Which Way Out?

Which Way Out?

Upward Trend In Business Owners Looking To Exit

With the thought of another year of uncertainty around the Covid pandemic along with continued supply chain and staffing issues, more business owners than ever are starting to think about life after business.

As business owners return to work against a backdrop of holiday-based tight cash flow and start the planning process for 2022, many are considering what an exit strategy might look like.

Steve Wilkinson, of the Alternative Board Christchurch, has observed more clients than usual are starting to look for the exit.

“Even fresh from their holiday a lot of my clients are struggling to find the energy for another difficult year. We’re talking about options and there are more conversations around selling and finding other solutions to take some of the pressure off them”, he says.

“While most of my clients have been financially successful this year, despite the impact of Covid, the journey they have been on over this period has been met by new challenges not previously experienced. These challenges have necessitated better planning, increased costs and a lack of certainty about what the future brings.”

A continuation of this uncertainty, increased costs as supply chain and staffing issues compound, and a steady decline in resilience, is creating a feeling that now is the time to move on.

In addition, the emotional toll of handling the highly charged views of both sides of the Covid debate is something that is new to those business owners affected and, difficult to manage.

When emotions are running high it’s never a good time to contemplate selling a business, particularly if the business is not set up to achieve maximum value from its sale. Steve Wilkinson says “At the Alternative Board, part of our involvement with our clients is to continue to build ongoing strategies around longer-term exit plans to ensure that if exit becomes a discussion point, the business is well placed to explore those exit strategies, of which sale is only one option.”

“As most business owners know, there are many factors that impact on the overall value of a business, and it is often too late to address those issues at the time of sale,” he says.

“These factors need to be addressed as early as possible and plans put in place to mitigate where practical with a view to setting the owner up with options when, and if, an exit strategy needs to be considered.”

In summary, the message for all business owners from what is happening at present is to ensure that they continue to build strategies that enhance not only the value of the business but the saleability. This is in turn provides more flexibility in times where current thinking around exit is more prevalent.

The Alternative Board is a provider of business advice, planning and coaching systems to business owners, CEOs and Managing Directors. Our business owner Advisory Boards expand thinking beyond particular industry providing different perspectives to spur new ways of doing business based on real world experience.

Seven Secrets for creating Standard Operating Procedures (SOPs)

Seven Secrets for creating Standard Operating Procedures (SOPs)

When John Warrilow, world-renown author and founder of The Value Builder System*, comments on something it’s worth taking notice.

In a recent presentation, John described Standard Operating Procedures as the foundation of a business that is built to sell. Amongst other things, they provide the following for a business-:

  1. The secret to happy customers – by helping to provide your customers with a consistent experience
  2. Minimise the owner’s time spent problem solving – SOPs allow owners to pre-empt most questions employees ask resulting in less staff interruptions therby freeing up much needed business owner time to tackle other challenges.
  3. Help to train confident employees – SOPs give employees clear instructions on what main tasks make up their jobs.
  4. Increase the value of the company – by giving an acquirer more confidence that the business will continue to survive without the owner.

So if documenting your Standard Operating Procedures really does;

  • increase the value of your business,
  • improve profitability from greater efficiencies and productivity and
  • give the owner much needed time to focus on other things,

then why do some owners not invest the time required to put these SOPs in place? From my experience, it comes down to two things, time and money, and fundamentally, knowing where and how to start.

Anecdotally there is enough evidence to support an argument that the documentation of key processes and procedures will increase productivity and efficiencies which in turn will flow through to improved profitability. It’s also clear that any time spent documenting key processes and procedures now will be rewarded threefold in the future. That takes care of the time and money obstacles.

As to how and where to start here are the Seven Secrets for creating Standard Operating Procedures that John Warrilow advises will stand the test of time in your business.

  1. Use Video – If a picture says a 1000 words then a video is worth a million. By creating processes and training material in video format staff will enjoy the learning process and be more likely to retain the information. Such content can be supported by written documentation
  2. Keep your SOPs short – show your employees how you want them to perform a specific task. If you need more than two minutes break your instructions up into shorter video clips.
  3. One touch – the best SOPs are structured so that an individual only touches the process once.
  4. No double data entry – if a SOP requires entering data make sure that a single piece of data or field is only populated once and by a single person.
  5. Clear roles and responsibilities – when designing SOPs make sure it is clear who is responsible for each step.
  6. Make SOPs available where employees need them the most – ideally your SOPs should be cloud based and appear where your employees do their work so they can access them just in time without having to sift through a massive Google drive or Dropbox folder.
  7. Solicit help from Process experts: – just like Finance, Health and Safety and HR, SOPs are now an expertise in their own right. Experts from companies like New Zealand’s Bedrock provide guidance around templates, structures and frameworks which help make such an exercise less daunting

Increasingly I am hearing the message from business owners that they’re working too hard for fewer rewards. The more I research documenting SOPs the more I am convinced that if business owners invested the time they currently spend answering queries from their staff into documenting these processes, the quicker they would regain that lost time to use on more meaningful things in life
The benefits of putting some extra effort over the next few months into starting this process will quickly become apparent, while the longer-term benefits will continue to accrue as these SOPs are developed and introduced.

*The Value Builder System is a cloud-based assessment tool that helps build the value of a company. It has helped more than 55,000 business owners improve their company’s value by up to 71 percent.

What’s your Stress Quotient® – and how can you keep it under control?

What’s your Stress Quotient® – and how can you keep it under control?

Our Winter Pulse Check results showed that while many business owners remain confident their businesses are doing well, there has been a marked rise in those reporting anxiety, stress, and disturbed sleep as operating conditions worsen.

And it’s not just business owners feeling stressed.  The impact of Covid on workplace stress levels has been significant over the past 12 months and media coverage has highlighted the potential financial liability business owners may have if they choose to ignore the signs among employees.

The first step to reducing workplace stress is being able to identify and acknowledge it exists. There are several tools available to do this and it is an area we’ve been exploring for some time, in association with TTI Success Insights and an online tool – called Stress Quotient®  – which helps Kiwi business owners identify, measure and monitor various stress types within organisations and teams. Defining stress as ‘the harmful physical and emotional responses that occur when the requirements of the job do not match the capabilities, resources, or needs of the worker’, Stress Quotient®  identifies seven key workplace stressors that both employers and employees need to watch for.

  1. DEMAND: While today’s employees may want challenging tasks to maintain their engagement and motivation, it is important that demands do not exceed the ability to cope. Workplace stress tends to build as demands and responsibilities increase. Stress can be directly tied to poorly designed jobs, excessive workloads and talents and skills not matching the work. The goal is to have a balance between demands and time.
  2. EFFORT/REWARD BALANCE:  Having purpose or job satisfaction is an important factor in any job. High effort without satisfying one’s need for rewards can lead to workplace stress. Rewards come in many forms; recognition, helping others, gaining knowledge, personal growth, structure or compensation. High effort in the workplace is essential but must be matched by the reward that the individual desires. Workplace stress arises when there is a significant disconnect between needs and rewards.
  3. CONTROL: A feeling of powerlessness is a universal cause of job stress. You alter or avoid the situation because you feel nothing can be done. Common sources of stress at work include complaints of too much responsibility with too little authority, being involved, not being heard and no one understanding what you really do. Workplace stress increases as one’s degree of control decreases. The goal is to have a balance between responsibilities and personal control.
  4. ORGANISATIONAL CHANGE: Organisational change affects people differently. While some people welcome it, others become apprehensive and stressed at the mere mention of change. Organisational change can be defined as any change in people, structure, technology or procedures and can vary in degree and direction, produce uncertainty and initiate both stress and opportunities.
  5. MANAGER/SUPERVISOR INFLUENCE:  Common reasons given for stress at work include lack of effort from your employees or self-imposed pressure on yourself. Most people don’t realise that stress is a part of every job. That’s why, when you are working under reasonable demands you can get the job done more efficiently. However, when you do things that go beyond normal pressure this can cause stress.
  6. SOCIAL SUPPORT: A lack of support from colleagues and leadership can lead to workplace stress. A supportive environment is one where leadership provides clear and consistent information and co-workers stand ready to assist when needed. An environment that promotes positive working relationships and addresses unacceptable behaviour promotes productivity and employee engagement.
  7. JOB SECURITY: People worry about many aspects of their jobs, but most of the fear comes from job security. Job insecurity comes from the fear of job loss and the associated unemployment implications. Stress can also originate from a lack of advancement or being promoted too slowly. People also can have a concern with being promoted too quickly to be successful in the job.

By measuring each of these seven key workplace stressors, we can focus on the things that are within one’s control without having to make huge changes or rethinking career ambitions.

There’s a well-known saying: What gets measured gets managed so it may be time for NZ businesses to start measuring organisational and individual stress levels. Not doing so may overlook important health and safety issues in the workplace.

If you think Stress Quotient® could be a valuable tool to identify, measure and monitor stress levels in your organisation please get in touch with me or one of The Alternative Board team.

Confidence and motivation fraying for some SMEs, survey shows

Confidence and motivation fraying for some SMEs, survey shows

Article by Marta Steeman – Senior Reporter – Stuff Limited

The stresses and strains of handling Covid-19 disruption is taking its toll on the confidence and motivation of a good chunk of small businesses, a new survey shows.

The Alternative Board’s Pulse Check Autumn 2021 shows business confidence is still high among 46 per cent of the 271 member and associates who responded to the survey but a substantial chunk, 39 per cent, are “just ok” and have no room for more lockdowns.

The Alternative Board is a business development, coaching and mentoring organisation for small to medium-sized businesses and has about 300 members here. There are about 15 franchise operators around the country.

The Alternative Board North Canterbury managing director Steve Wilkinson​ said the Covid aftershocks of shipping delays, higher prices and difficulty finding suitable staff seemed to be fraying the high levels of confidence reported in the summer.

Continue reading on Stuff

Article first published in Stuff 14 May 2021.

Credit issues are on the rise

Credit issues are on the rise

Our recent Business Pulse Check showed 7% of respondents have experienced more late payers and defaults, while 4% are struggling to pay creditors. In recent client coaching sessions, I am also noticing that there is an emergence of fiddly credit issues that are starting to take up a little more time for both business owners and their credit staff.  These issues range from company liquidations, more creative excuses for not paying, down to just not paying on time, or paying later than normal. In some cases, the debtor has grown their exposure with the company over recent months without any further analysis of the increasing credit risk.

In a paper I wrote earlier this year on the Changing Face of Credit Risk I emphasised the need to continue to be vigilant with your credit control processes and procedures.

With the Christmas break coming up it is critical that everyone makes sure they have robust processes in place for collecting outstanding debts – including pro-actively following up overdue amounts expediently. Anything left outstanding on Christmas Day is unlikely to be paid until late January, with the resultant impact on your company cashflow at a time when it is most needed.

In the meantime I would suggest you remain focused on the following:

  • Watch for changing signs with any clients i.e. increased exposure/delays or excuses in paying.
  • Where appropriate be pro-active in updating Terms of Trade, particularly in cases where you may not have personal guarantees and exposure is increasing.
  • Use credit checking more regularly for clients who are showing different patterns in their payments.
  • If appropriate, consider registering under the PPSR register.
  • For clients showing changes in trading/payment patterns consider putting in place credit watch processes.
Author: Steve Wilkinson