Archive for Strategic planning

Why Small Businesses don’t make it: an accountant’s perspective

You might remember we talked to Business Insider last August about the three mistakes you need to avoid as a small business owner hoping to grow your business.

This month I took the theme up with Business Review Australia in an article ‘Why Small Businesses Don’t Make It: An Accountant’s Perspective“.

One of the big dangers I see is that new starters will often wing it with a cursory internet search to suffice as competitor analysis of marketing or pricing points without fully realising big companies can afford to run marketing campaigns such as loss—leaders, manage for years without profit or have other strategies to support their losses.

They also need to recognise that they really have to ‘sweat the small stuff’.  It gets down to understanding literally how many cups of coffee you need to sell each day from your small coffee shop, to make a profit.

Shoot over and read my article “Why Small Businesses Don’t Make It:An Accountant’s Perspective, I think you’ll find it helpful.

And I have suggested some actions you can take yourself without needing an accountant or business adviser to get you through.

Don’t make these 3 mistakes if you want your business to succeed

holding plant sprouting from handful of coinsWhat are the issues faced when transforming your company from a small business into a large enterprise?

In my experience, SMEs are hindering their growth in three major ways: emotions-based decision making, lack of attention to key business drivers and a business as-a-hobby mentality.

 

 

  1. As small business owners we fail to focus on the key overarching factors driving our business because we are trapped down in the operational detail.
  2. Decisions are often made for emotional and family related reasons and not based on solid facts.
  3. Many of us treat our business as a hobby, pursuing parts of the business we find enjoyable, rather than taking decisions based on business profitability.

Having worked with SMEs over the last 20 years, I see these problem areas regularly and consistently, and as I explained to Business Insider  journalist Sarah Kimmorley, they can be easily fixed with focus and goal setting.

How do you make sure your small-to-mid sized business doesn’t make the same mistake?

Read the full article in Business Insider, Don’t Make These 3 Mistakes If You Want Your Business To Succeed.

Christmas boost juice! 9 Top tactics to re-energise your business during the holiday sales season

berry smoothieEvery business needs to re-energise and re-vitalise at intervals, but when is a good time to start and how do you go about doing it?  For small business owners, it’s hard to go past the Christmas / New Year period. Customers are in a festive mood buoyed up by carols and decorations, and people are generally open to spending more in this period. It’s a great platform that you can use to renew, re-energise or boost your business up a notch or three.

My mantra that business success doesn’t just happen applies here more than ever. It’s all about planning and implementation.

My 9 top tips to using the Christmas / New Year holiday season to re-energise your business.

  • Be creative! – People look for uniqueness.
    What are your points of difference in your market place? Something unique about both your products and your service is vital. Without the two, you cannot expect a boost in sales and may experience a decline.
  • Ensure you satisfy and exceed your customers expectations.
    Don’t confine yourself to traditional business plans. Go for innovative and surprising ideas (within your cost constraints).
  • ALWAYS and at ALL TIMES aim to please your customers as an integral part of your business model.
    Your efforts and service levels during the holiday season can have residual effects in the following months. If you have offered excellent service you will surely attract more customers.
  • Plan promos and giveaways.
    If you don’t plan and commit to these actions and timings they won’t happen.
  • Ensure gifts you give represent your business well.
    Your gift does not need to be expensive. Just bear in mind that creativity is needed, otherwise you might be wasting your efforts.
  • Share the love!
    Consider using local or affiliated businesses when obtaining / creating your gifts and  encourage those around you to do the same.
  • Carry additional stock levels.
    If it is your busiest period then be prepared.
  • Start PR activities as soon as possible.
    This is imperative because there are many competitors locally, domestically and internationally. As the saying goes, the early bird catches the worm.
  • Choose a marketing strategy that fits your business’ budget.
    There are a lot of free platforms that you can use, especially in the social media. Reach as many people as possible.

Re-energising your business is something that you want to achieve for the longer term as well.

To do that effectively, ask the following questions:

  1. What are the specific goals I want my business to achieve?
  2. What is required to achieve the goals and objectives that I have?
  3. What resources do I have to accomplish the plans and bring them to fruition?
  4. What is the time frame for the plans that I have listed?
  5. What strategy will I use that will benefit the business and bring the best results?
  6. How can I incorporate the holiday season boost into the longer-term plans?
  7. Do I have back-up arrangements if things don’t go according to plan? Many one-off crises can be prepared for ahead and while difficult don’t have to be an unmanageable disaster.

Feel like doing a bit of a brainstorming on how you might re-energise your business?

Ask us, it could be fruitful! (Sorry, obviously getting into the season’s cheeriness a little too soon. But we do have a lot of good ideas!)

 

Making my business run independently of me. Month end..all hell breaks loose

Fighting-fur-sealsI have committed myself to the goal of setting up my business so that it runs independently of me. Unless your business can operate without you, it becomes a job, perhaps a lifestyle (desirable or otherwise), but not a saleable asset. In this month’s progress update I have to report – it’s not easy.  But I have five tips to help you create an independent business that you can sell one day – and survive the chaos on the way through.

Life is a flow: the flow of events over time, the flow of a business, and the flow of people’s personal lives. And each of these area impacts on all the others. Around 600 years ago a English poet called John Donne wrote ‘No man is an island’. Whatever happens to the people around us, says Donne, in effect happens to us too because we are all connected. I’d have to say that this month showed me the truth of that big time.

When my business and personal life is in flow everything just works and seems effortless. No bump is too big, everything is surmountable, everyone works together and it just happens.

The period of life I am currently experiencing is the opposite. It’s all about chaos rather than flow. In attempting to remove myself from the processes and ensure everyone follows their responsibilities and pulls together to assist me, the very reverse has occurred.

Tempers have become frayed, relationships have soured, and issues we have not encountered for a long time have arisen.

The nature of my business has one particular feature that militates against flow. We deal with many clients in a wide variety of businesses and industry sectors, so there are always at least two clients with fairly major issues at any given time. Our commitment to our clients is that we will do everything we can to assist. This can threaten to interrupt our internal processes and generate a certain amount of upheaval as we pull out the stops to help our clients through their difficult patch.

The combination of a business that inevitably operates under a degree of pressure coping with one-off unpredictable crises, my program of working towards removing myself from the middle of communications, (plus a few personal issues happening at present) and you get &%#&#&%$$& – in spades.

So now to sort it out. In order to move forward, I have to take two steps back.

Processes and training for the unpredictable

I have been following the enquiries into the management of the great bushfires that swept through Victoria and Tasmania. Bushfire management by definition is conducted through periods of chaos, high emotion and lack of predictability as to the likely flow of events. The idea of the reviews is to devise systems and processes and train people to manage through these situations.

It struck me that there were similarities to my situation. My business and my people need this kind of training and preparation.

What is the key to systems and procedures working smoothly – communication.

I’ll need to clearly communicate my goals, give direction and set some standards regarding mature and professional behaviour.

One of the reasons we employ a variety of people in the workforce who have different skill sets and personalities is to ensure a balanced organisation capable of being effective and competitive in different arenas. But a balanced organisation leads to potential internal conflicts when not actively managed.

5 Key Tips For Managing The Tough Times

Here are my five first-hand learnings for managing through the tough times when chaos seems to be more dominant than flow.

  1. Communicate clearly to all stakeholders
  2. Reinforce – use the black stick if you have too. Consistently reiterate your decisions, reward or point out where they are not being adhered to.
  3. Actively manage – don’t let thing get out of hand in anticipation that things will sort themselves out ‘after all we are all adults’. The reality is that everyone is capable of quite child-like behaviour when old wounds and buttons get pushed, or other personal / business issues are under strain.
  4. Persist. Don’t walk away and just give up. Persisting through the hard times means that your organisation and your people will evolve to be much stronger, better organised, more resilient and capable of dealing with the ups and downs of business life.
  5. Keep your goal in the forefront of your mind. What are you trying to achieve? What and who is important to you?

Life rarely flows smoothly. Personal and business worlds collide, individuals might be struggling in some area and often people try to escape rather than stay and work it out.

If you keep your goals in mind and work together then I truly believe anything is possible and achievable.

Remember at all times we are here to help you through.

What made you decide to create a business forecasting tool like CashMAX?

The Words Cash Flow on Crossword PuzzleMany people ask me how I came up with the idea of business forecasting tool for SMEs.  I saw a need for a tool designed to walk you through the process of gathering the right information to track and manipulate the drivers and KPIs that help a small business grow. The result was CashMAX, a tool that helps you plan, set strategies and manage budgets.

As an accountant and business advisor – and a business owner myself – I observed that not enough SME entrepreneurs really understand their businesses. They are not properly on top of their cashflow, the issues around GST, Tax, Debtors and Creditors and a whole heap of other things that allow a small business to become a big business – or even grow to BE a business rather than just a job for the owner.

One of the most important, but least understood aspects of business is making money, what needs to be done to generate cash, and how to manipulate the crucial relationship between the timing of profit and cash.

Of course you have the option of using spreadsheets and all the alternatives out there for what we do; but they are prone to human error. They require a lot of manual input, calculation of formulas and so on. In fact you either need to be an accountant or pay one to extract the right information for your business.

We started off building CashMAX Forecaster as a tool to assist us working with our clients. From there it took on a life of its own. Over time we built into the tool every circumstance we experienced over hundreds of businesses, developing more ways to look at different parts of their business.

Once we involved our clients we realised we needed to make people accountable – so we made it internet based. This allowed our clients and their managers to be actively involved in establishing their budgets. They could set budgets based on what would then become their KPIs. The result was that we could now hold them accountable for these KPIs. They were no longer some number established by accountants somewhere away from the real business and the people working in it. They were the numbers, the KPIs that they had set based on their own input.

For our clients it has taken their understanding of their businesses to a whole new level. They have a far more comprehensive view of their business and its drivers. They have better information for basing their business decisions on as well. And their management team feel more involved and have more clarity about their roles and responsibilities in the business.

It’s been a lot of work, and a lot of refining and developing based on years of experience and practical testing with hundreds of clients. We’re pretty excited with where it is right now, and it will keep on growing. It’s a powerful business forecasting and management tool for SMEs created out of a real synergy of knowledge, needs and skills between accountants and business owners.

Why you should consider business niche marketing

Mum and baby fitnessA niche is a targeted marketing proposition for your business. It helps create a perception that you offer a unique service or product that is intended to meet the needs of a specific customer. It’s also an effective tool to help your business stand out from the crowd and attract your target customers.

Let me explain.

I caught up recently with a friend who had just had a baby. She was worrying about her post baby shape. Health and fitness happens to be an interest of mine (I might be accused of being a bit of a gym junkie). So my friend showed me two email communications about training courses that she had received.

One said:

Stacked on a few kilos and can’t move them? If you want to lose weight but can’t get to the gym we offer online training to give you the mentoring and push that you need to move it.

The second one said:

We know how hard it is to lose weight after you’ve had a child. Celebrities make it seem easy but it’s not. That’s why we have worked with people directly in your scenario to develop a program that works for the busy mum with children. We have made it easy and we will provide you the support you need.

When I checked out the details of the two training programs, they were very similar in terms of their content. Furthermore both were offering online training. Both products were at good price points (being online allows gyms to save on a lot of costs). Finally being online meant that the clients would not have the difficulties (and perhaps costs) of arranging for babysitting on top of gym fees.

Despite this similarity the second one resonated much more with my friend who felt they ‘understood’ her better. Company 2 had tapped into the emotional space of their niche better.

This is effective niche marketing at work.

And in a world of 7 billion plus people that is the way you can target your business to stand out from the crowd and appeal to your prospective customers.

You see niche marketing everywhere. Compare the department store with a wide range of product lines with the specialist kitchen shop. The kitchen shop might be large and offer a wide range of choices, or it might focus on say European kitchenware. Either way the kitchen specialty store will attract a more focused shopper. The kitchen shop is operating in a niche segment. A baby shop is such a specific niche that you won’t even get people to step into one unless they were seriously considering purchases for a baby.

Why consider trying to establish a niche

  1.  Your communications can target the specific needs of your audience and hence will resonate with and engage them more effectively. Like my friend, the message that was tailored for her situation worked more effectively, even though essentially the same product was offered.
  2. You can target your advertising and marketing budget very tightly. The same amount of time, effort and money is all now concentrated on a smaller, narrower audience, and so is much more powerful and effective.
  3. You can be very, very specific. Imagine that you are seeking a referral or discussing a potential market. If you say, “My market is a female 25-35yrs who has had a child and is struggling to lose weight because of time or motivation issues”, then the other person is more likely to respond with “Oh, I know four people like that!”
    General statements like “we offer online training to everyone” don’t help people to understand exactly what you do, or where they might fit in either as your customer, or in order to refer others.

What do you need to do to create a niche

  1. Identify the niche
    • research whether you have a reachable market
    • evaluate whether your chosen niche is likely to be profitable
  2. Tailor your products (if required) to that market place
  3. Develop your marketing and communications in the specific language that suits their needs

Can I create a niche if my products/ services are across several areas?

You can still create a niche even if your products and services work across several customer types.

Just like clothing design companies that use sub brands in clothing lines for different target markets, you can position your services and products.

Some techniques you might use are:

  • separate websites
  • dedicated landing pages
  • FaceBook pages
  • sub-brands
  • flyers and brochures for specific product lines
  • niche focused newsletters, or blogs and so on.

The secret is to ensure that all your communications are couched in terms that address the concerns and needs of your target niche audience.

Successful strategies require thought and implementation plans

Businessman launching new ideas

Having a strategy is great but the implementation of a strategy is key to its success.

I am just back from London where I attended the international meeting of all ROCG regional CEOs to discuss global strategies.  I love London and love travel.  It’s awesome, but it loses a bit when I spend more time in the plane than on the ground. Then again, as a business owner yourself you know how it goes. You have to do what you need to do when you need to do it.

During the meeting we discussed the implementations of a particular strategy. In this case, the strategy was to foster the interaction of our international offices for the benefit of our clients (you) and for our own internal development. As one of the actions to achieve this we decided that it was time for another face-to-face meeting of the entire international group. Now for this to occur every one of our offices around the globe is required to invest heavily in dollars and time.  It’s a decision that our regional CEOs consider has valuable long term benefits, but we know that our local offices might need convincing of the benefits.

The importance of buy-in

Our strategy is to foster interaction between our international offices across all regions.  The key to implement this strategy we know is to overcome the resistance of individual offices to investing time and money.

So we will need a complete implementation and communication strategy – we have to find ways to create buy-in.

Our team members, like many businesses come from different demographics – different ages, locations in different states and different countries, English speaking but still differing cultures, and of course different opinions.

Any communication strategy must achieve the following three key results.

  1. People must be allowed to feel ownership, they must identify with the strategy.
  2. They must be able to contribute and to participate in a meaningful way.  If the strategy is foisted on them from outside they may end up feeling resentful rather than supportive.  At worst they might undermine the strategy and prevent it from achieving its aims.
  3. Finally they need to understand and recognise the benefits to them. It’s a lot easier to invest resources whether financial or personal effort into something when you can see the value for yourself.

Review past strategies even the unsuccessful ones

Not all strategies succeed and analysing failure or reviewing results is important for many reasons.

  • History repeats itself-determining the reason allows us to avoid the mistake or correct it when it starts to occur in the future
  • Determining if the strategy really failed or if we simply gave up too early helps us to decide if we should pull out of a strategy or keeping pushing ahead
  • We can assess if a variation to the implementation or overall strategy is required
  • Determine if the failure was due to internal or external causes and identify the failure point

Having a failed strategy is not the long-term issue. Not learning from our mistakes (and others) so that we repeat the same errors over and over is.

Recharging the batteries can be a smart business strategy

How quickly the year goes, how quickly the month of January has already almost gone! It’s made me focus on the importance for business owners and entrepreneurs to include time out as part of their business strategy.

Each year seems to have more and more crammed into it and goes faster and faster. Possibly it just seems that way because I am getting older, or is there more to the story? Perhaps all our technologies combined with the pressures of business mean that we are constantly connected, reachable, on the go. The end result may be that we fail to take time out to recharge our batteries, truly relax and enjoy everything that we have achieved.

After all what is the point to it if you don’t take the time to enjoy it.

Depending on what phase your business is in, and the degree to which the business depends on your personal hands-on input, this can be a real issue. The side effects on personal health of the failure to rest and relax are probably pretty widely documented, amongst them deterioration in your capacity to make good decisions and negative impacts on your relationships. Let’s focus instead though on the consequences to the health of your business.

Stepping away from the business for a break, however short, in my experience gives me the time to think about what I should be doing, what should be happening and what is, or isn’t, working. The risk of not taking time to yourself to quietly refresh and review is that your business continues to head along what might actually be a less optimal or even an incorrect path. Ideally you need the opportunity to get a ‘bird’s eye view’ of your business, where you are removed from it, and so able to see it as an outsider from all angles.

This year I had the weird experience of being truly away from the business, completely non-contactable, and getting literally my bird’s eye view of the world. It came about unexpectedly when I flew with a group to Burma / Myanmar on my recent holidays. See my blog post Planning the ride of your (business) life which covers my adventures Hot Air Ballooning.

My plane landed and of course the first thing I did was turn on the mobile phone, it’s the natural habit these days. I waited and waited, nothing happened. Myanmar it seems does not have roaming agreements with Australia – so no mobile phone service for 8 days.

After the initial shock it was mmm… great.

In the end most of the hotels where we stay had Wi-Fi. So each evening as our group returned our phones would start picking up reception. But due to the slowness of the Internet and the unreliability of the access on some days it was truly a time out.

Did it matter? No, everything back home continued and everyone survived. Most people knew I was away and I answered the very occasional email. To be honest my rare bouts of access were probably used more to upload photos to make sure I didn’t lose the shots of the trip.

What did it mean? It actually meant I had a real break drifting down the Ayeyarwaddy River and floating over the landscape of another world. A break from all the activity related to the office. A real opportunity to recharge the batteries and take the time out to think and re-plan some of the strategies and actions which otherwise probably would have just chugged along in the same old way.

A week back at work and it’s already starting to feel like a quite a time ago. But the point is that I have re-mapped and planned for 2013, and I feel more refreshed and ready to drive the business forward.

It makes sense to see taking time out as an important business strategy. You will feel better and operate smarter, and your business will benefit it terms of growth and continuing longevity.

Pick up your diary and lock off some time now. Limit the level of contact you have within that period to the extent that you can. Make sure you switch off and ENJOY!!!!

 

Planning the ride of your (business) life

It’s the last days of my holidays and I am hot air ballooning over Bagan, Myanmar (Burma).

My idea of being in the right place at the right time to launch a great 2013!

We’d cruised up the Ayeyarwaddy River first and now 2,500 – 4,000 temples, pagodas and stupas (religious monuments) lay stretched out below us.

It made me think about the parallels between many businesses and hot air ballooning.

In business and life there is always an element of luck – – being in the right spot, the right conditions, the right timing and the right people- in this case it was the weather that was on our side. It had been inclement and too hazardous in the previous two days for safe flying.

But with a bit of forethought and some good strategic planning you can influence / or prepare for some of the so-called unforeseen events in your business life; I believe that you can plan and prepare to be ‘lucky’ in other words. As Henry Ford said, “The harder I worked, the luckier I got!”

Our pilot gave us some very clear instructions on our role, what was expected of us, what we could do, and what we could not do.

Your staff too need the same clear guidelines from you if they are to work constructively and effectively to move your business in your chosen direction.

Prevailing winds, air temperatures and the elements heavily influenced the balloon’s journey. The pilot’s ability to control all these was fairly limited. Even so, with a clear plan and a few ropes and pulleys, he navigated us safely to our landing destination – and the frosted flutes of champagne waiting there to celebrate.

 

In business though you have a far greater opportunity to influence the environment as long as you have a clear idea of what you want to achieve, and what you need to do to reach that outcome. Much more than the balloon pilot you can adjust and tweak and set the direction for your business…and enjoy the champagne celebrations as you achieve your milestones.

Remember business success doesn’t just happen – if you are not achieving what you desire from your business, contact us.

The Rocky Road of the economy

After 85 years of trading, and sales through the USA, UK , Canada, South Africa, Australia and New Zealand a true Aussie icon looks as though its days are numbered.

Darrell Lea, the Australian chocolate manufacturer and retailer is 100% family owned and has been an icon down under for many years. It boasts 70 locations of their own and another 1,000 outlets around Australia. However, despite its rich history, well-known brand and great reputation Darrell Lea along with its 700 staff, has gone into liquidation and is facing an unknown future.

Is the great chocolate retailer a victim of its own making? Has longevity and previous success allowed them to become rigid, and unresponsive to change? Have they failed to innovate and rediscover themselves?

It’s a melting pot of possibilities. 

Many years ago I was involved in the stocktake of Darrell Lea that was an experience. The smell of chocolate for the full day…and No I didn’t eat too much of the stock!

So what has gone wrong?  Many factors can lead to a company experiencing turbulence in today’s markets and not all of them necessarily involve the business directly.  So I am just going to list a few.

  • The company is old establishment but not trendy, so it attracts the occasional purchase rather than the regular purchase.
  • The market for the brand has moved on and they haven’t evolved in the process.
  • The large super-market chains have overtaken with convenience and pricing of alternatives, offering other chocolates from Cadburys to Lindt, and have the means to make expensive imported chocolate affordable through their buying power.
  • The cost of maintaining their own shops and rent in the current economic environment.
  • The cost of wages and 7 days a week trade on their margins and penalty rates.
  • Manufacturing in Australia at a higher wages and cost rate.
  • A failure to combat the seasonal nature of sales for this product. (Easter, Christmas, Fathers/Mothers Day)

Obviously at the end of the day the largest component, while any or all of the above potentially may be contributing factors,  is that they weren’t making enough money to cover all their costs and overheads from the sale of product.

The company needed to be taking action quite some time ago.  The company really needed to be considering the sorts of matters we cover in our booklet “Weathering the Storm” (if you want a copy send us your details or request it on the rocg.com website).

Weathering the Storm discusses how to constantly re-evaluate the position of the business, how to assess the value proposition of the business, and of course the need to constantly review cash, budgets and forecasts – to be well in front of the curve.

Of course I am not saying that simply reading a booklet would have necessarily stopped the slide into Administration for Darrell Lea.  But I am saying that considering the factors discussed and applying its values to their business would have ensured the company was operating on the best possible footing at all times.

Sadly it serves as a timely reminder of the need for insight and overview of any business no matter how well it seems to be running.  Yes, Darrell Lea had a Vision, a Purpose and a Values statement and it was all around the word SHINE (Success, Honesty, Initiative, Needs and Embracing opportunity).  But did they live by it and did they review it to ensure it met current needs.

As I write this, I glance over to my other computer screen to see MYER have axed 100 workers in response to what they are calling “The toughest retail conditions in 25 years”.  So a final word of warning for all:

  • Keep an eye on your business (both the internal and external environment)
  • Keep an eye on your competitors (remember they aren’t all in your backyard – they could now be operating from another state, country or other side of the globe).
  • Ensure you plan and fund your business appropriately and if ever in doubt, don’t hesitate to seek advice.