As we move back down through the Covid-19 alert levels and more businesses commence trading, it is clear that it will not be ‘business as usual’ for most businesses for some time. There may well be a small short surge as businesses open, but at present most business owners have little confidence in predicted business and public confidence beyond that period, as the impact of restructuring and redundancies take hold.
This raises the question of what steps business owners should now be taking to assess the risk of doing business with clients going forward. It would be great to be able to tighten terms of trade and insist on higher deposits or shorter payment terms, but practically that is unlikely to work in a lot of cases.
So what can a business owner do to improve credit management processes? Here are some ideas.
1. Review and update your terms of trade to ensure they are robust enough
2. Ensure, where appropriate, that you have protection through the Personal Property Securities Register by registering your interest in the goods sold.
3. Set up a credit watch arrangement with your credit agency to ensure that any issues with major clients are advised early. This at least gives you a head start over other unsecured creditors.
4. Review your client base and determine those clients where a failure to pay two months debt would severely impact on your business viability and look at taking our debtor insurance on those clients.
5. Where practical, look for higher deposits or shorter repayment terms.
6. Do proper due diligence on new customers including credit checks. This is a time when customers may be changing suppliers because of credit issues with the current one.
Like with health and safety and employment law, it is not sensible to use the old adage: “It will never happen to me”. Over the past few years some well-known companies have fallen over and I would love to have a dollar for everyone who said to me: ‘That was a surprise”.
Well-known brands in the media at present are publicly advising of difficulties, so one would be naive to think that any company is immune from failure
Now is the time to review and improve your credit risk procedures to bring them in line with the significant improvement that has occurred with health and safety processes in recent times.
– Steve Wilkinson, TAB Business Owner, Christchurch & North Canterbury
When our world is predictable, we plan with confidence.
But what do we when our world is not predictable – as it is now?
First, we acknowledge that we are dealing with an unpredictable world.
Why? Because most of us act as if the future is predictable – when it’s not…
Using the Cynefin framework (pronounced kenevin), we divide the world into those things that are predictable (on the right), and those that are not (on the left). Having identified this, we ask: Is the situation we are dealing with simple, complicated, complex, or chaotic?
These definitions are important. Particularly now.
In a simple world, cause and effect can be replicated. You can tell what to do simply by looking at what works and doing it.
In a complicated world, cause and effect are still predictable, but the actions we need to take are less obvious. This means we need to some research or bring in an expert to help us determine the best path forward.
In a complex world, life is unpredictable, and patterns do not repeat. We can only see a cause and effect relationship after we have acted and can look back over time and join the dots.
In a chaotic world, there is no cause and effect relationship.
So how do we chart our path through these uncertain times?
First, we need to accept that what we have learned in the past will not necessarily help us in the future. This can be a hard lesson to learn…
Then, we scan the environment as accurately as we can, to see what is happening. Then we do the next best thing we can – we experiment. Then we learn, and we course correct. Then we look again, learn some more, and course correct again. And again.
As Jean Boulton said,
“Wishing the world was predictable and controllable does not make it so and might make us disregard what is actually happening.”
At The Alternative Board, our business owners meet together regularly. And when we do, we share our best understanding of what is happening. And as we see more, and learn more, we course-correct. And then we course-correct again. And again…
If you are struggling to identify the best path forward, please call us to see how we can help you navigate through these uncertain times.
– Karen Van Eden, TAB Business Owner, Auckland West
The thing about business planning is that it presents options that are available at some future point. Having a clear view of potential options can be remarkably useful. Especially when your business collapses around you.
Take this example – a TAB member had a small engineering workshop in Tauranga, with two CNC machines that were fully committed. The opportunity to expand capacity was in the 2021 plan (built using the TAB planning tools). In mid-2019 disaster struck – one machine failed and the business was in real trouble. The machine was no longer supported by the manufacturer and after six weeks of attempted repairs and imported second-hand parts that failed to help, the reality was accepted. Customer orders had been given to competitors to supply and the machine was scrapped.
Now the choice was to re-invest or close!
Fortunately, the planning had been done on new capital investment and the monthly accounts were in very tidy order in preparation for the inevitable scrutiny by a lenders credit committee. So a new machine was purchased at $200,000 and the business began a new chapter.
Time out of the business: This owner was forced to take time away from being completely focused by his workshop and now had time to talk to customers and potential customers. What he learnt was worth more than his lost production.
Customers: This was the opportunity to leave behind the customers who were low margin or late payers as the company took on new business.
New Investment: The new machinery catapulted the business’s capability over the competitors and gave the business a competitive edge to talk about. It changed the business’s position in the Tauranga engineering business.
New business: Was being won on the capability of the machine, at improved margins, for the reality of the market was different from the owner’s perception. It was not a priced based market! The lowest price was not the key desirable. It was reliability-based. Customers were willing to pay for surety of supply and were not interested in obtaining a lower price.
– Craig Ross, The Alternative Board Business Owner, Bay of Plenty
“The first secret of getting what you want is
knowing what you want”
Arthur D. Hlavaty
The call came through one February afternoon during a break at The Alternative Board’s Australasian conference. “Hi, I own a professional services company. I want to grow it but I am having trouble with my sales staff and I need help and advice to sort it out”.
I thanked him for the call and
promised to arrange a meeting with him once I got back home.
At the meeting, I asked him what was top of mind, and he repeated he wanted to increase his client list, and that his sales staff were underperforming. But I also uncovered the reasons for wanting to grow his business:
he wanted to exit his business in 3 – 5 years,
he had a buyer in waiting and
he wanted to maximise his return.
That’s great I thought, I’ve signed up a new client who has stated an interest in being a member of The Alternative Board until he sells his business in 3 – 5 years’ time.
In our first coaching session, I said “forget about the fires in front of you, what is your personal vision?” In other words – “in the ideal world what would you be doing?” My new client talked about his community, his mission at his church, his family, and using his Ph.D. to grow things that he was passionate about.
None of this was about his business, so I questioned him a little more. His response was he had been building his business for fifteen years with the goal of semi-retiring at 55 – three years away. And now he had lost the passion for doing it. So, I questioned him – why was he still running his business? The facts were, he had a buyer that was willing to pay enough for the business to retire on and he owned commercial properties that would see him financially independent for the rest of his life.
A smile slowly came over his face, “What am I doing? It’s not about sorting out what my business needs, it’s about me sorting out what I need!”
I lost a client that day. I coached him for a few more months putting in place the plan for semi-retirement but the value I got was in the satisfaction of helping a fellow business owner find clarity – rather than a mutually beneficial solution.
I’m proud to be an independent business owner within a high CALIBRE* organisation. An organisation that puts its clients’ needs above its own.
Are you looking for business growth? But have been frustrated by the reality of making it happen?
Here’s 5 reasons why you might consider an alternative to organic business growth: growing your business by acquisition.
An attractive ROI Depending on many factors, it is likely that an appropriately sized SME acquisition target will be valued at a multiple of between two and six times its EBIT. Taking a simple inversion of those multiples suggests a crude return on your investment of 17% to 50%. In these days of extremely low-interest rates, where else can you find such a yield?
Industry Knowledge Most likely you will have had many years in your industry sector and know many of the likely acquisition prospects. You will be aware of the relative strengths and weaknesses of those prospects and probably know the position of the owner(s). Using this knowledge will go a long way to mitigating risk and maximising opportunity. And, you’ll have the benefit of a “due diligence” exercise during the acquisition process.
Synergy Benefits Synergy is commonly defined as 1 + 1 = 3. This means the whole is greater than the sum of the parts! Typical benefits that may arise from a combination of two businesses include;
eliminating duplicated facilities and processes,
optimising distribution channels and
offering new products to a wider customer group. And all these synergy benefits increase the RoI of the acquisition!
Access to Finance Organic growth requires funding. Funding for more production, wider distribution, more inventory, more receivables and so on. From a funders point of view, fronting up with finance for organic growth requires confidence in crystal ball forecasting. Will greater production and distribution capability generate more sales? Compare this to funding an acquisition. An acquisition where the target company has provided 5 years of historical financial information, has an existing and proven infrastructure and has been subject to a thorough due diligence process? A process probably involving firms of reputable accountants, lawyers or consultants. Which do you think would be preferable to a financier?
Access to Staff Today’s often-repeated lament: “I can’t find qualified, experienced staff anywhere“! But, if you acquire another business, you will get access to a pool of experienced talent. In turn, this will reduce the need for the frustrating and expensive recruitment processes required by organic growth.
If this all makes sense and you’re looking for your business to grow one question remains: are you and your business ready and prepared for growth by acquisition?
Great sports teams and coaches set clear goals and plans, but
remain accountable at all times.
Business owners are accustomed to wearing many hats, that of Shareholder, Director, and CEO. The last-minute rush to Christmas brings out the frazzled Fire Fighter hat as owners juggle often unreasonable customer deadlines, family demands, and the party season before shutdown and escape to the beach.
Christmas comes and finally, the Shareholder hat comes out.
Is there any gas, I mean cash, left in the tank for me?
How did we perform?
Do I still want to own this business?
The holidays are a time for reflection. Questions to ask include;
What worked well?
Can you imitate others?
Or – what can you learn from change or bitter experience?
For many businesses, January is a quiet month, and at best February is like a car in second or third gear. When you return in January fresh from rest with a clear head – this is the time to plan. A ship without a rudder goes nowhere. In January/ February the phone doesn’t go continuously and you can put on your Director’s hat – to work on the business – review your strengths, weaknesses, opportunities and threats, and reset or revise your company goals, strategies, action plans and tactics with your team.
By March you are back into CEO mode – executing the strategy, action plans and tactics with the help of your team.
But if you don’t have a clear plan you won’t achieve your goals.
First, we acknowledge that we will face challenges as we navigate our way through this. Expecting to do this with ease is not realistic.
Second, after we get clearer about our path forward, we hold this path lightly – evolving and adapting what we do in response to the changes we see around us.
Third, as we move down this path, we stop and find that place of stillness that exists within us. This supports us to find our true north, our anchor, in challenging and uncertain times. F
Fourth, we act as mindfully as we can. Being present to what is happening, being here in this moment – and the next one – enables us to see a more accurate version of the world around us. This helps us to make better decisions, so we swim with the current rather than against it.
And finally, we relate to ourselves, and to other people, with the greatest generosity we are capable of; as we appreciate and open to new and different ways of doing things.
This willingness to see the good in ourselves and others and to appreciate what is – may be the game-changer. For our willingness to do this reflects – and enhances – our belief in our ability to influence the outcomes around us, which is so much harder in times of uncertainty
At The Alternative Board, our business owners meet together regularly. And when we do, we share our best understanding of what is happening. And as we see more, and learn more, we course-correct. And then we course-correct again. And again…
If you are struggling to identify the best path forward, please call us to see how we can help you navigate through these uncertain times.
– Karen Van Eden, TAB Business Owner, Auckland West
It’s been dubbed ‘bigger than the Great Depression’ and daily news of redundancies and restructures highlight we’re in difficult times but we’ve weathered challenging economic situations before – so how can we learn from the past and prepare for the future?
Ten years ago, Harvard University published research into the way companies respond to economic crisis and how their actions ultimately determine shareholder value in the future. Covering three recessions – 1980, 1990 and 2000 – researchers found that 17% of the nearly 5000 businesses studied simply didn’t survive. Those that did survive were slow to recover and three years on from the recession hadn’t regained their pre-recession growth rates for sales and profits. Only a small number – 9% – flourished and the winners were not as expected. Those that won through adversity were those with a multi-faceted strategy able to master the delicate balance between selectively reducing costs to survive and investing for the future, spending on marketing, new assets, research and development.
Researchers classified the companies and their responses into four groups:
Prevention-focused companies, which make primarily defensive moves and are more concerned than their rivals with avoiding losses and minimizing downside risks.
Promotion-focused companies, which invest more in offensive moves that provide upside benefits than their peers do.
Pragmatic companies, which combine defensive and offensive moves.
Progressive companies, which deploy the optimal combination of defence and offense.
Getting the balance right, being a ‘progressive company’ is a challenge we all face right now, particularly given the effects of recession are not felt for some time – for example, the depth of the 1987 recession was felt in 1991. So best practice means being prepared for the next waves as they come through.
So what does best practice look like? Here are some steps that can help:
Continue monthly /quarterly rolling cashflow forecasts
Preserve liquidity so you have two to three months working capital
Regularly forecast sales so you can identify trigger points for actions
Use a financial model to calculate
Sales by category or division
Gross margin before labour by same
Direct and indirect Labour
Your breakeven under a best / worst / likely scenarios.
Note your breakeven can be quickly adjusted to a percentage of sales e.g. 10% target.
The model below determines your monthly salary cap. Determining your salary cap is the best way to achieve your required labour productivity and, for simplicity of explanation, I have used an annual example.
Assume revenue of $1 million and a net profit goal of 10% or $100,000
Assume also, we have non-salary costs (costs of goods sold $200,000 and overheads of $200,000) i.e. a total of $400,000.
We can now determine a salary cap of $500,000 in order to still achieve our net profit goal of $100,000 or 10% at this revenue.
It doesn’t matter if your employees are part-time or full-time. You have a $500,000 salary cap. It doesn’t matter if you give incentive pay or hourly pay. The sum of all salaries & wages at the end of the year cannot exceed $500,000. It’s no more complex than that. On a monthly basis, this is $41,666.67.
Being able to respond to economic challenges takes some flexibility – for some years now, agile working has been signaled as a good way to operate but what does that mean for day-to-day operations? For the most part, it means continually reassessing your position – what matters most? Next, stay vigilant, inspect and take stock of your numbers. Work on your strategy – what choices are there, how can you improve your value proposition, what will you do to inspire your team? Finally – agile means getting on with the job. Executing and implementing the plan as you adjust it and often this is the hardest piece of the puzzle.
We may find ourselves in a great recession but with some forward thinking, agility and an adherence to best practice it is possible to come out the other side and flourish.
As an entrepreneur, you are a visionary. You have an idea, a product or service that you want to bring to life. Rarely will the requirement to maintain a set of accounts feature strongly in your desires or even your planning process.
As your business grows your visionary zeal can quickly be overtaken by the mundane requirements of compliance.
This ‘cost’ of compliance can manifest itself in many ways, the most common is a drag on your own time and quality of life. You can find yourself working late into the evening and weekends just to keep on top of ‘paperwork’.
To overcome this loss of your own time you may decide to hire a bookkeeper to join your team but how do you find a good one?
Come the end of the financial year you will more than likely need the help of an Accountant to draw together your Year End Accounts, filing at the Companies Office, and preparing your business Tax Return.
Worst of all, this Year End paperwork takes place weeks and months after the event, which provides you with no useful information at all!
Turning Information Into Knowledge
What if this bookkeeping and paperwork could contribute to the profit of your business? What would that look like and how would you feel about paperwork if you knew it was contributing to your success? Turning Information into Knowledge to Decide what critical pieces of information you need daily, weekly and monthly to ;
Ensure your financial systems support the provision of that information
Use charts to plot key information and see trends develop
Identify key drivers of Gross Profit and include them in regular reports
Look back at financial history to assist forecasting but spend more time looking forward identifying potential challenges ahead
Turning Knowledge Into Profit
Deciding which pieces of information are critical to you and limiting the number to no more than seven will mean you pay attention to those numbers. This helps you to focus on what is important in your business, making decisions based on fact.
Creating a reporting ‘rhythm’ helps those around you understand what is important and what they need to provide to ensure the information is accurate and provided in a timely manner.
Charts create pictures, pictures based on numbers. Pictures paint a thousand words and if those around you have understood the requirements those numbers will not lie.
Gross profit is the first line of ‘cash’ available to spend in the business, everything that comes below revenue and above Gross Profit leaves the business. Make gross profit your new ‘top’ line and understand what impacts this profitability. A 1% increase in gross profit adds far more to the ‘bottom’ line than a similar increase in revenue.
Spend a little time looking back at past performance but only to understand what worked and what didn’t. Forecast to do more of what worked! It may be fine to forecast sales a year ahead in your business but there is rarely value in forecasting cashflow more than four weeks ahead. The better you get at forecasting cashflow the easier you will sleep at night.
No forecast should be ‘set-in-stone’, make it a work-in-progress to gain the benefit of agility. Plan – do – check – review, keeping the critical information you need to a minimum will enable you to continuously improve those areas vital to your business’s success.
Cash Is King
A bank will follow the ‘flow’ of cash through your business before making a lending decision. The IRD expect your accountant to follow the ‘flow’ of cash through your business to ensure you have accounted for everything in your year-end accounts. How closely do you follow the flow of cash through your own business? Do you sleep well at nights because you are carefree about our cashflow?
Most transactions within a business are processed by the ‘accounts’ function and usually within a piece of accounting software. Those transactions are ‘information’ and that information can be turned in to ‘knowledge’. Knowledge about where your cash flows from, where it flows to, and most importantly what is left for you to re-invest.
Most business owners can make better decisions for their company when they have timely and accurate information. Leveraging that information, turning it into knowledge, converts bookkeeping costs into profit.
After the shock of what’s happened in the last month or two and as the adrenalin begins to subside and fatigue starts to catch up, what happens next?
Here’s a few initial thoughts.
First, take a moment. Imagine the bell signalling the end of the round has gone, you’re reeling from a knock-down but now, for a few moments, you’re in the safety of your corner with your coach. Introspect. How are you feeling? How’s your energy level? Do you have the resilience to keep going? Whatever you think, it’s ok! Quoting Paul Simon: the fighter still remains.
Secondly, survey your environment. What’s changed recently? What impact does that have on your life? Your family? Your business? Use the SWOT exercise to help you think this through.
Thirdly, talk to your coach in your corner. They’ve got your back. Iterate. Discuss. Challenge. Look ahead. Be open-minded. Agree some short-term actions.
Fourthly, be light on your feet: float like a butterfly!
Whatever path you select, the next few months will throw some further challenges. Be ready to adapt and adjust.
Finally, lean on your supporters to get you through (RIP Bill Withers). Now is not the time to be alone.
Stephen James – Owner, The Alternative Board New Zealand
“Prior to joining TAB the opportunity to share my ideas and
day to day issues was limited to my accountant and some of my senior staff.
Having an opportunity to meet with other business owners with remarkably
similar issues was empowering.”
“Since joining TAB I have resolved a number of difficult employment-related issues, but more importantly gave me the motivation to step back long enough and complete a Strategic Plan, with the invaluable assistance of Karen Van Eden. Critical for our future growth and longevity.”
“TAB gives me an environment that challenges me as an
individual and reminds me of my responsibility to my staff and customers”
“Bruce is a treasure of experience and professional
connections of which I have taken advantage. One on One Coaching has help me
confirm my thoughts and provided connection with other professionals to help
resolve issues that ultimately strengthened my business. I would have no
hesitation in recommending Bruce and Karen and TAB to any business owner. You
don’t need to go it alone.”
Does my organisation have the capacity to undertake this new task or project? This is one of the common questions that many companies, especially those experiencing strong growth and with limited resources, ask themselves every day.
How do you know if your resources can manage the increasing number of tasks and projects in the days, weeks and months ahead? Managing under-resourced companies growing at a fast pace, I have learned that the most important point is to know the capabilities of yourself and of your team and then to be able to decide which projects or tasks to execute, which to put on hold and which to abandon altogether.
A way to manage this is situation is by following these two steps:
Estimate the time every task will take. This must be discussed and agreed with the person or group of people
that is going to perform the activity, trying to consider all relevant aspects. Measure and register the actual time spent in every job done every day, every hour. It is key to report the spent time frequently and consistently to be accurate. People forget what they did the day before or how much time it took.
As Peter Drucker once said, “you can’t manage what you can’t measure.” If all team members register their spent time in any of the activities, tasks and projects that are being pursued, then project managers are immediately aware of such important things as:
• Are we ahead or delayed in the execution of the task?
• Was the task/project estimated time correct?
• Are we spending too much time on a task? Does it need improvement or re-engineering?
• Do we have free time to add a new activity, task or project?
• Do we need to reprioritise, put tasks on hold or abandon any of them?
• Do we need more resources to undertake existing or new tasks or projects?
Following this process also helps team members to look back and review their progress, to see what was achieved on a certain date and fulfil the humans’ inherent need for progression and growth. This helps to alleviate any feelings of frustration that employees often suffer from perceiving a lack of progress, overload or lack of direction.Following this pattern of project or task management has the longer-term benefit of changing employee behaviours. Since everybody becomes more aware of both the limited time available and pre-existing workloads, organisations become intrinsically better at organising and prioritising tasks and projects.
Alfredo Puche – The Alternative Board Nelson and Marlborough
Many years ago, when I was a young 20 something year old, I was offered a role as an Insurance Consultant for a well-known New Zealand company. Working from an office in the capital city, Wellington and being a new resident there I didn’t have a great network or access to a great database. I learnt very quickly that the telephone book was a good source of potential prospects and even had the address and phone numbers alongside the names. They were in alphabetical order to make it easier for me. So, armed with a pen, paper, ruler and telephone I started my journey to build a client base and to earn myself a substantially better income than I’d previously experienced.
The company also provided me with a folder that had “Daily Diary” written in bold letters on the front. I was shown what to do with it. Record everything that I did. That was – phone calls, discovery meetings, presentations, sales and non-sales made. Then with every sale I would record my commissions earned and would keep a rolling target of my income over time.
After almost a year I had an accurate and detailed enough record to understand exactly what my time was worth. How many calls it took to get an appointment. How many appointments to get a sale and so on. I was able to understand my conversion rates and where I could find improvements. Most of all though I knew that no matter what the activity or the result I was creating an income from doing the right things at the right times. Even when a potential prospect said no to me on the phone I knew it was making me $50 every call regardless of the outcome. I set goals to improve that number. I was able to budget well to achieve my desired income and I knew exactly how many calls I had to make every day.
This was the best ever start I could have to my sales career. It has served me extremely well running large teams of sales people. Setting budgets and goals for the companies I owned or worked with and ensuring I met or exceeded targets.
So why is 1440 an important number? Well every day has 24 hours and every hour has 60 minutes. There are 1440 minutes in a day. It’s a finite number and you can’t create more time.
When you know what each minute is worth to you in business and you have a plan then you’ll see that every minute counts. Make the best use of your time and keep a good record of what you do. This will change the way you think about those who say no in sales because the no’s are still making you money.
“I felt quite lost and drowning in my weekly responsibilities, that is, until I became a member of The Alternative Board,”says Barbara Rivers, Managing Director of The Makers Atelier in Christchurch. The Makers’ are a curtain and soft furnishings manufacturer with a work space of 190 square metres and 9 staff.
Barbara finds value in being involved in The Alternative Board peer group process.
“I was in two minds as to either startup fresh or purchase a business with clients, staff and production in place. The business I purchased had a good name but was in a state of being rundown and required a lot of energy, marketing and customer relations. The latter two, marketing and customer relations, were things which I knew I was good at.”“My biggest challenge was that I was pouring money in each month to keep the business going, paying staff, working with old pricing structures, and the challenges that I had were make or break for the success of the business,” she adds.
“Working with The Alternative Board has helped me realise that these are growth stages. I have been given tips to deal with these challenges, in a controlled and practical manner.”“There’s a real respect with the other Board Members of The Alternative Board. I see results quickly after each Board Meeting because I’m empowered to do so. It has been an invaluable process for me because I felt quite lost and drowning in my week-to-week duties and responsibilities. Having the backup support of The Alternative Board has helped me to achieve and grow each month.”
Barbara has learned lessons from being a Member of The Alternative Board.
“The biggest change I have seen in me has been accepting that I am the boss and not just a co-worker. I believe that the staff are happier in their working environment now. With the help of The Alternative Board, I’ve become very clear on our business message and vision.”
Barbara’s top tip to other business owners is to work in your new business for a year before you make changes.
“Understand it and its cycles and, most importantly, ask the customers what they value before you change.”
The Alternative Board peer group process of accountability allows Barbara to ensure she keeps very clear with her business message and vision.
Lee Dewerson has put in the hard graft and for many years has worked 60-hour weeks relentlessly, learning all there is to know about the Audio-Visual technology world. Lee is now a Co-Owner and Operator of Safe N Sound Limited, a high-end retailer and installer of audio-visual systems, which has branches in New Zealand and Australia.
Lee finds value in being involved in The Alternative Board peer group process.
“Despite starting out as an electrician, my true passion was always audio. So about 15 years ago, I worked in the automation side of things for various companies in Auckland. I wanted to suss out the industry and learn all there is to know about the audio field. I got to the stage where I was ready to go out on my own. This hard work has led me to where I am today, with my own business.”
Being a Member of TAB has provided Lee with lots of lessons—an important lesson includes being more deliberate and taking the necessary time to do things right.
“I’ve learned to take my time and not to rush things. Things take time. I now make sure that I know exactly what the client wants and the best way to do it. I ensure that I understand all of the products and all of the people involved. By attending Board Meetings you learn a lot about your own business. You also learn a lot about yourself, especially from different perspectives.”
Lee explains further.
“When you run your own business, you can get narrow minded and tunnel vision can easily set in, especially as there just aren’t enough of you at that one level. It is good to have everyone’s opinion. I’ve resolved several issues while sat at the Board table with the other Members.”
Lee’s other tips to business owners are to make sure that capital is available to fund growth, work as much as possible, don’t give in and, most importantly, don’t overspend. The Alternative Board peer group process provides the support and accountability that allows Lee to stay true to these tips.
Robyn Lonsdale is General Manager and part owner of the well-established Temple Water Technologies Limited, which has been in operation for 17 years. Robyn works alongside her husband Chris Lonsdale, who is the Founding Director of this water treatment solution provider, primarily to the dairy industry. Robyn gives an insight into the history of Temple Water,
“I joined Temple Water 10 years ago to help out my husband, Chris. Even at that time, though, we both knew that we would benefit from professional coaching to fully develop the true potential of the business.”
Robyn explains how they came to be Members of The Alternative Board.
“The global dairy crisis hit, and it was in this environment that I got a call introducing me to The Alternative Board. My curiosity was piqued. Deep down I knew we needed help to get through this time, as achieving our goals seemed to be getting harder. It didn’t seem to me that we would get there on our own.”
Robyn made the commitment to The Alternative Board and hasn’t looked back.
“I went to a sample board meeting and was most impressed with the process. Not only did we get a personal coach but we got access to all the other wisdom and experience held by the other Board Members, who are business owners.”
Robyn explains further,
“At our Board Meetings we discuss the issues we are dealing with. All of us have different issues at different times and have tried different things to overcome them, and I’m finding ‘pearls’ every time we gather around the Boardroom table. These people have no other agenda, just my best interest and the best interest of my business, and that is priceless. The Membership fee is structured in a realistic way to the size of our business making the coaching relationship more sustainable for the long term.”
Temple Water has seen positive business growth from being a Member of The Alternative Board.
“Since beginning our relationship with The Alternative Board we have incorporated another business, creating a satellite of ourselves in the local area, and we now have 6 employees. My Board helped me with the challenges of staff, as we haven’t really experienced this area of the business before, whereas others on the Board have.”
During tough economical times, Robyn chose to trust the peer group process of The Alternative Board. In turn, by trusting the process, Robyn has grown as a business woman, and, importantly, her business has grown, too. Robyn urges other business owners to explore The Alternative Board process.
“Learn to trust the process and the shared challenges of the other Board Members. It is a growth process and all of us who sit around the Board table get lifted up by the process, knowing it is a safe place to share our challenges with one another and help out with wise and creative solutions.”
High performing companies have recognisable traits when it comes to their culture and the opposite is true of poor performing companies. It is therefore surprising that so many companies do not proactively work to improve the culture of their business.
My first example is of a company I worked with that had a destructive culture. This company had a General Manager who was one of three equal shareholders. The other two shareholders were Directors on the Board but were not involved in the day to day operation of the business.
The General Manager’s wife also worked in the company in a mid-management role. Even though the company had clearly defined role descriptions, she felt that it was her right to interfere in all parts of the business. The other managers constantly felt that they were being spied on and undermined in their roles. If they tried to defend themselves they immediately found themselves in the outer circle of employees, as opposed to the wife’s inner circle. In this position, they then felt completely unsupported by the GM. The company became divided, employees lacked trust, communication broke down along with several other implications – one of the worst being the continual loss of the best employees.
Upward communication in a business is equally as important as downward communication. It is upward communication that can drive innovation and improvement. However, a positive company culture must exist for this to occur.
Culture filters down from the top. A positive, people-first company culture starts with leadership and depending on the size of the company that originates from the Chairman of The Board, the Directors, the CEO or the Business Owner.
Leadership is about responsibility and it is the business leaders who are responsible for the culture of their company. They must create and foster an environment for a people-first business culture to exist and flourish. An environment that is one of sharing and learning encourages a shared sense of purpose and must be underpinned with trust.
In the example above, the General Manager did not allow a positive working environment to evolve, however eventually the Directors stepped in and removed the wife from the business. Unfortunately this met with resistence from the GM and it got to the point where he also had to be replaced. This was the catalyst for a significant turn around in the performance of this business.
My second example is of a company that truly embraced a people-first business culture and developed a team of very loyal and motivated employees. The company became a leader in its industry.
This company had two principles that it constantly worked on improving. The first was the concept of the internal customer and the external customer. There are two parts to this. The first is that the employees treat each other with the same respect as the company treats its customers. For the second part, the best way to summarise this is to use the following quote from Richard Branson of Virgin fame:
“Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients.”
The second principle that they implemented was that of the no blame culture. Simply put, when things went wrong they did not look to blame anybody. Instead, they looked at how they could improve their systems and processes and within this particular company, how they could improve their training.
Company culture can be identified as simply as this is how we do things around here. The employees in this example developed their own saying:
“We turned that lemon into lemonade!”
This mind-set was not handed down by senior management, but reflected their attitude. It evolved from the employee’s desire and confidence to turn a negative situation into a positive one. Jack Ma of Alibaba says:
“It’s my job to make sure my team are happy, because if my team are happy they make my customers happy.”
Another of Jack Ma’s views that is equally as valuable is that for your company to grow and prosper, “you must empower your people” and “always employ people who are smarter than you”.
You may think that quoting the founders of such big businesses is not relevant to a small business, but the truth is that size doesn’t matter. These principles apply equally to all businesses. A people-first business culture leads to people-led business growth .
There are several possible drivers of business growth, but people-led business growth is what drives top performing companies. So, no matter what size your business is, working on your company culture is something you can start right away.
Time is a key issue today, there is never enough of it. So this is a challenge to think differently and to take some time to review your efficiency and effectiveness.
The key to understanding this is the 80/20 Rule. Research indicates that 80% of a company’s:
profits come from 20% of its customers
complaints come from 20% of its customers
sales come from 20% of its products
Tight is managing the 80% scenarios that are relevant to your business.
This is about “doing things right”, in effect meticulous efficiency. (Dotting i’s and crossing t’s)
The ‘Tight’ is the engine room of the business and the individual, it’s where the profits are generated and the money is banked.
So follow procedures, be best practice experts, understand exactly what is required to be client excellent and prioritise the important tasks first.
Key questions are:
Does each staff member know the 20% of things they do that delivers the 80% of their outcomes?
Does the business have a vision that underpins the 20% of its activities that delivers 80% of its profits? Is this in a clear, accessible plan that is clearly understood by everyone in the business?
Loose is everything thing else. With individuals and organisations spending 80% of their effort delivering 20% of their outcomes, this is about “doing the right things”, in effect rigorous effectiveness.
So do what’s most important first, stop doing what doesn’t count, get people to create ‘stop doing lists’ as well as ‘to do lists’, innovate new ways of doing things, find and copy best practice in areas you are not strong and leverage technology whenever possible.
Ask the question: is what I am doing either increasing sales, improving margin or reducing cost? If the answer to these is no, then question why you are doing it.
Create the time to become creatively effective, hypothesise ideas to create these new ways, evaluate, test, and then retest.
In summary, know what counts and be excellent at it. For everything else constantly look to improve effectiveness and eliminate anything that isn’t critical to the business.
Bruce Roberts – The Alternative Board Auckland West
Having spent 15 years running a labour-hire company, I have learnt a thing or two about temporary employees and how to use them successfully in your business.
The best time to think about using temporary workers and selecting the best agency to provide them, is actually when you don’t need them. Every business owner has times when they struggle with staffing levels. This may be for many different reasons, and to name a few:-
• Covering holidays
• Covering sick days or absenteeism
• A rapid increase in workload
• Planned training days
• Court duty
• Unforeseen emergencies
• Seasonal cycles in workload
• Looming critical deadlines
• Urgent deliveries
The agencies that provide the best temporary workers are those that take the time to get to know their clients, as well as their workers. These agencies will send out a specialist Recruiter or Account Manager to meet with you and your team, to walk around your workplace and see the environment you provide for your employees and get a feel for your business. This type of visit will almost never occur if you ring an agency for the first time at 7.00 am Monday morning, requesting a worker to start by 8.00 am. So, if you are ever short of staff, don’t wait for the emergency, ring a few agencies now and start the selection process.
Here are a few things to look out for when making a decision;
• Try ringing afterhours. Do you get a message or a real person, and if a message, how quickly did someone get back to you?
• Do they offer to come and meet you in person?
• Do they ask about your approach to Health and Safety and do they have their own Health and Safety system?
• Do they have a specialist in your field of business?
• Are they quick to quote the price or are they more interested in getting full details on the job, so they can provide the best person?
• Did they have a list of workers to choose from?
• Do they make regular site visitors to check on the well-being of their workers?
There is a lot more you will most probably want to know, but the above pointers will help you sort our who is most likely to look after your needs best.
Equally as important is the temporary worker and the requirements on what you need.
• Be clear on the total task the temporary worker will need to complete.
• Is it a short-term job?
• Could the right worker be offered a full- time job with you?
• What risks and safety gear are needed?
• What sort of team will they be working with and who will train and supervise the worker?
• Are there any special conditions or requirements when working in your business?
Finally, a note on the workers themselves. They will come from many backgrounds, with lots of unknown skills and various reasons for choosing temporary work.
• Treat them like your own staff.
• Buddy them up with someone who knows the job and wants them to stay and help out.
• Involve them as much as possible in your business and let them see why you need their help.
• Look for those that are keen to learn and have a great attitude. Your next employee could come from the temporary workers you use.
So, to finish, if you think you may need help, go out now and start the process. Then plan for the emergencies by working with your chosen agency. Look after the temporary workers that are supplied, and provide the best working conditions you can, so they will want to come back and work for you again and again.
There is very little argument for not being online for your accounting requirements these days.
It’s a topic that took some persuading 10 years ago, but now we are fortunate in New Zealand to have some world leaders in innovation and technology security providing fantastic online accounting platforms for businesses.
The world of bank feeds was revolutionary 30 years ago and it was the rural sector that really jumped on this platform and transformed the preparation of GST returns and data gathering.
These days you can invoice debtors, pay creditors, prepare your payroll and do your bank reconciliations daily from your smart phone, tablet or PC from virtually any location in the world.
If that isn’t enough reason to think about changing, here are another five:
No more duplicate data files
Real time collaboration with your accountant, bookkeeper or trusted advisor
Secure and continuous off-site data storage eliminates exposure to data loss
Quicker debtor collection (by invoicing on time)
No more backups!
If you are not online it’s time that you seriously thought about doing so. All providers offer a 30-day free trial and have vast support networks to assist you.
Russell Jaggard – The Alternative Board Hawkes Bay
There are only three areas to work on to develop a high performance sales team, and if you crack all three you will achieve sales results that just keep going in the direction that you want.
The world is littered with sales reports that say ‘made contact but the customer had placed an order with the competitor just a month back’. So is that just bad luck with the timing of the contact? No, it shows that the process of targeting and touching is either flawed or non-existent. Absolutely nothing beats an organised, measured, monitored programme of activity for your sales team. This is not a form of micro-management control for your team, even though some may think so. It is just a simple fact – you have to work hard because your competitors already are! If you have three competitors you have to work three times as hard.
There is nothing that turns off potential buyers like a lack of product knowledge. They want to talk to people who understand the experiences they are having using your product or a similar competitors product. That is why sales people with poor product knowledge can be viewed as ‘just a front’ for you and your organisation, for they are judged to be lightweight, just trying to push their numbers, with little affinity for the actual user that parts with their good money for the product of the service. Years ago when Eastman Kodak was a global chemical and photographic giant they were putting sales people through training that could last 12 months before they were released into the real market. Perhaps you don’t have that luxury but you can insist that your sales people reach a better than novice standard before you send them to engage with the people most vital to your business. Remember – the real world is not the place to practice.
Performance in the field
The art of selling is in listening and understanding in a profound way. Customers will tell you what they want but they will struggle to tell you what they need. The sales person who understands the ‘need behind the need’ will be the one closest to your customer. So train them in listening, train them that the word no can be more positive for your relationships than the word yes, and train them to see the world through your customers’ eyes. If they have worked the process, they are engaging at the right time. If their product knowledge is strong they will be treated with respect. Now all they have to do is understand what the customer actually needs and if that need is delivered, the cash register will ring. Guaranteed.