Profitology

Category: Business Planning

  • Why I wish I didn’t use a Business Mentor for my business

    Why I wish I didn’t use a Business Mentor for my business

    After I had been operating my business for a few years, I found myself stuck in a rut. Although the business was growing, I was not achieving the results I wanted out of my business, and certainly hadn’t achieved the outcomes I had hoped for and aspired to when I first established the business.

    It was at this time I met and engaged my Business Mentor to assist me in turning the business around. I couldn’t say the experience was smooth sailing and without challenges. Sometimes I wished I hadn’t made the decision to work with a mentor.

    Why did I struggle with the mentor/mentee relationship?

    1.      He challenged me to reconsider the value I was providing to my clients and to have the confidence to set my fees appropriately/accordingly

    2.      He encouraged me to revamp my business model so that I was only working with those clients who were profitable

    3.      He encouraged me to step outside my comfort zone in terms of the way I conducted meetings with clients

    4.      He taught me the importance of “being present” when with family or at work. I often struggled with switching off when I was at home and would find my mind wandering to thoughts about work.

    5.      He provided me with a tool to understand the dynamics of my team, their strengths, and how to best utilise their attributes to prepare those tasks which come naturally to them.

    6.      He made me cry… often… which is a testament in itself of the boundaries he pushed me through.

    Of course, my headline is said in jest. I am extremely grateful for the mentoring I received from my business mentor. He guided me to push the boundaries, create clarity on services I wanted to provide, and those clients I enjoyed working with. Most importantly he was a trusted sounding board, with an unbiased, outside perspective for me to share thoughts, ideas and gain insights.

    It goes without saying, if I wasn’t prepared to make changes, or take actions based on our meetings it would have been a complete waste of my time.

    I’m sure we have all experienced times when a sporting coach, teacher, parent or mentor has urged us to stretch our boundaries, for better or worse. How did you fair?

  • Risky Business: What if you had EVERYTHING to lose?

    Risky Business: What if you had EVERYTHING to lose?

    Walt Disney, Colonel Sanders and Reed Hastings are examples of wildly successful business owners who were either bankrupt or had very little when they launched their business.

    They had nothing to lose from taking a risk and persevering with their vision.

    Early in my career one of my colleagues often said to me “What’s the worst that can happen?” At the time this was very appealing to my single, attachment free life and encouraged my risk taking attitude when making decisions.

    Fast forward 20 years and my circumstances are very different. I’m married with 3 children and a substantial mortgage to boot. Added to this is our less common circumstance of living with and caring for my husband’s disabled mother who depends upon us to provide her with support and a suitable roof which accommodates disabled access and functionality.

    The answer to the question “What’s the worst the can happen?” when considering a risky venture now poses different thoughts and responses.

    What if taking a business risk resulted in not being able to meet the mortgage repayments? Sure, we could sell our house and live elsewhere, but this has complications with catering for accessibility needs for my mother in law.

    I acknowledge I’m not the only one who has circumstances preventing or screaming caution from taking business risks. It is not uncommon when considering business opportunities or ventures to be mindful of the negative impacts the leap may have on your family should the venture not be as prosperous as you hoped.

    We now are faced with the question: “What if you had EVERYTHING to lose?”

    What measures could you take to execute your business idea, or achieve your goal, whilst minimising the potential misfortune of failure?

    You could take intelligent risks by:

    1. Having a Plan A, a Plan B and a Plan Z. Reid Hoffman, founder of LinkedIn and co- author of the Startup of You with Ben Casnocha, discusses the importance of having three plans.

    Plan A is what you are doing right now. Plan B is an overview of the parameters of where you will shift to if you discover Plan A isn’t working. Plan Z is the lifeboat if something goes drastically wrong with Plan A & B. It is designed to give you peace of mind to adopt the risks of Plan A & B.

    2. Researching the market, the potential risks and pitfalls of the idea, and considering the existing options available on the market.

    3. Utilising your existing networks, or a business mentor, to evolve the idea, considering the possibilities and ensuring the idea has merit. It’s very easy to get caught up in the excitement of an idea and not consider it’s feasibility.

    4. Setting a budget for your expenses, asking yourself if you really need to buy that item or incur that expense before spending will encourage creativity and innovative ways of implementing the idea with minimal risk.

    If you are passionate about your business idea, understand the risks and make intelligent decisions to mitigate any negative impacts of those risks you have a greater chance of succeeding with your business idea.

  • Embrace the Naive Expert

    Embrace the Naive Expert

    n my role as Business Advisor, I meet with an average of 15 business owners a week, and of those 15, typically 3 are business owners I haven’t met previously.

    I am truly in my element in this environment. I thrive on meeting new people, learning about their business ideas, gaining insights into industry “quirks” and experiencing the motivation and drive entrepreneurs have for making a difference in their community.

    When faced with industries or business concepts I am not familiar with I have, on occasion, found myself apologising for not being well versed in the particulars of the industry.

    Until recently that is. I was fortunate to sit in the audience of a presentation by Duncan Wardle, Former Head of Innovation and Creativity for The Walt Disney Company. Duncan introduced the concept of including a Naive Expert when holding brainstorming sessions, and making important business decisions.

    He spoke of the benefits of having an unrelated person in the room to ask the “silly questions” and encourage the group to think differently.

    Armed with this insight, my perspective of having limited industry knowledge has changed. I now embrace my naivety of industry quirks, and use it to my clients advantage when working with them to provide insights in to their business operations and strategy.

    It provides me with the avenue to ask the basic questions, to challenge the status quo, to remove the blinkers, and to present out of the box ideas. All the while applying my knowledge of business principles to achieve sustainability and longevity.

    This approach empowers the business owners to consider their options from other angles and to come up with a business model which sets them apart from their competition.

    So when planning your next brainstorming session, or if you’re feeling stuck in your business, reach out to an unrelated party, who DOESN’T know your industry or business. They may be your most valuable contributor.

  • Set the Rules of the Game Before you Start: What to include in a Shareholders’​ Agreement

    Set the Rules of the Game Before you Start: What to include in a Shareholders’​ Agreement

    You’ve come up with an exciting business idea, you’ve formed a relationship with a business partner. You’re looking forward to launching your business.

    Whilst all partners are on favourable terms, all is rosy, now is the time to set the rules of the game.

    A shareholders’ agreement is used to outline the business practices, matters to consider in the event there are disagreements or unfortunate circumstances arise. It is the prenuptial before your wedding vows in the business world.

    What do you include in a Shareholders’ Agreement?

    Below are some matters to consider when drafting a shareholders’ agreement with your business partner(s):

    1.     Those decisions which can be made by one individual partner

    2.     The maximum dollar amount to be spent without consent from the other partner(s).

    3.     Decisions which require a majority vote, or a greater than a certain percentage in favour vote.  75% vote for example

    4.     The roles and responsibilities of each partner

    5.     What happens if one partner wishes to exit the business. Consideration can also be given where ownership is not equal and one party has a controlling vote to ensure he best interest of all parties is taken in to account. This is known as Drag Alongs & Tag Alongs

    6.     What happens if one partner dies or is no longer able to work in the business

    7.     A dividend policy for payment of profits

    8.     The nature of the business and process for changing the overall purpose of the business

    9.     How directors will be appointed and removed

    10.  Requirements for personal fund contributions, eg how much each party will contribute, in which circumstances additional funds can be called upon to inject in to the company. How the funds will be treated. Eg as a loan, equity, or a gift

    11.  The process if there is a deadlock or dispute between the partners

    Once you have this agreement in place you can focus on building your business, with comfort that there are mechanisms in place to manage unforeseen circumstances and that you have agreed upon the expected outcomes and profit share of the business.

  • Planning for Staff Absences

    Planning for Staff Absences

    I was asked recently for my thoughts on how to plan for unexpected events in business such as when key staff members resign, take annual leave or are injured and unable to work for an extended period of time.

    I share my thoughts here for consideration.

    A business can reduce its reliance on people by concentrating on defining the structure and processes for its operations.

    With structure and processes clearly defined there is consistency in the delivery of your product or service, staff are able to make decisions and take actions confidently. Further, in the event of staff absences, other team members are able to step in and adopt their tasks.

    Once you have defined and implemented your systems the key is to find the right people to follow those systems.

    Finding the right people is a matter of matching their individual values and attributes with the values and culture of the organisation. Where a team member does not share the values of the organisation there will be tensions and frustrations from both management and the individual themselves. The organisation will suffer as a result of constantly needing to monitor the work and performance of the person potentially resulting in poor customer experiences and loss of time in micro management.

    Under these circumstances, a team member who does not share the core values should be encouraged and supported to find a company which aligns with their values.

    Gino Wickman, author of Traction: Get a Grip on your Business, states that for an employee to be a “right person” for a position they must Get it, Want it and have the Capacity to do it.

    In the case where the right team member does not have the capacity I recommend they are either trained and mentored to fill their role, or are transferred to another role within the organisation which best suits their skills and capabilities.

    To recap, a successful business focuses on structure and processes first. Implementing the structure ensures the business is not dependent upon any one person, and no person is irreplaceable.

    Having the right people in the right roles will lead to your long term success.

  • Overcoming the struggle of keeping up with technology

    Overcoming the struggle of keeping up with technology

    We live in a time when we are surrounded by numerous forms of technologies to make our lives easier. Technological advancement has impacted on how businesses function and owners are constantly faced with pressures to keep up to date with new technologies to streamline, automate, create a digital presence, and cut costs.

    Take, for example, the mobile phone. When I grew up there was no such thing as a mobile phone. In the space of 20 years I have witnessed mobile phones grow from clunky, impractical items to the device everyone carries, which has all but replaced the PC.

    As businesses struggle to keep up with the constant shifts in technology, there is a perceived need to compete to deliver the most efficient product or service, to automate processes, to be accessible 24 hours a day, 7 days a week, and so on.

    Business owners are inundated with numerous options to cut costs and gain competitive advantage. It is difficult to know where to focus your attention, or which technologies to implement first to achieve momentum and progress within your business.

    Answer the following questions to gain clarity and certainty as to which technologies, and business practices:

    1. What are the core components within your business that will never change?
    2. How can you utilise technology within your business to improve on the delivery of those core elements?
    3. Will this technology assist you in delivering your values to your customers, or your team in the medium term?

     

    Adopting New Technologies

    Consider the following factors when selecting and implementing technology within your business:

     

    1. Identify the needs of the business first. Don’t introduce a new technology simply because it is popular. Consider the functions you need to fill, and how the adoption will improve the business operations.
    2. Ensure the technology will grow with the business. The technology needs to suit the business for the foreseeable future and meet the business needs as it scales and matures.
    3. Ensure the team is on board with the change. Secure buy-in for the technology in the early stages by seeking input and granting ownership to the change. This will assist with a smoother adoption process and reduce the risk of wasted time and money on the implementation.

     

    To gain and maintain a competitive edge in business, it is vital business owners are investigating new ways of delivering their product or service. However, this should not be at the detriment of the core business.

  • Is poor Cashflow keeping you awake at night? Follow these 6 tips for a better night’s sleep

    Is poor Cashflow keeping you awake at night? Follow these 6 tips for a better night’s sleep

    Regardless of what stage of business you are in, cash flow, or the lack thereof will impact on your ability to operate your business.

    In my experience, poor cashflow creates pressure and stress for a business owner. Their focus and time is drawn away from the core operations of their business as they worry how wages will be paid, suppliers will be kept happy, and other creditors obligations are met.

    Further, poor cash flow makes it difficult for business owners to take advantage of opportunities such as new product lines, new technology or other equipment for the business.

    Simple aspects such as taking advantage of supplier discounts may also be a lost opportunity.

    If poor cash flow is hindering your business, you may benefit from one (or more) of the following tips:

    1. Ensure your terms of trade are documents and clearly communicated to your customers. More importantly, implement a process for following up debtors when they fall overdue.  Remember, the squeaky wheel is the one which gets dealt with first.
      Offering for the debt to be paid by instalments, and receiving a first instalment prevents your debtors from being able to argue with the invoice amount at a later stage. If your debtors are slow in paying or avoiding your efforts to make contact, consider engaging formal debt collection. Despite common belief, initial debt collection processes are often a cost effective means of recovering debt.
    2. Progress billing is an option that is often overlooked. Are you able to request a deposit upfront, followed by progress claims as you complete certain milestones of the assignment? To ensure you benefit fully from this process, ensure the progress invoices are in line with the work being performed.
      An example of this is an electrician I worked with who often found cash flow to be tight when working on large build jobs. The majority of the work is performed in the early stages of a build contract, yet he was invoicing more than 50% of the job on completion.
      Given that the timeframe of a job may span 3 or more months this significantly strained his cash flow. A simple change of invoicing 50% for the progress claim brought the invoicing in line with the work performed and made a significant difference to his cash flow.
    1. Consider providing fee proposals for service agreements and invoicing the service monthly on a fixed fee arrangement. his also assists with cashflow for your customers as it spreads the cost out for them. Further, implementing direct debit as a set and forget process ensures you receive regular cash injections, and avoid the need to chase outstanding payments.
    1. On a similar theme to the above tip, ask suppliers for arrangements to pay ongoing expenses in monthly instalments to spread out payments. This will reduce “lumpy” payments which can put strain on cash for a business.
    1. Where your business has significant wages and superannuation expense, consider depositing the PAYG Withholding and superannuation obligations in to a separate bank account at the time each payroll is prepared. Discipline is key here. Although it is tempting to touch the funds when needs arise, the promise of “I’ll pay it back” is rarely kept and businesses are unable to meet tax and superannuation obligations as they fall due.
    1. Cash is often used to purchase stock items, which then sit on the shelf waiting to be sold. Reviewing stock purchasing practices to limit stock holdings is an effective way of improving cash flow. Ordering more frequent, smaller quantities of inventory items may improve cash flow for a business. In addition to this, where stock is not selling, it is worth considering promotions to sell the stock and collect cash to reinvest in other popular stock items.

    As a final note, a business which generates small, or no profits, will undoubtedly face cash flow strain with business owners forced to inject their own funds, or seek other external funds to prop up the business. Reviewing the profit and loss on a regular basis will enable a business owner to identify those expenses which should be reduced, or eliminated.

    Need further guidance to improve cash flow in your business? Contact me to discuss your business cash flow needs.

  • Scaling Up: Three Measures You Should Know to Grow Your Business Effectively

    Scaling Up: Three Measures You Should Know to Grow Your Business Effectively

    Is your company planning to scale up? Are you prepared to tackle increased workload? Is the business ready to handle more demands from existing and new customers?

    There comes a point in time when most entrepreneurs choose to grow their business. Sometimes, it is because the business is not big or efficient enough to meet growing demands. Sometimes, it is simply because most business owners are big dreamers – they look forward to a greater future for their company.

    With this clear vision of success, smart business owners put measures in place very early on. This makes it easy for them to scale the business efficiently without losing focus on the company’s core activities. By planning for growth at an early stage, business owners and their team are able to adopt processes and practices they needed to manage increased demands and operations.

    “Scaling effectively means anticipating demand, not reacting to it” – Jason Albanese

    That means the best time to think about scaling up your business is before you even need to do it. The earlier you get into this scalability mindset, the better you will understand and apply the essentials to growing your business exponentially. Follow these action steps to prepare your startup or small business for the realities, challenges and constraints of scaling up:

    1. Implement systems and processes from day one.

    Have you documented the way you do everything in your company?

    If not, start recording all essential procedures in your business. Make sure that all tasks performed are properly done and documented. Take screenshots of company procedures or record tutorial videos of crucial business processes that are followed by all on a daily, weekly or monthly basis. This ensures that all team members are clear about the company’s standard systems and processes. Should roles evolve or should a team member take a vacation leave or resign, someone else in the organisation can step up to the role and complete the tasks for them.

    2. Adopt a comprehensive Customer Relationship Management (CRM) System to record client and prospect data.

    A business that thrives is one that focuses on the needs of its customers.

    That’s why having an effective system in place helps you identify, understand and serve your ideal customers. Have one system to record all your customers’ contact information. This is massively helpful in tracking leads and conversions; facilitating sales and marketing functions; and developing a client profile of needs, traits, and special requirements. Eliminate the guesswork and back up your plans with solid customer data.

    3. Automate processes.

    Automated bookkeeping and invoicing is incalculably useful for business owners who want to speed up their cash flow.

    These days, it’s possible to receive on the spot payments from clients through your laptops, tablets, and smartphones with credit card, PayPal and other online payment systems accessible 24/7. Workflow management and time tracking can also be automated. Communication between employees is more efficient these days with instant messaging and team management systems such as Skype, Slack or Fleep.

    Which of these steps have you taken to prepare for scaling up your business fast and profitably?

  • Are Your Business Systems Hurting or Helping You?

    Are Your Business Systems Hurting or Helping You?

    One evening, I was watching my daughter feed the dog. I noticed she would spoon the biscuits one by one into the dog bowl. The process was painfully slow. But given it wasn’t hurting anything and she was entertained while I cooked dinner, I let her go on.

    Then it dawned on me how many of us continue with slow systems when running our business. Though our current business systems are not necessarily the most efficient way to complete a task, we still don’t change them. It’s crazy, isn’t it?

    Many years ago, I had a client who vented his frustrations about a staff member who performed a particular task really slow. The said employee would set up a piece of equipment on the work bench at the start of his shift. At the end of the day, he would disassemble the equipment and put it away for storage. If he didn’t dismantle the equipment, he wouldn’t have to reassemble it for the next day’s use, saving the company hours of unnecessary work.

    It’s a simple change. But it makes a lot of difference over a long period of time. These minor inefficiencies within the business add up, affecting the company’s productivity (and profit).

    I had a similar experience at a firm where I used to work at. Their system of invoicing clients was also incredibly frustrating. There are too many steps involved for something as simple as creating an invoice for a client.

    To give you an idea, here was the process:

    1. The manager notifies the admin that a job could be billed.
    2. The admin then pulls the report containing the amount of time spent on the job to send back to the manager. This document also has the amount billed the last time the same job was prepared, if applicable.
    3. After receiving this report, the manager advises the admin how much they want to invoice.
    4. Subsequently, the admin drafts the invoices to send back to the manager (e.g. for proofreading or to check the wording).
    5. Afterwards, the manager reviews the process. If it’s okay, he will send it to a partner for final approval. If changes are needed, he has to send it back to the admin for changes. The admin will make the necessary corrections and send the invoice to the manager who will forward the error-free document to the partner.
    6. When the partner finally approves the invoice, he will notify the admin to send the invoice to the client.

    This clearly illustrates that the existence of a system does not necessarily mean business processes are as efficient as they could be.

    Taking the time to analyse your system’s effectiveness could save you valuable time and might lead to a much better bottom line.

    So, when was the last time you stepped back and reviewed your systems?

  • Why Do We Put More Effort into Planning our Holidays than our Businesses?

    Why Do We Put More Effort into Planning our Holidays than our Businesses?

    It’s funny how when I ask business owners where they are going on holiday, their response is so certain.

    Their vacation is all planned out, day by day. They have usually decided which sights and attractions they will visit; how many days they are staying in each location; even the time of their flights.

    You probably do the same when planning for your holidays. You research the best hotels, airlines, and time of the year to travel to your dream destination. Like most savvy vacationers, you usually compare prices and plan your budget accordingly.

    Often, you’ll engage the services of a travel agent to assist you with these tasks. You know that you can benefit from their experience and insider knowledge. You also feel comfortable knowing that if something goes wrong, you have someone to help you sort out flight problems or accommodation mix-ups.

    So, why is it, as business owners, we don’t plan where we want our business to be in one, five or 10 years time? Isn’t the livelihood of our business more important than the two-week holiday we take once a year? Doesn’t our ability to take regular holidays depend on the continued success of our business?

    Plan Where to Take Your Business in 10 Years

    Look into the future and imagine where you want to see your company in one, five, and ten years. Do you see a clear picture? Does it look promising?

    If it’s vague and uncertain, set aside some time to determine where you want your business to be in 10 years time.

    Choosing your goals well can help point your company to the right direction. Your mission is a good starting point when setting goals and objectives to tackle over the next decade. Then break it down to 5-year and one-year goals, all working towards the achievement of your 10-year plan.

    From there you can plan what you need to do on a month by month, week by week basis to achieve the goals you have set for your business.

    Getting Started with Your 10-Year Plan

    Like engaging a travel agent to plan your holiday, why not invest in a business coach or mentor to assist you in setting and achieving your short- and long-term goals?

    A business mentor is an invaluable resource you can turn to when you come across challenges or need encouragement in difficult times. They can provide indispensable guidance, advice, and solutions that will lead you to the path to success.

    Working with an incredible mentor can help bring clarity and strength to your vision. You will also accomplish more things much quicker than you would be able to do on your own.

    So, tell us, what’s stopping you from fulfilling the great vision you have for your business?

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  • Why Every Business Needs a Contingency Plan

    Why Every Business Needs a Contingency Plan

    At the beginning of the year, our team sat down together to discuss our goals and plans for the next 12 months. This included systems and plans that we want to implement this year to improve efficiencies and consistencies in how we do things.

    One of the suggestions put forward by my team was to create a “Mel contingency plan.”

    Is there a continuity plan for your company in case of your long absence?

    We had to think through and document the tasks and processes that I, as a business owner, routinely carry out so that should something happen to me, someone else can step up and fill my shoes.

    Preparing for eventualities goes further than filling my roles such as meeting with clients, overseeing staff, and managing workflow. They had to be aware of the critical aspects of our business operation, such as:

    • where our business comes from;
    • what key functions need to be filled when I’m not around; and,
    • what resources are required to continue the business.

    Plans have to be put in place to ensure wages and suppliers are paid on time, regulations of professional bodies are adhered to, and new prospects are being acted upon.

    The Bright Side of Preparing for Twists, Turns or Unexpected Changes

    This may sound doom and gloom, yet having a contingency plan would give me, the leadership team, and my family peace of mind in the event I get “hit by a bus”.

    As a business owner, I see also this as a remarkable opportunity to review and improve our systems and processes.

    It’s also a great time to appoint or empower key employees in my company by sharing with them crucial business knowledge and processes.

    With this solid plan, I am giving myself freedom to go on an extended holiday knowing that the business can operate without me.

    What greater satisfaction could there be than knowing your business will still run smoothly even if you’re not around?

    Have you ever worried about how your company would do without you? If so, what have you done about it?