Sunday, November 4, 2018

Business Management

It’s Time for an Effective Business Plan

Creating a road map for a business may be a key to growth and success but how many entrepreneurs do it right. Here are suggestions for developing a solid plan.

1. Shorten the planning horizon. 
With the speed of change today the 5 year plan has become obsolete and even a 3 year time horizon may be a stretch. You can have great vision and well developed strategy but unless you can connect the dots between where you are today and where you want to be, you will fail.

2. Manage what you can measure. 
Knowledge is power. Monitor the right information and your plan will have a greater chance of succeeding.

3. Increase planning frequency. 
When the 2-3 year plan is complete, management meetings should be held at least quarterly to review where you are and what to do next. This will enable the organization to assess progress and realign targets to meet new business conditions.

4. Write the plan yourself. 
This is an element of business that entrepreneurs love to delegate to a consultant. A plan is better understood if it is created within the organization. The elements contained within the plan vary depending on the size and complexity of the organization. Only when there truly is a lack of the skillset for developing plans should the process be delegated to an outsider like a consultant.

5. Share the process. 
Entrepreneurs who keep their plans close to their chest, not revealing them to anyone, do so at their own peril. Making other managers part of the process provides the opportunity to hold them accountable and share ownership of the plan.

6. Be realistic.
Plans that are overly optimistic or too safe are both wrong. Optimistic plans project revenues and a resulting spending scenario that may not be achieved. Deficits will result. Plans that are too conservative may result in limitations on spending because revenues are not expected. This may result in lost opportunities. Every effort to achieve realism should be undertaken and frequent reviews help keep the business on track.

7. Share the plan. 
Once completed the plan should be shared with the management group so everyone understands expectations and the yardstick for success. The organization should, where possible, tie performance bonuses to result attained in the plan.

When employees feel a sense of ownership about the future you may be amazed what they will be willing to do for the organization to help ensure success.
I hope these suggestions help you focus on building an effective plan for your business. Please let me know your thoughts.

Sunday, October 21, 2018

Business Management

Succession Planning Tips for Small Business

Many small-business owners know what it is like to take risks, work long hours and juggle multiple priorities. Even many successful ones drag their feet when it comes to succession planning, but there are steps they can take to cut down on succession headaches.

It's not hard to understand why. Succession planning can be complex, expensive, time-consuming and emotionally wrenching. But business owners who don't have a succession plan are putting a lot at risk if they hope to someday cash out at a fair price and/or ensure that their companies survive them.
Succession planning isn't a cookie-cutter process. The amount of time it takes is often dictated by the size of a business and the particular issues involved, as well as the approach of the advisor or other professional overseeing the process. Yet successful planning hinges on some of the following considerations:

1. Don't wait too long to begin
It can take as long as a year to put together a succession plan, and plans are often implemented over the course of many years. Succession planning can involve wrestling with emotionally difficult issues, such as deciding whether a relative or longtime employee is most qualified to eventually take over.

2. Shop around for the right advisor
Advisors may collaborate with other types of professionals, including lawyers, accountants and those who specialize in valuing businesses. Valuations prepared by objective third parties tend to be viewed more favorably by potential buyers, including internal successors, than those calculated by business owners themselves.
There are estate-planning issues, tax-related concerns and money-management considerations involved in succession planning. Nobody is an expert at all of those things.

3. Evaluate your own retirement savings and insurance.
As part of the succession planning process, business owners may want to consider whether they have sufficient retirement savings and life and disability insurance. Some owners opt to buy a "key" person insurance policy, which generally compensates a business for financial losses arising from the death or extended incapacity of a critical member of the company.

4. Discuss succession plans and update
A good succession plan should clearly delineate the individuals responsible for  management, governance and ownership positions. The players involved in all three areas are likely to change over time, as will tax laws and other important matters. Therefore, succession plans should be revisited periodically and updated when necessary.

I hope this provides some ideas of the importance and necessity of business owners having a well developed Succession Plan. Please be sure to work proactively with key expert professional to develop a plan. The business may be at risk without a plan.
Please let me know your thoughts.

Sunday, October 7, 2018

Business Management

Effective Cash Management Tips

As a small business owner, one of the key focus areas that determines your success is effective cash management. In fact, the interest rate and loan amounts from banks and lending institutions are primarily based on how well your business is able to manage cash.

If you are floating money and creating bad debt other businesses know about it. Managing cash is not just about perennial success. Having a healthy cash balance in your balance sheet will also help demonstrate effective management to potential investors by helping secure a better valuation of your business.  … no one wants to buy an unstable company.

Here are a few tips for better cash management.

1. Track cash flow monthly.
Use a budget to track anticipated cash inflows and outflows so you can assess your situation and react to problems such as the loss of a key sale. Cash flow forecasts and variance analysis against actual should be performed monthly in order to identify improvement opportunities. This frequent monitoring allows you to delay discretionary payments if necessary.

2. Protect capital expenditure.
It is important to preserve the cash that your business generates. One way to do this is by slashing your capital expenditure. While you’re in a growth phase, slashing capital expenditure may not always be feasible. However, you should perform your due diligence on expenses and ensure they are backed by a thorough return on investment (ROI) analysis.
If cash is tight don’t pay cash for long term investments in equipment. It is better to use debt or leasing to finance these projects. Debt can be used to re-finance fixed assets to free up capital. 

3. Build in a culture of cash consciousness.
This is especially important if you have separate teams handling sales and finances.    Typically the sales team would consider cash management to be the responsibility of the finance team and would offer liberal credit terms in the hope of increasing sales numbers to make quota or get that bonus.
One way to overcome this hurdle is to incentivize cash conscious behavior. Instead of sales incentives based on sales figures, you can offer sales incentives based on collections. This will ensure that your sales team focuses on not just achieving the numbers, but in the quality of sales.

4. Be aware of incentives.
No matter which part of the world you are operating in, there are typically a lot of   incentives available for small businesses operating in specific industries.

Take time to research available incentives at a federal, provincial or municipal level. Some of the programs may help improve your company’s cash flow and profit margins.

Ultimately, where cash flow becomes an issue is when small business is operated like “small business.” You can’t arbitrarily spend money on things that may be working or go months without analyzing your expenditures.
Being your own boss is great but there’s much to learn from “big business” management. 

I hope these ideas help. Please let me know:

Sunday, September 23, 2018

Business Management

Issues Facing Small Business Today

Starting a business is a big achievement for many entrepreneurs, but maintaining one is the larger challenge. There are many standard challenges every business faces and these include things like hiring the right people, building a brand and so on. However, there are some that are unique to small businesses, ones most large companies have grown out of long ago. Here are a few thoughts:

1. Client Dependence
If a single client makes up more than half of your income, you are more of an independent contractor than a business owner. Diversifying your client base is vital to growing a business.

2. Cash
Finding it and managing the cash flow. Cash is hard to get and there is never enough. If you are a fast-growing company you can rapidly outgrow your available resources, if you are an under performing company you can’t get enough cash. Many companies do not manage cash well.

3. Fatigue
The hours, the work and the constant pressure to perform wears on even the most passionate individuals. Many business owners, even successful ones, get stuck working much longer hours than their employees. Moreover, they fear their business will stall in their absence, so they avoid taking any time away from work to recharge. Fatigue can lead to rash decisions about the business, including the desire to abandon it completely. Finding a pace that keeps the business humming without grinding down the owner is a challenge that comes early (and often) in the evolution of a small business.

4. Lack of a Clear Plan
Many businesses don’t know how to plan. Lack of a plan worsens the cash problem by wasting cash chasing tempting diversions, and throwing money at problems. Equally important is updating your plan according to changing economic and business conditions and to ensure your survival in weaker economies.

5. Ineffective Leadership
This issue takes many forms. It is frequently in the form of depth of leadership. The founder of the company is too much hands-on and a) does not concentrate enough on his primary role as a leader rather than a manager; and b) fails to enlist support of competent managers and staff behind him or her either through recruitment or by outsourcing. This eventually causes the company to stop growing and eventually could lead to failure. Directors should always remember their core role and responsibilities.

I trust these ideas provide thoughts to resolving some issues faced daily by many businesses as they strive to develop and grow.
Please share your thoughts.

Monday, September 10, 2018

Managing Change

Businesses face change all the time, driven both by internal or external influences. Growth, innovation, redundancy, outsourcing, relocation, diversification and competition all can force change in a business.
In is important to make the necessary changes before they are forced upon you – minimising change that can impact on profitability and maximising change that creates opportunities. Most people, in particular employees, are uncomfortable with change because it interferes with their routine and exposes them to the unfamiliar.

Drive Change
It’s better to drive change than let change control your business. It’s also important to identify any need for change early on. Think ahead to where your business needs to be in one, three and five years’ time. What do you need to do to get there?

Decide which changes are most important and focus on the changes with the biggest potential benefits – not the easiest ones to implement.
Aim for continual smaller changes rather than a few large ones. Large changes are harder to digest and can interfere with one another, while small-scale changes are easier to manage.

Change usually involves going into unknown territory, but others will have been there before you, so seek their input and advice. Talk to business associates and learn from the experience of people who have made similar changes.

Whatever the area of change, you will need the co-operation of your employees. However, resistance from employees is often the biggest stumbling block to successful.  The key to managing change successfully is to keep staff informed. Start communicating the change as early as possible, so people have time to come to terms with it.

Even small changes can backfire if they’re not handled sensitively. Consult with those affected before implementing any changes. Those involved may be able to suggest alternatives that deliver the same results more effectively or more efficiently.

Remember life in Business is about change. Growth is optional. Choose wisely.

I hope these thoughts are of value as you move your organization ahead through change.

Please let me know your thoughts.

Sunday, August 26, 2018

Business Management

Success factors in Business

What separates winners from losers? Business analysts almost daily come up with a list of factors or definition of key success factors.

Here are a few to consider:

1. Plan for success. 
A good plan increases your chance of success by defining objectives, framing costs, forecasting revenue and defining risks.

2. Managing and developing people
 People today want some direction and structure, but they also want freedom and encouragement to develop their skills and knowledge. Effectively managing people requires balancing direction, structure, organization, with liberating forces encourage personal growth, development and creativity. If you as manager/leader err too much in one direction or the other, your organization will be either too rigid or too chaotic.
A strong management group is critical. Entrepreneurs should have the confidence to surround themselves with strong people; this will pay dividends in productivity and growth of the business. Those owners who seek individuals who will follow and not lead will be constrained by their own failings.

3. Strategic focus
 In today’s rapidly changing world, it’s not just enough to have a purpose for existing. Leaders have to focus the organization’s resources on the greatest opportunities, which shift with each new day. Doors open and doors close. Major customers or income sources can change or even go out of business at any time. So it’s necessary for leaders to keep focused on the desired end results such as increased sales and profits, or more satisfied customers, while constantly steering the organization across the stormy waters of the marketplace.

4. Consumer focus
 An unwavering commitment to the consumer is invaluable. Understanding the consumer’s wants and needs provides the best way to gain customer loyalty. Repeat business is the lifeline to continued success. This also strengthens your reputation in the marketplace.

5. Know your strengths. 
An honest approach to management of the business can help generate growth. Don’t waste time chasing dreams or ill-conceived ideas that do not match your core values or strengths in the business.

These are just a sample of key factors for business success. I hope they provide some food for thought in your operations.

Please let me know.

Tuesday, August 14, 2018

Business Management

Stress Management

As a business owner, every part of your business has the potential to create stress. Slowly developing sales, debt, poor cash flow, employee issues, equipment or operational issues. You think about the business 24/7 and this makes you tires and anxious.
You cannot escape the reality that business ownership s stressful but perhaps the following comments will help with stress management.

1. Positive Focus
Remind yourself of the many accomplishments you may have achieved no matter how small. Stress will increase if you always focus on things behind schedule, unfunded or that need repair.

2. Be aware of your body signals
Excessive heart rates, headaches, anxiety may be signals and suggest a need to find time to wind down.

3. Don’t procrastinate
Do not postpone decision making. Difficult decisions are not made easier because you postpone them. At times conditions may worsen if issues are not resolved.

4. Purge your Brain
Enjoy time away from the job to let you recharge your batteries. Plan periodic vacations or days off. The organization is unlikely to collapse because the boss is away for a short time.

5. Delegate:  
No one has a monopoly on all of the good ideas and ways to resolve problems. Let staff participate as part of team that enjoys successes and faces difficulties on the job as well.

6. Stay Aware
Make sure key support people including those managing the finances keep you up to date. Since cash flow is a key marker make sure expenses are kept under control and systems to improve productivity are reviewed often. A well run business with good information flow is a key to stress reduction. Eliminate surprises.

These suggestions won’t eliminate all of the stress in your business but they may help keep stress at a manageable level. Please let me have your comments.