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.

Planning for the unforeseen!

During these unusual times we have all realised that we cannot plan for every eventuality, but we can help by being prepared. How we react to sudden events is our choice and our decision.

Situations can come out of the blue just like Covid-19 did, but unexpected events can take many forms – a technology shift in your market, an unsolicited offer to buy the company or something more personal like divorce, illness or injury which can affect either yourself or someone close to you.

Why prepare?

The better prepared you are to deal with the unforeseen, the sooner you can react and the less impact it will have on your business. This is where having an Exit Strategy and Contingency Plan come in. Planning ahead, doesn’t mean you are expecting something to happen or that you are selling your business right now, but it means you are prepared and able to react accordingly. It will bring peace of mind and often many other benefits which you otherwise wouldn’t have realised.

Many business owners are often fully consumed with the day to day running of their business, so allocating time to focus on preparing these plans can be difficult.  Making time will ensure you are fully prepared when you need to be and that you don’t lose sight of your direction and goals. Getting bogged down in the daily operations of running the business won’t help you should the unforeseen happen.

How to prepare an Exit Strategy or Contingency Plan

If you’re unsure how to approach the planning process, a Business Advisor can help you action this, offering advice and support along the way.  A monthly meeting with follow-up actions will soon have your plan and strategy coming together and will bring clarity and confidence in the knowledge that your business will continue to operate during challenging times.

Creating such plans can and, often does, identify other areas that need attention, helping build a more thorough structure from which to work.  It can identify the need for more growth and funding, through to marketing campaigns and staffing levels.  The benefits will far outweigh the small investment and effort of setting aside a few hours in a month. As an example, recently a CMC Business Advisor helped increase a company’s growth by over half a million pounds in just six months. A great return on investment for the client for such a small monthly fee.

What if you decide to sell your business?

Most owners have never sold a business and it can be a complex process if you have never gone through the experience.  CMC Business Advisors have over 30 years’ experience and can guide you to navigate the many pitfalls that you may come across in preparing your business for sale.

Remember, most businesses don’t sell so having the right insight, information and know-how will increase the odds as well as the business value.

It is always a good idea to know the true worth of your company.  Learning on the job is not the recommended way to prepare your business for sale, but having an exit strategy in place can make you ready and prepared for the event.  Give yourself time to do this and review your plan on a regular basis.

To discover how we can support you, get in touch today and arrange an informal chat.

Adopting a purpose-driven strategy

Understanding a business’s purpose just became more important. Here’s why. 

In a recent Ipsos poll of over 21000 people across 28 countries, 86% of respondents said they want to see the world change to become a fairer and more sustainable place.  

Talking about the new normal has become fashionable. Yet, how many businesses can genuinely claim they want a new normal. Why would companies desire a new normal any way – when the old one was suiting them fine. After all nobody was talking about changing the norms in December 2019 

We know life changing events – loss of job, death of a loved one, partner separation – often lead to soul searching. The economic wreck, heaped by the pandemic, has led many businesses to pause and reflect on this life altering event.  

This is an opportunity for businesses, of all sizes, to reflect on the reasons they were in business in the first place.  

Why do you do what you do (or did before the pandemic).  

What is your purpose for existing? Did you have one? If not – how can you create one and adopt a purpose-driven strategy? 

We offer a basic structure to think about and incorporate purpose into your own organisation: 

Purpose = Strategy = North Star

Purpose, however, defines the reason for your existence and how you decide what to do. 

Purpose is distinct from a firm’s mission or vision statement. A mission statement describes how a company does what it does, while its vision statement is an attempt to define where it wants to go. 

In defining your company purpose questions such as ‘Is our purpose to become the most profitable technology services company?’ or ‘Is our purpose to become the world’s largest food delivery company?’ are misplacedThe better question instead is to ask yourself ‘Why are we in business?’  

Once you are clear about why you are in business it becomes a whole lot easier to define what you will do to achieve that purpose and through what means you intend on getting there. 

Virgin Group aspires to change businesses for good. The group attempts to use this statement in running their operating companies and subsidiaries and the way they build their brands.  

Unilever’s stated purpose is to make sustainable living common place. There is a clear emphasis on the environment and the potential for creating a negative impact on the climate if it doesn’t recognize the extractive nature of its industry on the climate.  

To be clear, a company cannot be a sustainable business if it does not generate margins or positive cash flows. Producing profits is necessary for viability and doesn’t make a company evil. Yet, it’s purpose cannot be generating margins. 

Let your business purpose dictate how you allocate capital

Strategy is nothing more than a set of conscious choices you make as an organisation. You decide the customers whom you want to pursue, you design products that could meet the unmet needs of these customers and then you invest in making and selling those products 

Thus, where you allocate capital i.e. invest cash or resources, is a critical decision.  

Purpose-driven companies use their stated purpose to decide which project investments to pursue and which to reject if they are divergent to their purpose, even if this means that they will earn lower returns on their invested capital by not pursuing those opportunities. 

Unilever would want to avoid investing in sectors or ideas that could negatively impact the environment or source raw materials that could erode sustainability even if it is less expensive to do so. 

This makes having your employees, shareholders, partners and suppliers buy into your purpose a vital determinant of success.  

Recruit and reward to reinforce purpose

As we said above, a purpose is a shared belief. It does not help if the purpose is only in the head of the CEO or only a handful of senior managers understand it.  

It is critical that the entire organization and its stakeholders subscribe to it. Recruiting new employees who are able to imbibe the purpose is arguably the most critical. Recruit employees who would actively engage with your purpose. Basic introduction to the company’s purpose, as part of onboarding the employee, can create an immediate impression of the importance the firm places on its purpose. Many companies go a step further by requiring employees to demonstrate their commitment to purpose as part of the performance evaluation process as well as tying elements of compensation (say a % of bonus payments) to living the company’s purpose. 

A purpose is not just for global firms with large balance sheets, or only for public listed firms to put on their annual reports. Firms of all sizes and ownership structures can and should define their purpose and then adopt it wholeheartedly. 

Stick to your purpose and your employees and customers will appreciate it 

Exit strategy

Stand out amongst your peers, have an Exit Strategy in place

An exit strategy doesn’t necessarily mean you are looking to leave or sell your business. It can be this, but it can also act as a contingency plan. Having an exit strategy can keep your business moving, providing an income and keeping it viable in the unforeseeable event of the business owner not being able to manage it for a period of time, or even permanently.  

With this in mind, the largest generation category of SME Business Owners in the UK is Baby Boomers. Typically, the youngest of the Baby Boomer generation are from the mid 1960’s putting the youngest of them into their mid 50’s. Many have been through several recessions now and the latest Covid19 pandemic is for many, the last one they hope to work through. Many Baby Boomers are fast approaching retirement age, if they haven’t already. Many are also actively considering their retirement and what will happen to the business they have built up over many years and decades. 

Why you need an exit strategy

Depending on which statistics you read, around 80% of the UK SME owners don’t have an exit strategy or succession plan in place. This can cause the business not to sell – around 100,000 companies per year just close as they are not able to sell.  Having a clear and professional exit strategy in place has been proven to assist owners in getting better value for their company and enabling them to sell the business when the time comes.  

Take time to prepare

To make a company viable to sell takes time and preparation. It is advisable to start putting an exit strategy or succession plan in place at least a few years before you are planning to sell. This will not only increase the value of your business, but it will give reassurance that the business will run and continue to provide an income should any unforeseeable events happen. It’s an insurance policy! 

Creating a good exit strategy gives any potential buyer all the information they need about your business. It offers clear insight about the succession take-over of the company to gain a better valuation for the business.  

There are more Baby Boomer owners then potential buyers from the up and coming generations to buy the business. This makes it a very competitive market.  An exit strategy will show the advantages of buying an existing business, proving to your successor that they are acquiring not just a viable business, but they will gain: 

  • customer base and the history of income 
  • A trained workforce 
  • Required licenses and permits 
  • Established vendor relationships and credit lines  
  • A plan for growth 

The benefits of buying an existing business

Buying an existing company rather than starting your own would mean that you step into a position of respect within the business community rather than starting from scratch with many unknowns.  

By owning your own company, you are in the position of making the decisions that affect your own future, as well as the futures of those you employ – you may well keep a number of individuals in their job, very important in these uncertain times.  

As a member of the local business community you will be able to bring influence and bear on the issues that matter most to you and your employees.   

Now is the time in any stage of a business to have a current exit strategy and succession plan in place.  It will bring you peace of mind and give you added advantage when selling your company in this very competitive environment.  For more information and an informal chat, contact your local CMC Business Advisor.