dave and I that preparing for the recovery is vital in ensuring that there is a recovery and will be doing so with all our clients.

 

How we can help further:

We’re here to support our clients. Speak to us to help develop a plan for your business, now and in the future.

Richard.lloyd@cmc-partners.co.uk

Are you ready for life after COVID-19?

Are you thinking that life and business will go back to what is was a few months ago once this pandemic passes?  Are you just waiting for the ‘all clear’? Or are you preparing for a ‘new normal? Are you ready for life after COVID-19?

Some short and sharp lessons that we, as small business owners,in the service sector are realising as a result of this horrific pandemic are:

  1. Leadership and delegation has been key      

    In the past you could muddle along with vague and evolving plans because you saw your employees and work colleagues every day and you were able to adapt and tweak what they were doing as they were doing it.  With all employees now working from home, a clear and precise definition and plan of key tasks and activities is vital.  Clearly defined and well communicated work packages will ensure you maximise output to ensure you get the best from your workforce.

  2. You can trust your employees

    Some business owners were dubious about letting employees and work colleagues work from home as they did not trust them to work efficiently and effectively. It was often seen as a perk rather than an efficiency, probably because, as above, they did not clearly and precisely define their work packages.  With good management and through efficient use of conference calls, [for individual 1-2-1 meetings; daily scrum meetings (project) and regular town hall meetings (all staff)], working from home [or anywhere] is easy, inclusive and financially efficient for both parties.

  3. Costs

    There are some overheads that you thought were needed but now realise that actually they’re not. As we come out of this situation, cash will be vital in keeping the business nimble and flexible [especially if we have to go back into another lockdown should we get a resurgence of the pandemic].   Do you now really need all of the office space? How often do all of the workforce need to be together?  Do employees all need their own desk? Meeting rooms can be hired by the hour, so why pay for all that space if it is not needed.    Do you need your full quota of employees?  Can you look to outsource a lot of your work as a direct cost as opposed to utilising your staffing overhead?

  4. Business Continuity

    The current state of affairs and financial support from the government cannot go on for ever. It is now a good time to look at your business in the light of the situation.  Time to review and adapt your USP [Unique Selling Proposition] to ensure that it is still relevant. Time to get and to keep your company profile out there in the market place.  It is a good time to get your marketing and social media collateral up to date and appropriate so that the business is still relevant and ready to go as we climb out of this situation.

  5. Recovery

    Recovery will happen and there will be new opportunities out there. It is those businesses and business owners that are able to adapt and change to meet the demands of the ‘new normal’.  Those that and are ready with more nimble and agile businesses to address the challenges of post pandemic life.

This is not the time to sit and wait for the pandemic to be over and hoping that things will get back to normal. It won’t for some time, if ever. There is plenty to do and already so many lessons to learn from this relatively short crisis.  It is time to adapt your thinking and question those things previously taken for granted.  Time to change the parameters so that you come out it with all guns blazing. Are you getting ready for life after COVID-19?

Why (and how) Should I Value my Business?

Most business owners only value their business when they are thinking of selling their business. This short blog argues that a business valuation should be done throughout the life of a business. This will help guide the owner to focus on the broader issues that drive the business valuation as well as building a business with more sustainable profit growth.

Two Reasons to Value your Business:

Eight Aspects to Increase Business Value

It’s not just about a multiple of your earnings (EBITDA)…….

Many business owners just focus on the ‘numbers’ in terms of Turnover and a multiple of Earnings (3 to 6+ times) when trying to get an indicative value for their business.  However, there is so much more that should be taken into account when valuing their business.  This is especially the case when preparing for a business sale and looking to get the very best price.  Preparation is key and getting these eight areas in good shape will help to maximise and increase business value:

1. Financial Performance:

As well as the size of turnover and current profitability, it is also important to show progression and a good financial story form a historical perspective. A prospective buyer will want to understand expected profits into the future as well as the expected rate of return over time.

2. Growth Potential:

What is the potential to grow your business? How scalable is your business? Are there limitations to growth given the current set up?  An acquirer will be looking to maximise the return on the current infrastructure and cost base.  This is also known as scalability.  There are different facets to scalability: with the current set up, are you making the best economies of scale – how much more can you do within the current infrastructure; can you scale in other geographical areas?, can you increase growth through your existing customer base?

3. Over Reliance on Key Entities:

Is the business over reliant on any Customer, Supplier or employee? If your business is too reliant on a single customer (namely it accounts for 15-20+% of your turnover) then it is potentially unstable; Reliant on a single supplier you can be held to ransom; and reliant on any one employee, then they can also hold you to ransom especially when negotiating their terms and task etc.

4. Working Capital and Cash flow:

How much cash do you need to run your business and how easy is it to generate?  Do your customers pay you quickly?  Is your cash flow ‘lumpy’, do you have to dip into borrowings (overdraft facilities or loans (loans should not be used to finance the day to day running of the business)).  Having money in the bank makes running your business that much more relaxed and will help you to finance growth.

5. Sales and contracts:

Companies with a recurring revenue stream are of greater value. A recurring revenue stream helps you predict the future income with much more certainty.  Creating a regular income stream through the likes of repeatable contracts etc. is a great way to increase the value of your business.

6. Differentiation:

Is your business one of many offering a similar service or product? If so, you are likely to be very price sensitive as a business. If you can think less about price and more about what differentiates your business from your competitors you will start to look at the value of your offering as opposed to the cost.  The more unique that you can make your business offering the more you will increase the value of your business.

7. Your Customers:

How happy are your customers?  The more satisfied that your customers are the more that they will come back to you and the more repeat business you can do – not to mention good referrals etc. Being able to prove that you have highly satisfied customers through surveys etc. to a prospective purchaser of the business will certainly increase its value.

8. You:

Although last in this list it is probably the more important facet. Ask yourself the degree to which your business can prosper without you. Business owners who remain involved in the operational day to day running of their business are devaluing their own business considerably. Your business should be run as an asset rather than a life-style if you are looking at getting maximum return.  You cannot manage the growth of your company if you are dealing with day to day crises, unhappy customers, disgruntled employees etc. The more the owner does this the less valuable the business will be.

Summary

It is not just about the numbers when you are valuing your business in preparation for sale, these other facets briefly detailed above are just as important.  They may even help take the stress out of owning your business and lead you to enjoy running your business even more than you already are.  If you would like help and advice in getting in good shape, whether because: it’s just good practice and you want to reduce your own stress and enjoy your business; or, you want to get your business ready for sale or acquisition so that you can get the best return, please contact Rupert Beazley on 07880 221818 or complete our value questionnaire and we would be pleased to have a free initial discussion with you.

Business Value

SME Pricce to Succeed

Price to Succeed

‘The water was cold and shook me up. It was another few seconds before I realized that I accidentally drilled into a water pipe behind the plasterboard during one of my weekend DIY (don’t!) projects at home. With one hand covering the leak I frantically called a local plumber – who thankfully happened to be in the neighbourhood.

He was helpfully skilful and smoothly billed me £200 to seal the hole – a job that took him less than a minute.’

So why was I glad parting with my money and not fuming (I was, at myself, but not him)? What I needed was a skilled, well-equipped professional to be available immediately. The plumber was able to provide me with flawless service that roundly fit my requirements.

Despite all this, pricing for goods and services is rarely simple. One reason being service providers rarely take is a value-based approach to pricing. Not bandying hackneyed buzzwords but what you can charge as an individual or organisation often reflects the value or perception of value your customer places on the offering. Improving this perception is then a matter of digging deep to understand what the problem or need of your customer is and then figuring out a way to best solve that requirement.

So how should SMEs (or any other) businesses think about pricing? Here is a starter kit:

Making Your SME Business Investment Ready

Do you hope to sell your business in the future? Is your SME business investment ready?

If you are planning to exit or sell your business in the future you need to ensure your business is growing and operating in the right way focussing on 4 key elements to ensure your SME Business is Investment Ready.

Listen to our Derbyshire and Staffordshire based CMC Partner, Richard Lloyd on the 4 key principles of running a business, helping you to grow and build value in your business to ensure you are ‘Investment Ready’ when the time comes to exit or sell your business.

Webinar Presentation & Recording: Mergers & Acquisitions for SME’s – Is it a viable growth option?

Have you ever thought about buying a business?

Thank you for attending the Thames Valley Chamber of Commerce webinar on 17th October where our CMC Partner, Atreya Chaganty discussed whether a Merger or Acquisition would be a suitable option to help your business growth.

During the webinar Atreya explored how SME’s can successfully acquire companies and generate positive returns for their stakeholders, whether M&A is the best option and what the alternatives are.

Key Takeaways:

  • Exploring the link between growth and acquisitions
  • How should you weigh the risks versus rewards of acquisitions?
  • What should you do in preparation for an acquisition?
  • How should an acquisition be executed?

View the M&A Presentations Here

Listen to the Recording Here

Book your Free Appointment:

Atreya is offering a free confidential meeting to all attendees to explore the potential of M&A in your business, just complete the contact form below.