My journey into franchising (Part 1)

Big decisions!

What do you consider to be an important, life changing decision that can influence the rest of your life?

I would include things like getting married, having kids, buying and moving house, and changing jobs in my list. I also think things like approaching the end of a year makes us look back and evaluate what has happened to us, and that can often be the catalyst which prompts change. Often life altering events, like a significant illness, redundancy, and, of course, a global pandemic can be major influencing factors.

As we enter a new year and a fresh start, I thought it timely to share one of the biggest and best decisions I have made – to leave the corporate world and go in to the fascinating and rewarding world of franchising.

It wasn’t an easy decision and my route to where I am now wasn’t straightforward. It involved much self-reflection, in terms of getting to know who I really am and what I wanted for myself and my family at this stage of my career. It also involved evaluating and taking a measured look at the risks involved and ultimately getting myself in to the best position, mentally and financially to move forward. Adrian Knight, author of ‘Change Your Career, Change Your Life’, has produced a series of articles that I wish I had read three or four years ago that may help you too. If you are considering a move in to franchising, have a read.

Over a series of articles, I will share with you ‘My Story’. It will provide an illustration of my journey, my philosophy on franchising and why I think becoming MD of CMC is one of the best career moves I have ever made. I hope you find it useful and that it helps you navigate the path to change that you desire.

My decision-making process

Making the decision to leave the corporate world wasn’t something that just happened over night. I didn’t just wake up one morning and think “that’s it – I’m done with this way of life!”. The corporate world had been good to me. It had provided me with a nice salary, status and to a degree a sense of fulfilment.

So, what prompted me to look for change?

A diagnosis of cancer. The treatment forced me to take a significant period of time away from work and it was that time away that allowed me to evaluate things. Did I still have the inclination to travel, spend hours in a car, or at stations or airports? Did I still want to spend half my life in hotels? Did I still want to play that horribly unrewarding game of corporate politics?

Ultimately, I decided that despite the salary and the security that gives, the health insurance and the car allowance, I was no longer interested in being a hostage to the corporate career I once craved. An opportunity came to leave on somewhat favourable terms, which I evaluated and came to the decision to set myself free.

The next steps

Once I had made the decision to leave, and in parallel to negotiating my exit package, I started to consider my options. I briefly flirted with the idea of a change of scenery in the corporate world but quickly reminded myself that would not give me what I now wanted. I also had to be really clear with myself and family what exactly it was that I wanted – so I made a list. In fact, I made several lists or more accurately lots of iterations of the same list. High on that list was a desire to not spend any more unnecessary nights in hotel rooms away from my family. Maybe the odd one every few months but certainly not 3 or 4 a week as I had been used to. I also wanted to be able to use the skills and experience I had acquired over a 30-year career working with some outstanding people, being the beneficiary of some excellent training and successfully facing many challenging situations.

Quite simply, I didn’t want to throw the past away and start again. I wanted to use and build upon that experience but build my own business. Work on my terms. Work with the people I wanted to work with. Work hard but work flexibly and work when I wanted to. Also, I wasn’t ready or willing to work for nothing (although I have now taken on a number of volunteer opportunities because I’m interested in them and I can easily fit them around my work)! I wanted an income that would allow me to still maintain a nice lifestyle.

With that I quickly narrowed down my options to the following three:

  1. Become a Contractor
  2. Set up my own business
  3. Buy a franchise

I pretty quickly dismissed contracting as it’s not for me. I didn’t want to move from project to project every 6 to12 months. Also, I wanted to do something that would allow me to build longer term relationships so that I wasn’t constantly looking for my next role. Then, I thought about setting up a ‘Consultancy Business’ of my own. At first this was really appealing. I had the knowledge, some tools, some experience (albeit backed by my former Corporate employer) and a sizeable network to go at. However, closer examination revealed that this was more difficult than I first thought. There are loads of 1 man band consultants out there. A quick inspection of these revealed that very few are making a good sustainable income. Even worse, very few actually survive more than a year and only a fraction who start out on that journey last 3 years. So, with some disappointment I consigned that option to the ’too hard and too risky’ pile.

That led me to start to look at the world of franchising

I was excited. This was a world of opportunity and I had no shortage of potential options to investigate. I had a brief look at nearly all the ‘white collar’ franchises that I could find. Narrowing down my focus was quite difficult but eventually I filtered my list down from about a dozen to six that I wanted to make further enquiries with. Of those 6 I had “Discovery Days’ with 4 of them and got really excited about all 4. In their own way each opportunity was very tempting. The people running the franchises were very credible. They made it very clear that they wanted me to join and they assured me that I was exactly the sort of person they were looking for. I continued my research and got to the point of reviewing the franchise agreement in one case and very close to signing up in another. Ultimately though I didn’t take the plunge. I was disappointed and I know the franchise owners were disappointed too. Something was missing for me. Something prevented me making the investment and taking the plunge.

Join me for Part 2…

And discover how my journey evolved from here. See you soon.

How ready are you for recovery?

So here we are entering the third lockdown of this terrible pandemic, and for many businesses the emphasis is on cashflow management, immediate survival, and how to ensure that they are still going to be able to open the doors again in a couple of months’ time.

These are critical / uncertain times and like riding a motorcycle we need to be looking at what’s immediately ahead of our front wheel to avoid hitting that pothole or icy manhole cover.

What’s less obvious right now is that we also need one eye on the road up ahead to ensure that we miss those future dangers and obstacles.

What do I mean by this?

The difference with this lockdown is we now have a vaccine, a way out of the uncertainty, and a different prospect for the future. This is more than welcome, its much needed for individual wellbeing and essential for the economy. This is good news, we can see a recovery and how business will thrive again once restrictions are lifted, but this is where we need to keep looking out for those obstacles.

To use a nautical metaphor, a rising tide will raise all boats, so how do you ensure that you’re ready to leave the harbour with the best crew on-board and the right equipment on deck?

Obstacle number 1 – Avoid becoming a stressed business

What so I mean by this? We are seeing many distressed businesses currently, businesses struggling to pay bills and staff, losing profits, not being paid, having to downsize, reduce staffing and make cost savings. Therefore, by definition a stressed business is one that is growing too quickly. It doesn’t have the resources, processes or systems to manage with the increased volumes, it starts to miss deliverables, it cannot scale quickly enough so customers end-up being disappointed, staff become overwhelmed and start making mistakes, getting burnt out, needing time off for health reasons of simply leaving due to the pressures. As temporary short-term challenges these can be addressed, but it doesn’t take long for a stressed business to become a distressed business and ultimately the creator of its own demise, if not ready for the growth.

Obstacle number 2 – Becoming too focused on the financials

Of course these are important, and for sure businesses will have costs to recover, debts to repay, but if this becomes the number one priority, how far will you get left behind from a lack of investment? The danger here is revenue and profit become the priorities of the business, not the delivery of value. Now is the time to revisit your value proposition. Is it still relevant? Does everyone on your organisation understand it? Can you still deliver it or has the impact of the past 12 months made it obsolete? I heard a great quote the other day and its very relevant here.

Businesses need money in the same way a car needs fuel. But the reason the car exists is not to find more fuel! Why does your business exist and how does it serve its customers?

Obstacle number 3 – Ensure you have the right talent

Let’s be honest it’s an employer’s market right now. This pandemic has meant that many have faced redundancy, unemployment is at levels not witnessed in decades. With such an abundance and wealth of talent, who will be highly motivated, how well placed is your business to either take advantage of this opportunity, or to upskill and develop your existing talent to defend against it?

Forward thinking businesses will be recruiting for key positions and roles now, ready for the recovery, not trying to compete in the melee of it, and it will be these businesses that leave the harbour first. If you aren’t in a position to recruit, how well have you developed and fostered loyalty from your current employees? When did they last have a 1:2:1 with you? Have they had an annual review, have you listened to their concerns, dreams, fears and aspirations? Will they be tempted to jump ship and how will you react if they do?

Obstacle number 4 – Understanding the long-term impact of the past 12 months

Have you taken this opportunity to review existing processes and to refine them or adjust them? For example how has the buying behaviour of your customers had to change during the lockdowns? It’s naive to assume this will just revert back to type post lockdown, so do you have the right sales channels still? Do your routes to market need to evolve, is the messaging still fit for purpose? With many people being forced online, how strong is your online presence? Do you need to review your own supply chain and how strong is your position in your customers? These are questions that need addressing now rather than in 2 months’ time.

Obstacle number 5 – How has the competitive landscape changed?

You may be fortunate and find yourself benefiting as traditional competitors have failed to survive, but if not how have they adapted and changed their offering? With many businesses having had to pivot and enhance their offering what impact has this had and will it continue to have for you, the marketplace, your customers, your prospects? Have there been new entrants into the market, for example online, or independent consultants having been made redundant?

There is plenty of reason to be optimistic about the future, and a recovery will happen, that’s a certainty. Many, many businesses will be better off as the economy heals and we see a return to normal trading conditions.

For a small proportion of forward thinking, prepared businesses this will be their stepping stone to a significant period of growth and market share gain.

For a greater proportion this will see a return to pre-COVID business levels and then a plateauing of small annual growth year on year (maybe in line with the market growth, maybe not).

For another group they will see growth and recovery, but they will then disappear as they will be victims of either of these possibilities:

  • Acquisition by another company
  • Losing share to competition
  • Becoming too stressed and failing
  • Becoming irrelevant through failure to adapt and change

Where do you want to be in 12 months’ time and how ready are you to recover?

Metrics that Matter

“If you don’t know where you want to go then it doesn’t matter where you are going”

Measuring business performance is not easy. But it is both fundamental and critical. Setting a strategic course is hard enough – but without appropriate measurement techniques and metrics we could be far from shore and marooned quickly.

What you measure is as much a function of why you want to measure. Your strategic priorities (how you want to drive value in your business) should drive what you measure.

So, what should you be measuring and how do you do it?

The imperatives of a start-up stage company are assessing product-market fit, demand generation and degree of customer adoption. These priorities would indicate that metrics such as the number of active users, growth of net new users per month, engagement minutes with the product, etc. would be relevant.

As opposed to a mid-stage company where growth rate of acquired customers is already high but you are keen to understand how sustainable this growth might be. This could translate to customer acquisition cost and customer satisfaction measures as more relevant metrics to consider.

Mature, multi-location, business-units driven company structure could have added operational priorities.

A simple strategic priority driven approach to bucketing metrics could be:

Revenue Measures

Unarguably the clearest indicator of demand and customer interest, Revenue metrics are of course vital to measuring the growth of your business. But don’t simply think of measuring Revenue as a single metric – compare your revenue growth with some form of a broader market growth rate to see how well you are growing relative to the market (it is impressive if you have been generating 25% annual revenue growth for the last 3 years – but if the market, i.e., your top 5 competitors, have grown by 30% each – your growth is suddenly not that impressive).

For pre-revenue companies look at early indicators of potential revenue, such as, number of free trials contracted per month or level of user engagement in minutes per day with you service.

Simple longitudinal trend analysis such as: Year-to-date Revenue % v/s Budget, Year-on-Year Revenue Growth % v/s Market Growth %, Revenue by Service Line £ and % v/s Market Growth %, Monthly or Annual Recurring Revenue £ and Growth %, etc. are some of the metrics with potential to reveal underlying strength in growth.

Profitability Measures

Choosing a margin metric can be a function of your line of business. Gross Margin % is typically valuable in sectors with high cost of goods or services sold such as Wholesalers or IT Services. While not an accepted accounting measure EBITDA or Earnings before Interest, Tax and Depreciation/Amortization deductions is a common measure of operating margin strength and a metric typically used in company valuations. EBIT is a commonly used measure of operating margin strength. Net Income %, SG&A% etc. can be used to understand overall level of cost efficiencies and ability to convert revenue to net margins in the business.

Customer Measures

Understanding your customers gives you visibility into the sources of your revenue. Services organizations could be interested in understanding Average Bill Rate £ or Average Client Tenure Years. A useful (but often sparsely used) metric combining revenue and customers is Accounts with annual revenue > £1m. Other consumer centric metrics include NPS score, Customer Satisfaction Score and Average Revenue Per Account.

What you measure needs to be aligned with your strategic imperatives and choices you have made as an organisation to pursue. Implementing a reporting dashboard accessible to the CEO and management team for decision making can support evidence-based decision making.

CMC works with businesses, management teams and shareholders in understanding key drivers and business performance and then implementing performance management systems that help measure the underlying health of the business. To learn more, feel free to contact me directly or via the form below.

Business Purpose

Practice with Purpose

This is a quote I have heard time and time again from my days as a professional golfer, but increasingly I am witnessing how applicable this mantra is in the business environment.

In the sporting arena it means having a goal or objective that you wish to achieve in that session, and ensuring that each repetition is 100% committed to achieving that goal, whether it is a change in technique, a routine to engrain focus and commitment or building good habit’s so that performance is possible under pressure.

Practice without any purpose is just repetition.

In many cases this can have a detrimental effect, as poor technique, or routine is actually being ingrained rather than eradicated.

The same is true in business. Many businesses are operating without defining their purpose or not understanding it. Every business should have a purpose, and by this I don’t mean shareholder returns. That is the by product of understanding and delivering your purpose. Steve Jobs described this as the “why”. People buy into your why! Customers, employees, suppliers, supporters all buy into our why or our purpose. That’s because people have values and we are far more comfortable engaging with people who share those values.

The business purpose becomes even more important to understand and communicate internally if we are to get the best performance and engagement levels from our workforce. With a well-defined purpose we have a united effort and a clear understanding of our common cause. This leads to people going that extra mile, putting in the hours required, driving change, bringing creativity and celebrating success. Ever wondered why the most successful brands attract the best talent? What’s made them successful in the first place is their purpose and people want to contribute to achieving that purpose. This is because they share in those values or that vision.

Without a business purpose, confusion and frustration reigns.

Leadership sees a lack of progress, so starts to exert pressure. Engagement levels drop because employees get frustrated with negative feedback, despite their efforts. A blame culture starts thus a silo mentality ensues. In the worst cases employees back away from what’s required becoming compliant but disengaged and ultimately retention suffers as experienced and valued employees choose to leave.

The natural temptation from leadership is “fix what’s broken” so action plans are created detailing the remedies required. Focus shifts from what were perceived to be the strategic objectives, and these start to suffer too. This is where the confusion really manifests itself, as initiatives are started but not completed, priorities change, and the business is now reacting all the time making it task oriented and transactional. Internal messaging lacks clarity and mixed messaging becomes the norm. In the worst cases this creates resistance to change, customer focus suffers and ultimately reflects in financial performances.

This is all obvious stuff, right?

In too many instances businesses think they have well defined strategic priorities and improvement priorities. They are implementing continuous improvement cultures and tools to drive efficiencies or reduce costs. They have detailed action plans with due dates and owners, monitored by metrics and KPI’s which are discussed at monthly management meetings. They have a performance management process and hold people accountable to deliverables. This will surely deliver the financial objectives, won’t it?

I’m afraid not. Until a decision is made on what type of business you want to be and your purpose for being, how can you possibly decide on the strategies, resources, investment, capabilities and actions required to achieve it?

Even more importantly if you have already made the decision, ensure that is well communicated. Say it, say it, and say it again. After you’ve said it make sure you live it!

With a well-defined, communicated purpose, people will gravitate towards you.

You can build the resources and capabilities required on a backbone of a committed & engaged workforce who share your values. Customers will become more loyal and will champion your business. Suppliers will value your business and the position you occupy in your market. Shareholders/investors will be more attracted to you and will seek to collaborate.

Finally, you will be well positioned to build pre-eminence, brand strength and market share.

The natural by-product of this is financial performance and shareholder return!

Practise with purpose and witness the impact it creates.

Exit planning checklist

How to improve your chances of a successful exit

The owners of small businesses are very likely to make mistakes when the time comes to selling their business. This is not at all surprising – most of us learn from experience but most owners of small businesses have never sold a business before. However, this is one of those situations where “learning on the job” is definitely not recommended!

Check you and your business against the points below to help improve your chances of success.

Exit planning checklist:

1. Accept that the time will come when you, the owner, will no longer be willing, or able, to run your business every day.

2. Work out what you want to do next – and how much money you will need to fund retirement or take on your next project.

3. Think about what the business might look like when it is no longer yours. How much you care about what happens after you leave has a major influence on your choice of exit options.

4. If there are several shareholders expect each to have a different expectations and timescales – so you will need time to discuss and agree an exit strategy that all will find acceptable.

5. Give yourself enough time! For example . . .

a. Anticipate issues likely to be discovered by due diligence and correct them in a timely fashion.
b. Key skills, client and supplier relationships, specific expertise and market knowledge need to be “in the business” – not just exist in the minds of the owners.

6. Review basic issues of “good governance”. Such as . . .

a. Is the Shareholders Agreement still appropriate to the needs of the business and its directors.
b. Is there evidence of a formal decision making process at board level – e.g. for new hires or capital purchases?
c. Does the board regularly review business risks associated with continuing and, particularly, new operations.
d. Are you compliant? E.g. in areas like H&S, HR or Terms of Trade
e. Company reputation and customer satisfaction are being actively monitored.

7. Is there evidence of “good business practice” . . . such as:

a. Processes are documented and subject to continuous improvement.
b. Business plans, operational budgets, management accounts are in place and key are metrics monitored.
c. There is clarity about structure, accountability, roles and responsibilities, and pro-active succession planning for key personnel.

8. Understand your options. Learn about how a trade sale works, get briefed on how your business might be “valued”, understand how to that valuation could be improved – and check out the length of time required to complete a typical transaction.

9. Expect the process of marketing the business, dealing with potential buyers, responding to due diligence activities – and all the many associated tasks – to consume a great deal of time. And remember, your key task throughout this activity must be to keep the business moving forward strongly in all areas.

10. Have an exit strategy in place and review it regularly – every year or two. Then, if it happens, you will know how to respond to an unsolicited offer to buy your company – and not be in a blind panic!

Remember, an exit strategy is not a foot in the grave – rather it is the beginning of something new!

If your business is not shaping up well against this checklist or you have any questions and wish to discuss your responses, please call us on 0208 895 6189 or contact us via the form below – without obligation.

5 Things to do in a recession

As many of my customers have remarked to me, often with some surprise, they are managing to achieve more now than they were before the pandemic, and usually at a lower cost and with fewer people. So why are SMEs experiencing this now? 

This should not come as a surprise – systems and processes that are not routinely tested and evaluated tend to become inefficient over time. People in the corporate world of big business understand this phenomenon very well and they have at their disposal a range of tools and techniques to force changes on the organisation and drive out poor productivity and low efficiency.  

In the world of small business, particularly small owner managed businesses, the problem may be recognised but the tools and techniques used in the corporate world are seldom applicable. So, very commonly in small businesses, things inevitably follow the expected pattern and productivity declines almost unnoticed over time. Then along comes a pandemic and all at once survival becomes everyone’s top priority.  

The story of the last six months

In most businesses, a root and branch review of the way everything gets done became an urgent priority the moment the first lock down was announced. Nothing has been immune from scrutiny and all the tasks we had been happily performing as a matter of routine for years, have now been re-examined with much more critical eyes – resulting in changes that were both necessary and probably overdue. 

Things should not be allowed to stop there. Smart companies see recession as a chance to address issues they may just not have had the time to fix in busier and happier times.  

So, what are the 5 key areas of change during a recession?

Technology

Top of my list has to be an overhaul of the technology platform. Right now, much more business is being done in ways that are critically dependent on the IT infrastructure – right across the business. So having secure, stable IT solutions is no longer a “nice to have” option but a “must have” imperative.  

Systems integration

It may be counter-intuitive but recession is the best time to review core applications and move tasks and processes to IT solutions wherever possible across the business. Making sure that all the key systems the company uses are fully and properly integrated is a “game changer”. Almost all small businesses could significantly reduce transaction costs, reduce errors and waste, improve quality and raise customer satisfaction levels by making better and more complete use of IT.  

Cash flow forecast

For the owners and managers of the business, one of the most valuable outputs from all these systems should be an up-to-date cash flow forecast. All the other key metrics in the monthly management accounts pack are good to have as well . . . but without cash there is no business.  

Clear, up-to-date visibility of the sales funnel and key marketing metrics

Most small businesses do not have good forward visibility of their sales pipeline or sensible measurement of their marketing processes – and these are particularly important in volatile markets. These parts of the operation are some of the easiest things to measure and yet the work is just not done. Simple stuff like knowing how many new inquiries have been received each month and having access to a full, up-to-date list of all the prospects to whom the company is talking, knowing what the next action will be, by what date and who will complete it. Today there is just no reason for any company not to have accurate and timely measurement and reporting of these vital functions.  

Customer satisfaction

Implementing or improving upon some kind of routine customer satisfaction process for the business is another often over-looked but equally important initiative that is more easily implemented when people in the business are not rushed off their feet.  In the current market many things have changed and so have customer behaviours and priorities so it is more important than ever to understand what customers value and leads to satisfaction.

Like a lot of stuff that needs to be done in a small business it can be very difficult for the owner to achieve sufficient “distance” from the operation to be objective about the need for, and the nature of, changes in these five areas that would deliver long term benefits for the organisation. A fresh pair of eyes really can see more clearly and this is one of the key areas where a relationship with a trusted business advisor will add considerable and lasting value to your business.

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 completing the form below

Add ‘Selling your Business Whitepaper’ in the ‘Your Message’ box and we will email a copy directly to you.

White Paper – Growing your Business – The People Dimension

Are you a small business owner looking to grow your business in the next 3 years? If so, you’re not alone! According to recent research by the Department of Business Innovation & Skill, 75% of owners have an ambition of growing their business during this period, however understanding how best to scale up your operations is not always obvious.

Determining what resources are required in terms of people and skills is key to growing any business and in our experience of working with business owners over many years, most encounter problems when it comes to hiring the right people.

Within this white paper you will gain an insight into the various stages involved and practical advice to help guide you through the process towards manageable and sustainable growth.

the people dimensionIncluded within this paper:

  • Growing your business – the view from the top
  • Are you “prepared” to hire new people
  • Can you grow the business without adding people?
  • HR Basics – bringing new people on board
  • About Management
  • Stages on the growth journey

Download your copy of ‘Growing your Business – The People Dimension’.

Simply complete the form below adding ‘Growing your Business Whitepaper’ in the ‘Your Message’ box and we will email a copy directly to you.