Half-day strategy and planning session with additional free healthcheck

The essentials of your strategy and plan, for your business, marketing, project, new product, or even cash flow or cost reduction exercise, on one page of A4 in 4 hours. Combine this with the free initial consultation of up to 2 hours that we give to all of our clients, you'll get 6 hours of consultancy for the price of 4.

Depending on your needs, the free initial consultation can include an optional quick healthcheck that takes your through the 8 essential areas of your business:

• Strategy and plans; 
• Products and markets; 
• Supply and manufacture; 
• Finance; 
• Human Resources; 
• Information Technology and Inormation Management; 
• Safety, Health, Environment and Quality; and 
• Your own personal management style and its effect on your business. 

This is an excellent basis for embarking on a strategy and plan.

Whether you are a start-up or an established micro or small business, we firmly believe you should have a plan for every significant change or development you make with your business.

Our approach gets the essentials of your strategy and plan on one page of A4 in 4 hours, either in 1 session or 2 depending on the amount of further information that is required to complete the plan.

You'll cover:

• Personal vision - what you want out of your business or change; 
• Strategy - how you will achieve this with your business; 
• Market opportunity - is it real and will it deliver what you want; 
• Positioning - what will make your clients buy from you - your Mission; 
• SMART Objectives, Milestones - Simple, Measurable, Achievable, Realistic and Timed; 
• Delivery strategies - how you will set about achieving your objectives; 
• Plans - real plans to deliver the milestones or SMART objectives; and 
• Brief summary financials. 

This may be all you need in terms of a plan for most business purposes.

Contact us for prices and to book your initial appointment. There is no obligation and it is completely free of charge.

Achieve a fair price for your company by managing your exit

Its a sad fact that only 8% of small businesses are sold for a decent price. This is not good news if you are relying on selling your business for your pension, or indeed for any other purpose. However, many more businesses would be saleable for fair value if the owners had planned their exit in good time.

Two to three years to get your business ready for sale

You’ll start with a valuation and you’ll probably find it is well below what you need. So, alongside that you’ll need an analysis of your business to show you what has to be done to achieve your price. This may include:

• getting your accounts in shape and audited; 
• some growth, not the least to show your business has potential; and 
• positioning you, the owner, so that on the eventual sale the business can be run either without you or on a planned exit path such as an earn-out. 

You’ll also need to identify who, in the long run, might buy your business so that you can position it to be attractive to them.

Plan and make the changes

Now that you know what has to be done and who you might sell it to, you can get on with planning the changes you need to make to your business and making them happen.

Use the right people to help you make the sale

Having gone to all that trouble the last thing you’ll want to do is to sell cheap. So, do make sure you choose people to help you who have a track record in achieving excellent value.

If you are in this situation and would like to talk to someone about it, please feel free to contact us. We work with specialists in this field and can help in every stage from the initial valuation to making the sale,

You can reach us by email at enquiries@sussexbusinessadvisors.com or by calling us on 01903 828451. We offer all of our new clients a no-obligation initial consultation of up to 2 hours that is completely free of charge.

Business consultancy from experienced business people.

Get back the spark and get back to growing your business

When you started out in business, somewhere at the back of your mind was the real reason you did it. You may not have realised it at the time but it - your dream - was there, driving you along.

If now you feel stuck, burdened down by the day-to-day grind - probably you have lost sight of your dream.

Re-discover it and you'll be surprised at the result.

You'll get back the spark and get back to growing your business.

What is holding you back?

"You've been in business for 'x' years. Is it where you thought it would be after that period of time?"

"Probably behind, but I'm not really sure". Almost certainly you had the inspiration to start your business up, and you may have done a business plan at that point. But you are not really sure now - you seem to have lost sight of your plan.

"If you had three wishes for your business today, what would they be?" Think hard about how you answer that question. What is holding you back is probably in there, somewhere.

What do you really want out of it?

Ultimately that is what we are getting at. Let's face it, you must have thought you could create a better life for you and those closest to you by starting out on your own rather than working for someone else.

Or maybe you just wanted to be famous.

Whatever the reason, if you are stuck now, you must feel also you are not going to deliver the 'bright new dawn' you promised yourself.

So what do you need your business to deliver, so that you personally can achieve those ultimate goals and ambitions? What is your new strategy?

More of the same won't change anything! 

You have to change something in your business that will give you back the spark to drive towards that bright new dawn.

It may be:

• Change your market focus - do the research and go after a different market with higher margins; or
• Find a way to spend more time managing your business - this may mean taking someone on to do part of your old job.

Or it may be a combination of factors - higher margins means taking someone on becomes more affordable. 

Inspiring?

You have re-discovered your strategy; you have looked at your market and decided where to re-focus to bring in the higher returns; and you have looked at your own time management and decided to spend more time thinking about your business rather than doing work for your customers. 

You have the beginnings of a new plan. You can see more clearly where you need to be heading and you should be inspired by that.

And we are there to help if you need us - mentoring is one of our specialites. Contact us on enquiries@sussexbusinessadvisors.com if you would like to talk about your business - we offer a free, no-obligation initial consultation of up to 2 hours that will get you some way into addressing your issues.

Business consultancy from experienced business people.

Just who has a stake in your business?

It is anyone who can influence your profit, your cash flow, your reputation, your peace of mind, or even the very existence of your company.

And looking at it from their point of view, if they have a stake in you, you also have a stake in their businesses or in them as individuals - there is a relationship to be managed.

Thinking about who they are and how you are going to build and manage the relationships - the real benefit from doing that is you are less likely to be faced with unpleasant surprises - more peace of mind.

Stakeholders

Just who are they, then?

• Employees
• Revenue and Customs
• Banks and other lenders
• Suppliers
• Customers
• Investors
• Professional services - IT, accountancy, legal etc.
• Local Authority
• Professional organizations / accreditation bodies
• Training providers
• Police - obvious if you supply security staff or services
• Local media
• Family

And there may be more. 

Also, there is a certain logic to this list - once you have staff your obligations to them have to be at, or near the top of your list. And in respect of claims on your cash, Revenue and Customs come next.

Why are they on the list?

Let's illustrate this with a some examples:

• Suppliers: they want you to pay them as quickly as possible, whereas you may wish to delay payment for cash flow reasons - there has to be a balance so both sides are reasonably happy;
• Local Authority: if your growth plan includes a significant new building or change of use, you will need them on your side early on to avoid spending time and money going down blind alleys;
• Training providers: poor training will lead to poor performance and may compromise accreditation; and 
• Family: in return for giving you space to concentrate on your business, they rely on you to contribute to their standard of living, for holidays, for your support for what they wish to do, and in part for their happiness and peace of mind..

Is it worth writing it down?

This is one of those areas that has recently crept into the ISO world, and you may in fact have to write a formal Stakeholder Management Plan for your ISO certification. 

But even if you don't have to, it can be a real help to do a plan - it doesn't take long and is one of those rare easy wins of the modern business environment.

In most cases, all that is needed is the headings and bullet points setting out strategies and plans for building the relationships you need with each stakeholder or stakeholder group - 2 to 3 pages at the most.

And we are there to support you if you need help. We offer a free initial consultation of up to 2 hours - please contact us on enquiries@sussexbusinessadvisors.com if you are interested.

Business consultancy from experienced business people.

Improve productivity, generate cash

In a small business as in any business, productivity is about the whole company not just operations or manufacture. As business consultants we advise our clients that the best measure is net margin per employee - this really focusses the mind on what productivity improvement is about.

Now I know I should not be blogging about this whilst on holiday, but on our first evening we were sitting in a sea-front restaurant we know well and I was struck by the capacity utilization of the waiting staff - there were 4 handling 35 to 40 covers each.

Although margins would be low, the whole business seemed to be set up to make as much money as possible out of the short holiday season - maximising sales and hence margin per employee.

And there was a great atmosphere, so they must have been doing things right from their customers' perspective.

What is it that determines productivity? 

A good business process supported by good records, and well trained and motivated staff who work the process to deliver the results.

A good business process?

Marketing - generating enquiries; selling - enquiry to order; fulfilment - order to payment; and customer satisfaction leading to repeat business.

You can think of the restaurant having a core process that is operated by the customer-facing staff - the waiters: customer walks in, gets seated, gets served, gets billed, pays and leaves.

At each step there is an indicator or record to show the waiting, kitchen and till staff where each client is in the process: menu left with the client immediately on being seated and after the main course is cleared; and tickets with order details.

Effective use of this process information is fundamental to productivity.  For example if the client is not given a menu on being seated, the waiting staff will have to think harder about where in the process the client is, and if the waiter has 35 to 40 people to think about that is a lot of unnecessary thinking!

Supporting this main process will be other process loops aimed at maximising the waiting staff efficiency, for example a menu, buying, preparation, cooking and serving process that gets the food to the customer when he or she expects it.

Training

We take it as read that our waiters are highly skilled in the basis - for example which cutlery for which food - you could not run a high-pressure restaurant if they were still learning those things.

What we do mean is training in the business process - how to recognise the stage each customer has reached and what they would want next; how to record their orders and convey the information to the kitchen; and how to know which table to deliver food to.

In our example the French waiters were so skilled at that - they were making decisions on the fly like highly trained fighter pilots - that things seemed to run like clockwork.

Motivation

And they get that of course from the satisfaction of a job well done under pressure and the little thanks and tips from their satisfied customers.

Continual improvement

Restaurants probably come second to yachts as ways of spending lots of money - it is said that owning a yacht is like pouring money into a hole in the sea. It is quite hard to make a decent living out of owning a restaurant, but some do it.

They have highly skilled staff and a well-worked process that makes them money, and they are always looking at where they can tweak the process to improve efficiency, to make more money. If they have good process records they can analyse them for improvement ideas - this is much harder to do if all you have is your memory.

Need help with your business processes? Contact us and we'll send someone out to talk to you - you get up to 2 hours free of charge on your first meeting.  We are on enquiries@sussexbusinessadvisors.com.

How productive is that?

Make money by not spending money on your debtors

Last week I arranged for my friend Graham Sands to give a talk to my local association of business consultants and business advisors on debtors and credit and their impact on cash flow and profit.

Graham is a specialist in this area and he gave us some very simple and clear messages that we could take back to our clients that apply whatever the size of their companies - start-up, sole trader, micro business, small business or SME.

In a nutshell, the message is this: send out the invoice as soon as you ship the goods, and contact the client regularly to progress the invoice through to payment, on time. Pretty obvious really, but not being done by a surprising number of the business we advise.

DSO - Days Sales Outstanding

Also known as debtor days, this is the average number of days your clients take to pay their invoices.

Let's take a business that has a turnover of £1,000 per day - £365,000 per year - typical of many small businesses with a couple of employees. If its clients owe them £75,000 then their DSO is 75 days - 75 days at £1,000 per day - that is what it means.

The DSO for your business is just the total debt owed to you divided by your average daily sales.

What does DSO tell us?

Well, the £1,000 a day turnover company traded on 30 days terms so it could reasonably expect to get paid on 45 days - if you invoice in the middle of a month the earliest you could expect to be paid by most customers is the end of the following month - and so it could reasonably expect to have a debt of £45,000.

Just imagine the impact on cash flow of reducing the DSO to 45 days - a £30,000 improvement. Even a 10 day improvement in DSO for them would improve cash flow by £10,000 - worth going for.

Effect on overdraft

Graham reminded us also that companies often find they have to borrow to fund the excess credit they give to their customers. Lets say our sample company had an overdraft of £30,000 at an interest rate of 12%  - essentially funding the gap between 45 days and 75 days DSO.

The cost to them of funding that gap would be an additional £3,600 in bank interest, not counting the bank charges that go with it. That is an extra £3,600 cost to their business for giving their clients excess credit on interest-free terms - madness really.

This is what we mean by making money by not spending money on your debtors. You could save the cost of bank interest by improving your DSO.

Invoice on time

Strictly speaking DSO does not include your delay in sending out your invoices, but the impact is the same and the easiest way to eliminate that is to send the invoice out as soon as you have shipped the goods or supplied the service.

Manage your clients payment expectations

This is where Graham's advice is like gold dust! He advises contacting the client at least three times between invoicing and collecting the money:

• The day after you send out the invoice to check the invoice has been received and there are no issues with the goods or services supplied
• 5 days later to carry out the same checks, so that there no excuses on that front
• 5 days before you expect to get paid to make sure your invoice has gone into that month's payment run

That way your customers will get to know your expectations on payment. They will often delay paying their suppliers where they can get away with it to improve their own cash flow, but if you chase them - nicely - they will get to know that you expect to be paid on time and they should act accordingly.

We can help

So you are going to invoice on time and contact your clients regularly to ensure payment on time, but you still have a number of significant debts that are proving difficult to collect. You need help in collecting the debts and in ensuring that such debts are less likely to occur in the future.

Contact us by email on enquiries@sussexbusinessadvisors.com for a free initial discussion of your issues, and we can put you in touch with specialists such Graham if we feel that is the way you should go.

Make money by not spending money on your debtors - now there's a thought.

Handling complaints

What if you fail to meet your client's expectations and they complain? Do you deal with the complaint, or do you put it in your desk drawer and hope it will go away?

Actually, you get back to them promptly and talk to them about it. Promise to resolve it within a given time-frame - and do that systematically for every complaint.

Your clients might still be unhappy with what you supplied, but they'll be happier with you and your company as they know you have responded to their complaint and their issue is being addressed.

And if you don't talk to them, they'll talk to their friends and business contacts about you and your company, and your reputation will - slowly but surely - slip away.

Put in a process

• Devise a system to log, track and resolve complaints; 
• Decide which staff will be involved and get them some training if necessary - they may have to deal with frustration, anger or confrontation over the phone;
• Set target time-scales for contacting the client and for resolving their issues;
• Tell the client what these time-scales are, and talk to them regularly about your progress;
• Take it really seriously - carry out regular audits at director level to ensure things are being done on time;
• Use your audits to drive continual improvement; and 
• Carry your staff with you and reward them for their performance in a difficult role.

This sounds like a lot of work

Not really. If you have a culture of client satisfaction and continual improvement, you are probably carrying out most of these steps anyway. All you have to do is make this systematic - take out the uncertainty so that everyone knows 'who, what, why and when', with some steps of the process always being done by the same people.

And remember, most growing, high-performing businesses are process-led, so if you want to be like that I guess you'll have to start putting some processes in.

How can I get help?

A client asked me what was meant by a complaints handling system that conformed to the guidelines in IS0 10002.

Now, these International Standards don't normally tell you how to do it, but amazingly there is a really good explanation in ISO 100002:2004(E) of a process for a small business - look up Appendix A.

So if you feel confident to put in your own process I suggest you start with that - or you could take advice. We'd be only too happy to help.

And the last thing is - don't hide behind your Terms and Conditions. We've all experienced being given the brush off when we thought we had a legitimate complaint - it makes you think twice about using the same company again.

Half-day business plan

In half a day, you should be able to get the essential features of your business plan 'down on paper'. 

Now, by business plan we don't just mean a plan for the business as a whole, we mean a plan for any significant change you make to your business.

We firmly believe that doing a plan helps you to think through your proposition carefully, and forces you to set yourself and your team, objectives against which progress can be measured.

How can you do this in half a day? 

You follow a structured approach that facilitates getting your ideas straight at every stage: you build up your plan stage-by-stage, on well-thought-through foundations. In reality however, you will keep going back over it  - naturally, things will come up that you will need to feed back into sections you have already completed.

And a further discipline is that you don't write much! By being really strict with yourself, you should be able to get the essentials of your plan down on 1 page of A4. We'll explain it in terms of a business plan, but you'll see the approach can be adapted for any plan.

Aims, goals, targets, vision

As a business owner, the first stage is to think through what you personally want out of your business. Do you want to be really wealthy, comfortably-off, famous, a locally-respected business leader, eventually a politician, retire at 50, a brand - what exactly?

Get that straight - this is really important - and you'll then understand what sort of business you will need, what market you will address, what size it will have to be, and by when, in order to deliver your own aims, goals, targets, vision etc.

Markets and mission

What will you offer to your customers that will make them want to buy from you in sufficient volumes to fulfil your business vision? What is the real market for your offerings that will deliver the growth and margins you need to build your bottom line?

We normally spend about 2 hours on these two sections to make sure the foundations for the rest of the plan are really sound. Then we spend the rest of the time doing the next 4 sections, and going back over what we have done to ensure consistency. 

SMART objectives

You then write down 5 or 6 bullet-point objectives that you you can use to measure your progress.  They should be Simple, Measurable, Achievable, Realistic and Time-bounded - SMART. 

Strategies

How are you going to set about achieving these objectives? What strategies will you adopt to deliver them on the time-scale you need, in areas such as market segments, staffing, training, compliance, accreditation, premises, IT - in fact any area that has a really significant impact on your proposition.

Plans

Now we get to being really specific. You have strategies to achieve objectives, but what do you plan to do about them, exactly - who, what, where and when?  You'll need another 5 or 6 bullet points to write these down.

Financials

And finally, to summarise the financial impact of the plan, you will need to include a small table, with months, quarters or years across the top, and as an absolute minimum, rows, to represent

• Sales
• Cost of Sales
• Gross Margin
• Overheads
• Net margin

You should be able to see at a glance where financial objectives occur, and the impact of specific plans on sales, cost of sales and overheads. You can include cash flow or balance sheet items such as capital equipment if your plan focusses on these areas.

Recap

You could do plans for: your business as a whole; launching a new product; selling into a new market; putting in CRM* or ERP**; buying a company; migrating from server-based IT to the cloud; expanding your leadership team; tackling a cash flow problem - as we have said, in fact any significant change or development you make in your business.

By taking a logical, structured approach you can get your ideas straight and then build on those ideas as you set out your plan.  You'll go over it a few times until you are happy with it.

The key features will all be on one page, and as a result your plan will stare you in the face every time you look at it! And you can use it to track your performance. 

And finally, unless you are really skilled at business planning, we think you would benefit from the support of a mentor or business advisor as you go through this exercise. They'll ask really searching questions and keep you on track - you'll be surprised at the difference that can make. 

Half a day really well spent.

* CRM is Contract Relationship Management

** ERP is Enterprise Resource Planning, of which MRP - Manufacturing Resource Planning - can be part

Set goals for dealing with your clients

You've probably set goals for what you want to achieve in your own life and for your business, but have you set targets for how you deal with your clients?

We all understand there are commitments made at every stage of a client life-cycle from initial enquiry, to order fulfilment, and on through long term after-care - have you set targets for those? 

Maybe you should, and in some businesses you have to, or you won't be able to sell your products or services.

So how about defining your service levels and setting up Service Level Agreements with your clients that you can both work to, to your mutual benefit.

Service levels

Why can't my service level be 100%? 

In practice this is unrealistic for whole variety of reasons: human nature, equipment failure, adverse weather, travel delays etc, and your true service level will be less than that. 

For example, let's say your business is to supply staff - cleaners, maintenance staff, nurses, guards etc. 

Your records show that in about 1 in 20 cases someone calls in sick or is otherwise delayed, and it takes you at most an hour to find a replacement.

Your service level is then 95% on-time and 100% within an hour.

If you explain that to your clients, in most cases they will accept it as realistic - you have been honest with them and your promise is based on history, not fiction: you have established a level of trust with your client.

 

Of course, those with good business reasons for needing a quicker solution can be dealt with individually, and you can establish acceptable service levels for them also.

What about your business?

So what is it about the way you deal with your clients that could make them turn to another supplier? Please think about it - these are the areas where you should set about defining your service levels!

For example, how long does it take to:

• Answer a telephone enquiry that goes to voice-mail or an answering service;
• Provide a quotation for a customized product or service;
• Be on-site to deal with an IT issue or a water leak;
• Provide a repair or replacement under warranty, or even out of warranty; or
• Respond to a customer complaint (we'll deal with complaints in our next blog post)?

No doubt you'll have a short list of time-critical activities that you could translate into service levels. 

Service Level Agreements

Having set their service levels, it is becoming increasingly common practice for companies to write them up into Service Level Agreement or SLAs that form part of their contractual agreements with their clients. 

And some have even published their SLAs on-line. 

If you think you should go down this path and you want to find out more, do a web search and see what comes up - there are plenty of good examples.

Continual Improvement

There is a hidden benefit to you, the supplier, too. If you have defined a set of targets you can set about measuring your performance against them - something you really can't do if all you have is woolly intentions.

And that will allow you to introduce a culture of continual improvement - regularly reviewing performance and making changes to drive up client satisfaction levels.

It is essential also for ISO9001 and accreditation in certain industries.

A high performing business, achieving and driving up its service levels, and as a consequence with great client satisfaction - wouldn't that be nice, eh?

Second starters: another pool of hidden talent

I've met quite a few people who didn't really start on a career in the world of work until they were in their mid-20s. They had fun in their teens; didn't do much at school; had a family early on; and started working when their children started school. Now, they are great employees, or qualified professionals, or running their own small businesses - fantastic.

Sage qualified bookkeeper

"I took a part-time job as a receptionist and when the bookkeeper was about to go on holiday the MD asked me if I could maintain the ledger while they were away. The bookkeeper was very kind and showed me what to do, and actually I found it quite easy.

Up to that point I had no idea that I would be capable of doing the books. The company encouraged me and gave me some training, and I am now working in the accounts department in quite a well-paid job."

Start-up home-based business

"After my kids went to school, as I had no qualifications to speak of and was interested in cooking, I decided to train as a chef. This was good for me as not only did they teach me to cook, they also taught me how to plan a menu, and how to plan and carry out the work in the kitchen to produce good quality food, on time.

My mum loves my food, and is always telling me how capable I am. It was her faith in me that encouraged me to start up on my own, and after working for a while in a job that didn't really fire me up, I decided to start up my own business, working from home. My business is growing and I really happy to have taken the plunge."

It is never too late

These are great examples of people who made a second start in their mid-20s. You have to admire them for realising that they could make a success of their working lives even though they had virtually nothing to show from school. All it needed was for someone to give them a chance and the encouragement to just go for it.

Discover hidden talents: get to know your staff

You want to make a change to your business and you need someone in a particular role. Take a look at your own staff first as you may find the capability there.

They would be delighted if you offered them the chance to develop their career in a new direction, and you could be up and running faster as they already know your business.

Talk to your staff about their interests

As well as building a good team spirit in your company, talking to your staff about themselves can spring surprises. Outside work they could be doing something as a hobby or in a charitable service organization that bears no relation to the sort of work they do for you.

And it could be that they have always wanted to build this into their career but haven't found a way to do it - early on they took a particular direction and got qualifications in an area that they are OK with but it doesn't really fire them up.

They get their real kicks out of what they do outside.

Don't waste that talent

So what are we talking about? Here are some ideas. You employee might be:

• chief fundraiser for a small charity,
• organizing fit-ups outside - staging, lighting, sound, seating, dealing with acts and property owners - for amateur stage shows, 
• secretary, treasurer or even chairman of a 200-member club or service organization, or
• a member of Round Table or a Rotary Club, or a Mason. 

What does this say about them? The are showing skills and above all an interest in marketing, project management, administration, bookkeeping, management, networking, and in the last example, a real desire to put something back into their community.

They could possibly do any of this for you also. Give them the chance and even offer them some training.

A perfect example

Some years ago before I escaped into the world of business, I worked on clean nuclear power - nuclear fusion - in a government lab. We were looking for someone to head up a new £10 million experimental facility and we offered the post to a theoretician - someone who knew the physics inside-out and could do the maths and computing.

But what about his engineering skills? Well - I knew that this person, outside work, rebuilt cars as a hobby. He knew a bit about mechanical work and electronics, and how to put it all together to make it work - to pass its MOT and run on the road. 

He was a great choice, and, supported by professional engineers and physicists, what a great career move that was for him.

This could work for you and your business in junior positions as well as senior roles up to board level. Give it a try.

You could save money by outsourcing

Imagine how you would feel if you discovered you could save £18,000 per year by outsourcing 80% of the work done by an employee to specialist.

As a small business owner you would be kicking yourself for wasting thousands of pounds and for recruiting someone who turned out not to have all of the required skills.

You would question your own judgement for not realising the full-time job you filled was not a full-time job after all - you looked for a full-time employee before your business was ready, and you should have explored outsourcing from the outset.

And sheepishly, you would confess to your business advisor who had been trying to get you to make this change for many months. Your business consultant would be trying hard not to gloat - we try not to gloat, it's unprofessional!

Four days to do 6 hours work

This happened recently to a client. When he started up he took on a full-time finance manager but, competent at certain aspects of the job, this person struggled with the bookkeeping even after further training.

Exasperated, the MD outsourced the bookkeeping to a specialist and it turned out that the employee was taking 4 days to do what the outsourced bookkeeper was able to do in 6 hours per week.

And furthermore the MD was surprised and delighted that the bookkeeper produced exactly the management information he needed, and on time - a great improvement over his own employee. Clearly the employee was not going to master bookkeeping and was in the wrong job.

When to recruit?

As an early-stage small business, you are ill advised to take on full time staff, especially in back office functions such as bookkeeping, personnel, IT support and QA, until you know can save time and money by doing so.

Except where your business genuinely requires close-up support, consider outsourcing the work to specialists with the required skills:

• Seek advice and scope the job properly: work out how many hours per week the job should take - write a proper Job Description;  
• Ask someone with relevant experience to help you find the right company or person, and place a proper contract with them;
• Leave the decision to take on a full time employee until you can see that the total time spend on that function by your own staff and the contractor is at least 40 hours per week; and
• Always think about the potential negative impact on your business of using people who are not trained, or are not competent, in specialist roles.

More for less

I used to work with an MD who, every year in the budgeting round to set the annual plan, would ask for growth in sales with reduced overall expenses. We were in a large global manufacturing business, and of course his objective, even in a difficult market, was to achieve growth in operating profit to provide funds for investment in growth and returns to shareholders.

I didn't like this!

Now, while I was happy to grow my business unit's sales, I felt that having already delivered cost reductions in previous years I was not happy to keep on finding more and more savings. The staff were fully loaded and I couldn't afford to lose anyone; and we'd reduced material costs and pared overheads to the bone.

But what do you do? You just get on with it. You realise that it is important for a business that all of the senior staff are aligned with the company's goals. In fact the MD's 'more for less' challenge was just a reminder that in a difficult market you have to grab what net margin you can, and in our heart of hearts we realised that.

My staff didn't like it either!

They also felt they were working as hard as they could and had delivered all the savings they could. But there is always more to be found if you know where to look. Working together you have to be creative and imaginative, and work it out.

A maxim for a small business

So, I think 'more for less' is not a bad maxim to work by whatever the size of your business. Even if you run a small business, cost reduction should be part of your continual improvement strategy: get it right and it can increase the funds you have available to pay yourself as well as re-invest in the business.

And if you need to borrow, you'll definitely be more convincing if - alongside your passion for your business and your vision for a brighter future - you can show you are determined to keep a continual downwards pressure on costs. Engage your staff and get them to help you deliver it.

All brand and no sales

I'm reminded of the old saying 'all mouth and no trousers'. I'll explain.

There is a lot of sentiment around on using social media to help you build your brand. But, of course, having a great presence on Twitter, Facebook, LinkedIn and elsewhere will not necessarily bring you additional sales on the time-scale you need.

The same can be said about having a great website. Why?

Who are your customers?

With social media, you have to ask yourself the question: what percentage of the clients I am going after (or people who could refer me to these clients) use these platforms? And then the second question: do I expect this percentage to increase with time and how fast?

Your answers to these two questions should set your social media strategy for your business. If, in all honesty, most of your your clients are not on Twitter, Facebook, LinkedIn etc., you can't justify social media being the main thrust of your current marketing effort - they should be just part of your overall marketing mix.

The same is true for your website. If most of your clients don't search the web for their suppliers, you have the same issue.

This is what I mean by 'all mouth and no trousers'. You can be as vocal as you like on these web platforms, but if it does not bring in new sales.....

Slow burn

That said, having a well-honed social media presence and website is a must. The number of people using them is increasing, and as time goes on you can expect to see more and more of your own clients beginning to make use of them also.

So even if the short term returns are low, in the long run the benefits begin will flow to those who have taken the time to develop their web-presence.

It makes you think

And, embarking on a social media campaign certainly does make you think. It makes you think about your brand and how to put it over to your target audience.

Even if you spend just a few minutes on it every day and look at the response, you can begin to see the impact you are having on your stakeholders. You can then think about it and adjust your approach to see if it increases the impact - and you can even feed your best ideas back into your website copy.

A benefit worth having, I'd say!

Find your market price?

"I'm offering a first class service at an affordable price." This is what a marketing specialist said to me when I asked her how she pitched her services to her clients. "But are you making enough money?" I asked. "No," she said.

Now, there are plenty of marketing people who seem to be making a really decent living, so either they are working incredible hours - which is hard in a creative job - or they have found a pricing for their product that works for them.

My client needed to find her 'right price'.

Your minimum price

As a small business, generally speaking each job should pay for its materials and its labour, and make a contribution to your overheads, your personal remuneration and your net profit.

Whether you pay yourself out of dividends or through payroll, when looking at job profitability you should always include your own remuneration before you work out the net profit.

So, making no profit after you have paid yourself sets your minimum price, as after all you are in business to make money for yourself, aren't you?

How much can you make?

Allowing 5 weeks for vacations, an 8 hour working day, and 1 day per week for business development, if you charge out your time to each job at £24 ($40) per hour you can expect to pay yourself just £36,096 ($60,160) per year before tax and national insurance.

Not much is it? You have to either work longer hours, or increase your prices.

Increase your prices

Now an interesting way of looking at this is to work out how many jobs you could afford to lose to make the same money if you increased your minimum price to pay yourself more.

Increase your own remuneration by 50%, to £36 ($60) per hour, you can afford to lose 1 job in 3 of those you would have won before and still pay yourself the same.

You then have time to go out and win more jobs at the higher price, and you can then pay yourself £54,144 ($90,240) per year for 32  hours per week of cover over 47 weeks. Much better!

Take the risk

So what have you got to lose? You have to take the risk of losing some jobs to work out the 'right pricing' for you in your chosen market.

Increase your prices to pay yourself more, and give it a go. Add materials, labour and overheads to your own increased remuneration for each job and see where it leads.

If you think a 50% increase is too high, try 25%. If you are still winning more than 80% of the jobs you would have won before, go higher. That's how the maths works!

www.sussexbusinessadvisors.com

What is your market?

You've got a great skill, or idea for a product or service, but will it sell? Do you really know who will buy it, where, and at what price?

Now, some people make a lot of money through having an idea that just takes off, but most of us don't have that luxury, and for us researching and understanding our market is a sure way to reduce the risk of disappointment.

Me too

The fact is, most small businesses are offering 'me too' products or services into an existing market.

This is true whether you are a trades-person, a small manufacturer, a service provider, or in a profession.

There will be plenty of other people around who are offering to do what you do: some of them do very well at it, while others just muddle along.

Better than the average

And surely you want to make some decent money: you want to be the best in your territory, or at least better than the average.

Successful entrepreneurs have the skills to differentiate themselves from the herd, and to know where to look for the jobs with the highest margins. They don't see themselves as 'average'. They, like you, want to build a successful enterprise.

Know your market

Segment your market by putting your potential clients into categories in which the requirements are similar:  identify the segments that yield the highest margins, and especially the ones that offer repeat business.

For example, as a trades-person your segments might be: low-value private dwellings; high-value private dwellings; residential blocks; commercial properties; industrial properties; government buildings; new builds etc. 

You can then see which of these segments will deliver the high margins and provide you with a steady flow of repeat work.

Then get the map out and mark off where these higher value opportunities might be. Define your territory so that you are not wasting too much time on the road.

Finally, look at what the really successful businesses are doing in your market and learn from them; Google them; study trade journals and local magazines - anything that will give you a feel for where you can build success with your special product or service .

High-end business

Now you have researched your market, you understand what and where your high-margin market opportunity is, you can start on your marketing - identify these high-end clients and go after them.

Stick to your territory and don't get side-tracked into accepting a full order book from the low end of the market. You'll not get rich by doing that.

What do you want out of your business?

“Your vision of where or who you want to be is the greatest asset you have.”

This is a quote from a brilliant little book called “It’s not how good you are, it’s how good you want to be” by Paul Arden (Phaidon, 2003).

Sadly Paul is no longer with us, but in the ‘80s and early ‘90s, as Executive Creative Director at Saatchi and Saatchi he was responsible for some of Britain’s most successful advertising campaigns.

I picked up this book recently on a family visit to Australia, and it set me thinking. What Paul is talking about really, is having an ambition, a goal, a vision.

Your personal ambition

Whether you are starting up a business or managing a small business of your own, obviously you are doing that for a reason. It is an ambitious thing to do, running your own business, whatever its size.

But have you set yourself real goals? Is there something concrete you are going after? What is your vision of where or who you want to be?

Your vision and your business

Do you want to be rich and retire at 50 with a yacht and a house in the Mediterranean, or work until you get your state pension, retiring with your own house and sufficient savings and assets to bring in a decent retirement income?

But there is more to ambition than that. For example you could just want to be famous, or become an MP.

In business terms, however, it is your desire to achieve a certain level of wealth through business that determines how big and how profitable your business has to be.

Take a pause and think

Faced with the daily grind, it is easy to lose sight of the long-term. I guess most of us in business need, from time to time, to take a pause and see if we are on track to achieve our goals. If we are not, we can think about what changes we need to make to re-align our business with our personal vision.

Make your time work for you

As a start-up, sole trader, micro business owner or a small business owner, your own, personal time is your greatest resource.

Yet, how often do we hear phrases like ‘I work 60 hours a week and I haven't had a holiday for 3 years', or more seriously 'I don't seem to make the time to go out and find new customers'.

‘Time is money’. Follow these steps to work out how to make your time work for you.

Where do you spend your time?

Take a typical month – 30 days – and write down where you spend your time. Decide on some headings that reflect your business activity and split your time across these headings.

Think in terms of half-days: you need sufficient headings to capture your activity down to that level – 4 hours per month.

Remember to include everything: website; networking; tweeting; facebooking; blogging etc. as well as finding prospects; travelling and seeing clients; quoting; taking orders; purchasing; making stuff; packing and shipping; follow up; invoicing; service; rectification; managing staff; R&D; your books etc.

How does this time relate to your revenues?

Your next step is to write down your main revenue streams and their contribution to your annual turnover, or if you are growing your business, where you want the growth to come from and the annual sales you want from that growth.

Then you allocate your time to each of these revenue categories.

 

For example, does the time you spend on your website or on social media really contribute its fair share to your revenues? Does it contribute to, and is it essential for your growth?

Are you programming your CNC machine every morning, and is this stopping you going out to see new prospects?

Be honest with yourself and you will be amazed at the result.

Make your time work for you

Now it is decision time. You can now see what you should cut back on, or give up, or delegate to someone else, or give to a supplier or subcontractor, to make time so that you can get your life back and grow your business.

Even if you can’t face the analysis, at least start thinking about what you do in terms of what it contributes to your sales.

Have fun, good luck and get help if you think it would help you.

Three steps to manage your cash flow

Remember, you only have a ‘business’ if you are making money out of selling to your customers and getting paid.

Equally, being able to manage cash is an essential skill for business owners, for even if you are making money, your business could fail if you run out of cash.  

Follow these three steps to get a grip on your cash and make it work for you.  

Understand your history

You know where you are, but how did you get there?

Re-construct your trading cash flow using the actual dates when transactions were made. Strip out non-trading items such as loans and loan repayments and get back to the bare bones of your trading history, to see if you are really making money.

Add back your other payments. Then write down who owes you money and who you owe money to. Don’t fool yourself – include those invoices you have kept in your desk drawer and not yet given to your bookkeeper! 

Group your transactions into categories - suppliers, staff, overheads, charges, interest, loan repayments etc. Keep on digging until you understand the story.

Predict your cash flow

Now, this is the hardest part. Document your sales pipeline – take your prospects and estimate, step by step, when they will become genuine enquiries, when they will place their order, when you will ship, and when you will get paid. Do this right through to your last prospect.

Using your history, predict your payments, then add it all up week by week, month by month. The result is your cash flow plan.

Manage it

Now you have a cash flow plan that shows when you are likely to be short of cash and by how much.

Furthermore, you should now understand what strategies you can adopt to do something about it, such as:

• Get orders in earlier;
• Bring money in earlier: ask for full or part payment in advance;
• Phone your customers and get them to pay your invoices;
• Find cheaper sources of supply;
• Reduce staff costs by being imaginative in how your share work around;
• Delay payments to suppliers - talk to them and tell them why; and
• Focus on high margin activity.

Build a reserve

Finally, plan for building up a cash reserve that you can dip into when you need to. If you use an overdraft for this, do remember it is not your money you are spending.

Have fun – once you master this you will be surprised at how it helps you achieve your vision.


And remember, we can help. We can construct your cash flow plan for you and show you how to manage your cash.

Welcome to Peter Johnson's Small Business Blog

Welcome to my new Blog in which I will focus mostly on insights and tips that should be useful for start-ups, sole traders, and micro and small business owners. I trust you will find my contributions helpful and informative.