Sunday, August 11, 2019

Increase the Value of your business




Most businesses with under $1 million in revenue (which is most businesses) sell at a very small multiple of earnings when their owners decide it's time. Typically they get two or three times their pre-tax profit, if they're lucky. How can you get more juice out the company you've spent years developing?



Here are a few ideas that may help grow that important valuation.

1. Recurring revenue: 
Demonstrate that your customers come back to purchase regularly and you'll drive up the value of your business because buyers will have confidence your sales will continue long into the future.

2. Revenue growth rate: 
Acquirers will look at your top line revenue growth and project how large your business will grow in the future. Revenue growth rate may be even more important than profit growth for driving value. Buyers know how to squeeze margin to increase profitability but it is difficult to replicate the formula you have that makes someone want to buy your product.

3. Positive cash flow: 
If your company takes in money before it has to spend it, buyers will pay more for your business. Acquirers look at opportunities by measuring the return they'll get on the money they need to invest. If your company generates cash, they will not have to put much of their own into funding your day-to-day operations. The less cash they inject, the better the potential return on their investment.

4. Succession: 
You may want to consider firming up plans for a successor to your leadership position. Having a second-in-command will help you show the business can continue on successfully without you. If you can't afford an entire management team, at least find and groom your right hand person.

5. Differentiate:
You'll get a higher multiple for your business if your product or service is truly unique in the market. Acquirers will graft your product onto their distribution channels and estimate just how big your company could be in their hands. That only works if you have a truly different product or service.

I hope these few tips provide some insight into steps you may take to present a positive opportunity as you reach a stage where you may want to move on to newer challenges. Please let me know your thoughts:Gerry@polarisgroupmc.com




Sunday, July 28, 2019

Business Planning

Business Planning for Success



Any road will get you there if you don’t know where you are going. Perhaps an updated business plan will help improve your opportunity for choosing the right options when you hit that fork in the road and help you achieve success.



Here are a few reasons to update your plan.

1. Cash Flow sensitivity.
Most business owners seem to focus on profits instead of cash. The reality is that businesses spend cash to operate, not profits. Understanding cash flow is critical. If you only get one report to manage the business make sure it is a cash flow chart.

2. To support growth and secure funding
Most businesses face investment decisions during the course of their lifetime. Often, these opportunities cannot be funded by free cash flows alone, and the business must seek external funding. However all prospective lenders will require access to the company’s recent Income Statements/Profit and Loss Statements, along with an up-to-date business plan. In essence the former helps investors understand the past, whereas the business plan helps give them a window on the future.

3. Operational focus
Successful business leaders know that a well-written business plan can provide day-to-day operational assistance. Organizations that stay focused on their business plan have a higher chance of success; when used as a road map, it can help business leaders stay focused on business growth, mission and goals.


4. To support a strategic exit
Finally, at some point, the owners of the firm may decide it is time to exit. Considering the likely exit strategy in advance can help inform and direct present day decisions. The aim is to liquidate the investment, so the owner/current investors have the option of cashing out when they want.
Common exit strategies include;
Initial Public Offering of stock (IPO’s)
Acquisition by competitors
Mergers
Family succession
Management buy-outs

Investment decisions can be taken in the present with one eye on the future via a well-thought-out business plan. Given that valuing firms is notoriously difficult and subjective, a well-written plan will clearly highlight the opportunity for the incoming investors, the value of it and increase the likelihood of a successful exit by the current owner.



I hope these thoughts help as you drive your business forward to success. Let me know your thoughts. gerry@polarisgroupmc.com

Sunday, July 14, 2019

Business Management

Why not Hire the Best?





In many businesses the most important asset is the employees going through the doors every day. These individuals impact your business in many ways with their actions and decisions. As leader the owner controls one of the most important decisions for the organization and the hiring process can be critical to the overall success achieved.






Here are a few pointers to consider when hiring:

1. Develop a precise plan
Identify the key skills a candidate must have to succeed. Also define the important attitudes that enable the candidate to excel at the job. Stick to the plan.

2. Be diligent in selecting a candidate
A thorough interview process is important in choosing top candidates. This is particularly important with senior management positions. Take the time to test for qualifications; a vague, wandering conversation of informal questioning will at best be a hit and miss approach. Results will be equally inconsistent.

3. Share the Process
To improve results, involve others to gain a different perspective. Choose peers that the candidate would work with and perhaps even involve key customers if you enjoy their confidence. These contacts will bring additional insights into the personality and style of the candidate and add a point of view of the person’s ability to integrate into the organization.


The more perspectives you bring to the process the greater the chance of success in hiring great people in the organization.

I hope these few tips are of value as you grow your organization. Please let me know your thoughts. Gerry@polarisgroupmc.com

Sunday, June 30, 2019

Business Management

Managing Change In Your Business



Managing change in an organization is crucial if the business is to move forward with adapting any new structure or shift in business focus needed to realize its goals of growth and profit improvement.


Here are a few thoughts on areas management needs to focus on to implement and manage change in the organization.



1. Responsibility. 
Clearly management and communication of change rests at the senior levels of the organization. Employees have the responsibility to try and accept and help implement changes.

2. Involvement. 
Management should involve employees in the changes – it is never a good idea to just impose change from the top. Employees want to understand how they are impacted.

3. Understand.
Knowing where the organization is and understanding where you want to be at a specific time, why, and what steps are needed to achieve the goal are all critical steps.

4. Plan.
The organization must develop a plan that is achievable if management is going to be credible. The plan should set out stages for implementing change in phases that are not only achievable but measureable.

5. Communicate
This stage cannot be overly stressed. Clear communication of objectives, involvement of staff at the early stages, and empowering them will facilitate involvement and buy in for the company.

It is obvious to most business owners that people matter. Sometimes however the organization gets lost in plans and processes rather than facing the difficult and more important people issues. Making the initial steps to involve the entire organization starting at the top will help achieve success.

I’m always happy to hear your thoughts.
Gerry@polarisgroupmc.com

Sunday, June 16, 2019

Business Management

Critical Steps to Crisis Management




Unplanned events can have a devastating effect on small businesses. Crises such as fire, damage to stock, illness of key staff or IT system failure could all make it difficult or even impossible to carry out your normal day-to-day activities.
At worst, this could see you losing important customers - and even going out of business altogether.
But with good planning you can take steps to minimize the potential impact of a disaster - and ideally prevent it happening in the first place.

Here are a few ideas to consider:


1. Plan
It's essential to plan thoroughly to protect yourself from the impact of potential crises since you may lack the resources to cope easily in a crisis.
Failure to plan could be disastrous. At best you risk losing customers while you're getting your business back on its feet. At worst your business may never recover.


2.  Identify a spokesperson
If the crisis could potentially impact the health or well-being of customers, the general public or employees, it may attract media attention. To ensure your company speaks with one voice and delivers a clear consistent message, a spokesperson must be identified as well as prepared to answer media questions and participate in interviews.


3. Collaborate
While there is nothing more important than forming a strong bond with your employees and clients, don’t overlook others with whom you should forge a relationship. This includes the local police department, community centers, and educational institutions among others.


4. Continuity
You should draw up a business continuity plan setting out how you will cope if a crisis does occur.
 It should detail:
- the key business functions you need to get operating as quickly as possible and the resources you'll need to do so
- the roles of individuals in the emergency
Making the most of the first hour after an emergency occurs is essential in containing the impact. As a result, your plan needs to explain the immediate actions to be taken.

5. Communicate with customers and suppliers
You do not want customers and suppliers to learn about your crisis through the media. Information on any crisis pertaining to your organization should come from you first. Part of the crisis communications plan must include customers and suppliers and how they will be regularly updated during the event.


No matter what has happened in the past, you never know what the future holds. At some point, you are likely to face a crisis. How and when you deal with this will determine what direction your company takes. I hope these suggestions help. Please let me know your thoughts: Gerry@polarisgroupmc.com



Sunday, June 2, 2019

Business Management


Leadership Principles for your Business Success




Effective business leadership demands a captain of the ship, not just someone who's standing by the helm. Leadership is active, not passive.
Cool-headed, farseeing, visionary, courageous - whichever adjectives you choose, leadership is a winning combination of personal traits and the ability to think and act as a leader, a person who directs the activities of others for the good of all. 
But you can't be a leader just by saying you are. Business leadership, like leadership of any kind, needs to be worked at. 

Here are a few principles that merit consideration:

1. Create a Vision
Vision is essential to good leadership. Vision provides direction and without direction, there’s not much point to all that planning; your small business will still flail about. Create a Vision Statement for your business. You may wish to become the “Preferred” supplier in your field. To become the Preferred supplier in addition to offering high-quality, reliable products and services, you must provide a great customer experience. Preferred suppliers create a competitive advantage by servicing their customers better than their competition.

2. Plan proactively
The core of business leadership is being proactive rather than reactive. Sure, leaders are good in crises - but that doesn't mean they sit around letting crises develop. Leadership involves identifying potential problems and solving them before they reach crisis proportions. Good leaders analyze and plan and adapt their plans to new circumstances and opportunities.

3. Embrace a culture of continuous improvement
Share with your employees that your expectation is for them to continuously improve their part of the business. Ensure they have the needed resources to do their jobs and don’t micromanage them.
If your company doesn’t continually improve, it will fall behind its competition. Even though continuous improvement is led by the CEO and other senior leaders, it is driven by employees at every level within the company. 

4. Staffing
Businesses are as successful as the people working in it. Great leaders who created successful companies have one thing in common: they surround themselves with talented, courageous, loyal people. Hire people with good critical judgements who are unafraid of making decisions. Once you have recruited them, invest in their development through training, coaching and fair compensation.


Learning to be a leader isn't easy because it takes a conscious commitment and consistent effort to develop one's business leadership skills. The advantage for the business however can be immeasurable.
Please let me know your thoughts: gerry@polarisgroupmc.com


Sunday, May 19, 2019

Business Growth

Keys to growing your Business



It is known that only half of new start-ups survive more that 5 years and only one third make it to 10 years.
In order to not only survive but grow, here are a few ideas you may consider.





1. Establish a value proposition
For your business to sustain long-term growth, you must understand what sets it apart from the competition. Identify why customers come to you for a product or service. What makes you relevant, differentiated and credible?

2. Define your target market with laser accuracy. 
Many businesses have drifted along and survived on low hanging fruit; perhaps it is time to refocus. Take a step back and define your market strategy. Where is your best bang for the buck? Are you headed for where the market is going? Imagine where you want to be in 3 to 5 years and what the business can become. Without this, you’re shooting blind hoping to hit the target.

3. Define your key indicators.
Changes must be measurable. If you’re unable to measure a change, you have no way of knowing whether it’s effective. Identify which key indicators affect the growth of your business, then dedicate time and money to those areas.

4. Focus on your strengths.
Sometimes, focusing on your strengths rather than trying to improve your weaknesses can help you establish growth strategies. Reorient the playing field to suit your strengths, and build upon them to grow your business.

5. Engage your employees and listen. 
Your employees can be a goldmine of ideas. They know your customers, your market, and your operations. Actively encourage them to come up with ideas to improve revenue generating operations, product innovation, cost cutting measures, etc., and listen to them. You’d be surprised at the level of ideas you’ll generate simply by asking. This also gives your employees a great sense of inclusion.

There are many other principles that could be added to this summary. I hope these have provided some suggestions that you find of interest. Please let me have your thoughts. gerry@polarisgroupmc.com