Most have the same issues as the $Billion businesses, but they cannot afford to pay $250K to $1M+ per year for a specialist Advisory Board.

Issues companies need to address for sustainable success – whilst doing business:

The list of challenges facing small to medium, and even large, businesses is bewildering.

The items covered above are only a small sample of the total array of issues that distract business owners and executives away from their main concern – which is making or saving money.

As it just happens, we offer an Advisory Board Bureau that provides you with access to all the expertise you need, when you need it, to help you navigate your way through incredibly complex issues that are taking up TIME YOU DON’T HAVE.

Expertise available through our Advisory Board Bureau

The following list gives you a sense of the expertise at your disposal as/when you need it.

• Drop-in CEO, COO, CTO, CIO or CFO for a short-term engagement to turn around a company.
• Development/Review/Validation of a Marketing Strategy or Plan.
• Mentoring and Measurement of a Sales Team.
• Mentoring of the CEO/CFO/COO through periods of dramatic change in the business.
• Development/Review/Validation of a Business Growth Strategy or Plan.
• Support the business executive team through the pains associated with actual business growth.
• Oversight of the Acquisition or Divestment of Businesses &/or Business Units.
• Creating, or Maintaining, High-Performing Teams within a business.
• Dealing with staff, talent and knowledge retention (or high turnover)
• Mediating between the Executive Team and The Board where there is a disconnect.
• Development/Review/Validation of an ICT Strategy or Plan.
• Oversight of the creation of a Project Management Office to handle all project activity.
• Health-Check, or Audit, of specific projects that are concerning Management.
• Specialist sector-specific advice relating to Product/Service innovation.
• Expanding your sales channels.
• Health-check of your IT Systems.
• Benchmarking your Outsourced service providers against industry accepted performance.

So, we can deliver to your business the same quality of Advisory Boards that $Billion businesses have, but with a small business price tag.

How do we do this ?. We’ve aggregated many $5M to $200M businesses, who use our Advisory Board service as a Bureau, which means we can afford to pay for Top Talent by sharing the cost across many businesses.

What will it cost you …. Let’s talk to understand what you need, it could be as little at $5,000 per month.

Buy/Sell Insurance for Small Businesses

There are over 2,000,000 small businesses in Australia, employing nearly 5,000,000 people.

Buy/sell insurance supported by a well-written shareholders agreement can protect the owners of these businesses and their respective estates from the impact of death, disability and critical illness.

Life insurance can be chosen as the funding medium for an owner leaving a business due to death, total and permanent disability (TPD) or critical illness.

Death (as well as terminal illness) and TPD are clearly events that lead to the departure of an owner/shareholder from a business resulting in a need to transfer his/her business interest to the continuing owner(s).

In that case, it is vital for Directors/Shareholders to enter into a written buy/sell agreement so they can set out their respective obligations regarding the transfer of their equity of the business. Plus, the choice of insurance solution for buy/sell purposes depends on the trigger events being covered.

Level of cover for buy/sell insurance

The sum insured should generally be the value of each owner’s share of the business, updated at least on an annual basis.

For example, if the business consists of two shareholders/owners with an equal share of a business valued at $1 million, the sum insured on the life of each business owner should be $500,000 for the express purpose of buying the deceased/incapacitated owners share (that is, they need the insurance to cover other things like their dependents).

The insurance trigger events should be death and TPD and possibly some well-defined types of trauma. 

Valuation of buy/sell insurance

Given that the Australian Taxation Office will most likely deem that the disposal of a business interest under a buy/sell agreement occurs at market value, it may be prudent to use current market value as the preferred valuation method.

This value would need to be updated on a regular basis (i.e. at least annually).

An alternative would be for the business principals to use a particular formula, reflecting either an industry standard or a method appropriate to that specific business. In this case, it would be prudent for the owners to recalculate the value using the formula, and then subjectively determine whether the outcome is realistic and acceptable. It is worthwhile having the business’ accountant review the valuation and confirm that it is justifiable on ordinary commercial terms, which – depending on the sums insured – may also be an underwriting requirement. 

CGT Considerations

Please talk with your accountant and/or tax lawyer about the Capital Gains implications, to get some understanding of whether CGT liabilities should be incorporated into the buy/sell cover sum insured.

Policy ownership considerations for buy/sell insurance

Certain ownership structures have tax implications depending on the type of structure chosen for buy/sell insurance cover. In any case, it is important for business owners to seek advice that is appropriate to their individual situation and objectives. Regardless of the circumstances, the implementation of a buy/sell agreement is vital. The most common types of structures are as follows:

• Self ownership – Each business owner owns his or her policy.
• Cross ownership – Each business owner owns an insurance policy on the life of each of the other owners.
• Trust ownership – An independent trustee of an insurance trust (also known as a bare trust) owns the policies on behalf of the insured (indirect self-ownership).
• Superannuation fund trustee ownership – A super fund trustee can own the policies on behalf of the insured.

Buy/sell insurance provides vital protection for small business owners against the impact of death, disability and critical illness. You should be mindful of the important areas of buy/sell cover, including the choice of risk products, the level of cover, business valuations, policy ownership structures and their tax implications.

I highly recommend one of the leading players in personal and business insurance – Risk & Business Consulting (www.riskandbusiness.com.au) – to guide you through the specifics of what you need for this complex but vital area of protecting your business interests.

Check here for a link to the 2010 blog entry I wrote.

As I said last year, everybody has their reasons why they might favour one dominant approach (M&A versus IPO versus PE Funds) over the others, and ultimately that’s what it tends to be … people pushing their own wheelbarrow on the coat-tails of one of these types of trends.

Irrespective of which one ultimately dominates during 2011, there are some things we can definitely observe and therefore make some educated guesses about:

• Mergers & Acquisitions will continue to be very busy during 2011, continuing what happened in 2010 with industry consolidations and tactical acquisitions.
  
• The number of attempted IPO’s in 2010 was only a small % of the successful ones. In 2011 this % will be much higher, and also be based on a much higher number of attempts.
  
• Private Equity got a bit of a run-on during 2010, but is still being brought unstuck by having to hold onto the trading operations for much longer than they used to.
  

Now, whilst those observations are very much SFW, there are some specifics to consider.

M&A.

• M&A activity will actually be stronger again in 2011 than in 2010, last year it was about businesses leveraging their balance sheets again. In 2011 it is all about growth by acquisition.
  
• Businesses were being picked up at 3 x EBIT early in 2010 it got better through the year – but didn’t get to the 6 x EBIT I thought it would. However, roll-ups have intrinsically greater value than a tactical acquisition and this is being borne out by some of the multiples being achieved.
  
• At the larger end of town hiring of staff has become very tight, in the SME space it isn’t as tight but this is because they’re being less picky. As always, acquisition is an easier way to get the right people (then you just have to find a way to keep them !!).
  

IPO’s.

• Public interest/appetite in solid businesses looking to list has continued to increase, and will do so throughout 2011.
  
• Trading conditions are still very fragile in some sectors, so whilst IPO’s are a viable option again, there is definitely enough downside risk to require caution.
  
• There are some heavy duty businesses looking to list, an example is the iSelect business in Australia which I gather is looking to IPO and list towards the end of 2011.
  

PE Funds.

• The Facewash/Strip/Sell strategies are still not viable because of the EBIT multiples available.
  
• PE Funds have had to hold and run businesses for the last 2-3 years, previously they’d have been out in 12 mths.
  
• The PE Funds have now got a totally different skillset/timeframe/approach courtesy of the GFC.
  
• Providing that trading conditions improve there will be a number of PE Funds looking to offload businesses during 2011, as they seek to reset their investment strategies for the growth times ahead.
  

Given all of the above, it will be a very active and interesting year for Corporate Advisory firms (like ours) and for those businesses out there that have a good story to tell.

Feel free to contact me if you want to explore this topic in greater detail.

What are the qualities/factors that the best Leaders have ?.

Top leaders…

1. Visionary: They have a very clear understanding of where the organisation is going and a clear strategy for getting there.

2. Communicate Well: Great leaders ensure that their message gets across to all in the organisation – clearly.

3. ‘People’ People: Top performing leaders build great relationships, and also develop excellent team spirit.

4. Delegate: Great leaders do just that – Lead. They let their people get on with the doing – and encourage them to do it well, and enjoy it.

5. Know Their Business: Not only visionary, they’re strategically sound. Top leaders truly understand their business inside and out, good and bad, and firmly move it on – they make the difference.

6. Are Role-Models: They lead from the front, and have the values of the organisation and their people. They say it , and also do it.

7. Build Rapport Quickly: Excellent leaders have a way of building rapport instantly, through what they say, how they look and especially how well they listen and value people they’re with.

8. Charisma: They quickly create rapport; they communicate well … and there’s something else – they have a personal style which ooozes that extra something … great charisma!

9. Very Determined: Whilst having great people skills, truly great leaders go that extra mile – they are follow-through to achieve their goals and vision. They’re totally ruthless, but in a people-friendly way.

10. Passionate: Great leaders bring immense energy to every task – no matter how big or small – because the Leader knows they all contribute to the business goals and vision.

So, where do you find Leaders ?

They can be found anywhere and everywhere – not just as CEO’s, Directors or Supervisors.

The key to discovering Leadership talent is in finding the people with passion and helping them to express themselves in ways – through support, training and learning – that bring out their best and deliver all the extra benefits to a business that leaders naturally bring.

We were discussing risk management, as I’m a PMP certified Project/Program Manager and have been for over a decade.

We talked about Risk Management frameworks, and for him it all boiled down to his “gut” in terms of whether the risk seemed acceptable or not.

Now don’t get me wrong, he didn’t just make all decisions based on his “gut” – but it certainly did drive him in terms of requiring more/less validation before making the final decision.

At the time I thought, there must be a better way than just “gut” for determining this sort of thing.

Now, years later, I tend to agree with him. Your gut-reaction to a decision definitely gives you a sense of comfort or foreboding about a decision and its consequences.

So, this leads to the topic of Leadership and the soft-skills associated with being a good leader. Read on for further details.

What is Intuition ?

In simple terms, intuition is when we know something or know what to do without necessarily knowing why.

What to do just comes to us in a flash of insight. Some intuition is instinctive. For instance, if someone starts running after you with an axe, you will most likely have the instinctive (and intuitive) response of either defending yourself or running away. Moreover, your reaction would be entirely rational.

Other intuition is the result of years of training and knowledge building. Police officers, firefighters, military commanders, emergency medical care providers, airline pilots and many others spend years in learning and honing their skills in order to react in an instant with the optimal solution.

Intuition …. So What ?

Our society expects specialists like those I’ve covered above to make high quality intuitive decisions quickly and accurately and then execute them effectively.

A surgeon with many years’ experience in the operating room has much better intuition than a newly-graduated doctor. The same goes for a highly experienced fireman.

In his bestseller Blink, Malcolm Gladwell describes how a veteran firefighter was able to “sense” a change in situation and order all of his crew out of a house just before it collapsed. He was unable to identify the steps in his decision; he just “knew” that it was time to get out.

The same goes for experienced leaders and executives in all walks of life. With many years of life experience, they can just tell if someone “has it” or doesn’t, and no amount of rational deliberation with convince them otherwise.

However, not all intuitive decisions are equal; and in fact some are wrong – or very wrong.

Experience, and in particular depth of experience, is a reliable indicator for a “good” outcome. Conversely, some situations are so novel, that intuition is next to useless and can even be counterproductive. In that case, deliberate decision making is needed in order to think through the factors impinging on the decision and to ensure that a variety of courses of action are considered.

The key here for a business leader is to consciously know whether they have direct or empirical evidence of an intuitive recommendation being “good”. If the answer is YES – follow your intuition; if the answer is NO – you will to take a more deliberate (and deliberative) and therefore rational approach.

Intuition versus Deliberation

As a guide, the following situations lend themselves to intuitive responses because of immediacy:

• During an emergency, that requires an immediate response in order to save lives;
• When there are direct threats to physical safety;
• When a team has gotten lazy or overly reactive in the face of risk, and requires inspirational leadership to fix the situation.

There are situations where both Intuition and Deliberation are suited:

• When you’ve been made an offer for the sale of your business;
• When you’re considering “dropping” an existing client;
• When you need to take action to correct the behaviour of a team/staff member;
• When you’re considering a merger with another business;
• When you’re considering taking on another business partner;
• When you’re considering Product/Service extensions to your business.

Most other situations have enough time built in to them to allow at least some level of deliberation. It is prudent to involve outside experts and to form an advisory team when faced with unusual situations that will require imagination and resolve to turn around.

Finally, intuition does play a role in deliberate decision making because of its ability to generate deeper insights and provide innovative solutions.

Because I get asked for advice on all sorts of topics, I’ve decided to put some pointers/tips/hints/advice all in the one easy to find place.

Some great quotes to consider, when creating the vision of your next business venture:

1. Revenue is vanity, Profit is sanity.

2. Your business idea …. If It Doesn’t Spread, It’s Dead.

3. Businesses take note …. The youth of today don’t wake up thinking about your brand.  Stop trying to buy their attention, because nowadays you have to earn it.

In a future blog posting during H1 of 2011, I will explore each of the 3 points above in more detail.

Some great links to check out, to help formulate the details about what your next business venture will be:

1. http://anthillonline.com/5-reasons-your-problems-arent-being-solved-and-5-ways-to-solve-them/

2. Bessemer Venture Partners acknowledged some of their big “misses” from the past  http://www.bvp.com/Portfolio/AntiPortfolio.aspx

3. 100 Best Small Business Podcasts  http://www.smbtrendwire.com/2010/03/01/100-best-small-business-podcasts-2010/

Some interesting technology statistics from the end of 2010 that your next business venture should be looking to exploit:

• In the US today (2010), text messages outnumber phone calls
  
• Globally, 95% of all text messages are read within 15 Minutes
  
• Over 20% of people respond to a text message
  
• Globally, twice as many people use text messaging as use email
  
• Over 2 billion people have mobile internet access
  
• 1.8 billion people will send at least 1 text message today
  

Some “scary” societal/economic statistics from the end of 2010 that represent some of the imbalances we should be trying to address:

• China has 140 cities with 1+ Million residents, the whole of Europe has 35 !!!
  
• The US is 4% of the total world population, but each year consumes 60% of the worlds total savings !!!
  
• In Europe in 2010, there are 4 workers per retiree.  In Europe in 2050, there will be 2 workers per retiree !!!
  
• In China, in 2050, there will be 450 Million people aged 60+; there will also be 100 Million people aged 80+.
  
• In the US today (2010), 40% of all adults aged 50-65 are already experiencing difficulty with basic activities like walking, and climbing steps.
  
• In the US today (2010) 1% of Americans received 25% of ALL personal income, this is also more than the bottom 50% of households put together.
  

Feel free to contact us, if you want more information, or want to discuss how your business might be able to take account of these trends to create a better business plan and a more sustainable business for the future.

Second to business cashflow as the issue which causes more heartache and business failures (or businesses to severely underperform) is success planning.

What sorts of businesses have succession planning issues:

• Businesses that have been operating for more than 5 years;
• Businesses where the principals/executives are over 45 years old;
• Businesses that have high staff turnover in the next generation of future leaders;
• Businesses where there are no logical successors within the business today;
• Family businesses where the Sons/Daughters are not interested in being part of it;
• Businesses where the founders/principals have been part of it for more than 15 years;
• Small to midsize Legal/Accounting/Medical/Dental practices (from 5 to 20 practitioners) where the major participants do not intend to be there in 5 years; and
• Businesses where the principals/executives are starting to suddenly encounter the health issues that come with middle age.

In other words, well over 50% of all businesses out there today.

What is Succession Planning?

Succession planning is a process of determining critical roles within the company, identifying and assessing possible successors, and providing them with the appropriate skills and experience for both present and future opportunities.

In other words succession planning covers these important, and often poorly executed, steps:

• Staffing and Recruitment … You Recruit and Retain superior employees who are right for the business
• Learning and development … You provide employees with the tools, methods and experiences to develop their knowledge, skills and abilities
• Leadership … You provide employees with the techniques and practical experience to genuinely – and naturally – be the future leaders of your business
• Annointment … You make sure that – when the time is right – everybody in the business knows who has been selected to spearhead the succession.  If things change suddenly you do not want your plans to fail do to opportunistic “coups” that take place in the vacuum caused by the sudden changes
• Performance and Compensation management … You prepare employees for advancement and/or promotion into ever more challenging roles
• Talent Management … Even though you’ve identified the future leaders, some times you need to replace these superior employees for the long-term future of the business.

Why Do I Need a Succession Plan?

Succession planning is a process by which the successors (future key employees/leaders) are identified for key roles throughout an organisation including vital roles in each department of the business.

Because it (should) take into account the strategic vision and objectives of the business, it means a business with a good succession plan in place, will perform no worse and often much better as a result of the changes caused by the succession.

This is because both employees and customers are ready for the changes when they occur in terms of appropriate skills and experience to have no/minimal impact to business operations (and profitability).

Conversely, businesses without a succession plan in place will inevitably stumble when events occur – such as a sudden death or departure of key executives.  These stumbles manifest as a drop in revenue, earnings and often customers who are dissatisfied with the performance of what was previously a good business relationship.

In fact, many businesses who have not prepared succession plans actually go out of business as a result of the events that triggered the need for that succession plan.

What is in a Succession Plan?

Typical activities covered by a succession plan include:

• Identify, Define and Articulate the roles and skills which are critical for future company growth
• Analyse and address each of the gaps (processes & people) revealed by this planning process
• Identify and Specify the developmental needs of all employees to fill tho key roles
• Ensure that all key employees understand their career paths and the roles they are being developed to fill
• Create the learning environment that trains people for skills and positions that may not currently exist in the company
• Recognise that the employee’s time needed for training/learning as part of the succession plan may mean their current roles need to be backfilled for some time and that this is a cost of securing the future of the business
• Allow the succession plans to evolve with the business through regular executive discussion of people and roles
• Identify the top performers in all departments and work openly with them to ensure they are engaged and satisfied to stay with you for a long period
• Continually manage and monitor the succession processes, and whether planned development for individual employees has taken place AND delivered anticipated/acceptable outcomes

Feel free to contact us, if you want more information, or want to commence a succession plan for your business.

It is fair to say that establishing a reasonable value for your business is fairly straightforward – in most cases it is a defined multiple of the EBITDA.  However, when this number doesn’t match up with what the current owner(s) want they resort to Goodwill to create the necessary “padding” to create the total value they want.

As the current owner, you’ll unconsciously factor in how difficult it was in the beginning and how much sacrifice was necessary to weather the difficult times.  The owners must realise, however, that others will evaluate your business from a much narrower point of view … it’s ability to return an investment over a fixed period of time with an acceptable margin of risk.

This doesn’t mean that a prospective buyer fails to appreciate your efforts in building the business.

But goodwill is the single most difficult portion of your business to value.  Your reputation and relationships with your customers, vendors and the community, along with your participation in trade-related activities, all contribute to goodwill.  In fact, your customer list is probably among your business’s most valuable assets.  In fact … sales of some businesses are based on this alone.

One of the key factors that causes sales to fall over is greed, or ignorance, with respect to Goodwill.

This is because the factors used to increase/decrease the EBITDA multiple have already been assessed and the judgement has been made.  Therefore you can’t have those contributions to the business valuation TWICE.

Some examples are:

• The quality of your current clients;
• The duration of your current contracts;
• The level of current revenues that are annuity-based;
• The reputation of the business in the industry/sector it trades in;
• The strength (or lack of strength) of your competitors;
• How much of the effort has already been completed that is needed to yield a great return on a product/service.

Some factors that legitimately contribute to Goodwill, and are not likely to be reflected in the EBITDA:

• Brand recognition;
• Product recognition;
• Intellectual Property that has yet to be fully commercialised;
• Intellectual Property that has real licensing potential;
• Intellectual Property that can be OEM’d into the product set of a major global player.

As a rough guide, if the Goodwill value is more than 20% of the total business value then you’re double-dipping on Goodwill factors and will have trouble justifying the price.

Remember that in the final analysis, your company is worth only what someone will pay for it.

Generally, a potential buyer’s offer will be influenced by how soon they expect to see a return on their initial investment.  As a guide, anything longer than 5 years is too long … therefore you’re trying to get a higher price than the business can actually deliver to the new owners.

Feel free to contact us if you want to understand more about business Goodwill as part of selling your business.

This is predicated on the business having an idea about what its Products/Services are, and what are the basic profiles of likely purchasers of these Products/Services.

OK … now that you’ve developed your Marketing Plan, you need to put it into action through the Strategic Plan and Sales Plan.  The processes of Strategic and Sales Planning is completed via 11 key building blocks.

1.  Potential Problems and Company Objectives:

First spot and rank the Potential Problems in your Company Operations.  Some examples of the areas that need to be analysed:

• Cash Flow;
• Market Changes;
• Competition;
• Costs;
• Distribution;
• Productivity;
• Staff Turnover;
• Market Regulation;
• Market Acceptance;
• Product/Service Pricing;
• Quality of Offerings;
• Customer Experience Management;
• Capital Management;
• Control Systems and Facilities.

With your Problems identified and ranked in importance and severity, you can develop Company Objectives you aim to obtain.  These Objectives should strive to minimize and manage the identified Potential Problems, while emphasising your Company’s Strengths.

2.  Risk Analysis:

Building on your Potential Problems identified in Section 1, this Analysis produces Expected Risks.  Look at Litigation Threats, Liabilities, Regulatory Issues, Major Risks and Problems and answer the following questions:

• When are Problems plausible to occur?
• What is the Expected Monetary Value of a problem if it occurs?
• What can you do to mitigate the potential risks and problems?
• How will you deal with these problems?

The last part of the Risk Analysis looks at how you can turn these problems into opportunities.

3.  Company Strategies, Tactics and Operational programs:

First develop your Strategies, then the relating Tactics and next the resulting Programs of work.

• Strategy is Focus.  Strategy consists of key factors that distinguish your Company and are most expected to contribute to your success.  It is important that your Company Strategies complement each other so you are not sending your business in separate directions.
• Tactics are used to implement strategies and relate to a specific Strategy.
• Programs are specific business activities which have concrete dates, assigned responsibilities and highly-developed Budgets.  Programs relate to one/more Specific Tactics of a Specific Strategy.

4.  Sales Strategy:

It is important to remember that sales close the doors (deals) which Marketing opens.  Sales are dealing directly with your Customers.  Develop the Sales Strategy as it specifically relates to the Marketing Strategies you have already articulated.

If you’re trying to sell something that you haven’t developed marketing strategies around previously you will just waste time, confuse and alienate customers and burn-out your sales team.

Describe and develop the different sale methods and channels you will use to sell your Products and Services.  Determine your Sales Goals and your Sales Process.

You will also need to develop an effective Salesperson Training Program and suitable Compensation Structures.  You should also look at order processing optimisation, sale milestones expectations, price maneuvering, sales leads generation, distributor roles; credit and collection policies; how Internet, social media and viral channels will be utilised; and so forth.

5.  Sales Programs:

After developing your Sales Strategies, it is time to define the Sales Programs, which will address how your Sales Strategy will be implemented.  Once implemented, you should have systems in place to measure the implementation of your Sales Strategy and support your sales efforts.

6.  Strategic Alliances and Joint Ventures:

Define your Keystone Strategic Alliances and Partnerships.

Identify and develop Co-Marketing and Co-Development Opportunities; Sales Commissions and any Product/Service Agreements.

Is the fate of your Company tied to another Company?  Explain how these Alliances help your Company and any inherent risks that have to be managed.

7.  Operating Budget — Rolling Monthly Outlook (Yearly Basis):

The Operating Budget is a Planning and Control Mechanism which also helps you develop the Sales Forecasts.

It should be on a Rolling Basis 12-month basis, including Forecasts and Actuals.

Rolling Basis means after each quarter you re-Budget for the next 3 months, based on the Actuals for the last 3 months.

The Budget should be 12 months forward looking, as well as Financial Year YTD figures.  You should have Targets and Actuals so you can track results and adjust throughout the year as necessary.

Your Operational Budget should directly reflect your Strategic Planning Goals.  Determine whether it is best to use a Top-Down, a Bottom-Up or Blended approach for your Operational Budgets.

Ask yourself:  How will your Budget be used as a Control Measure?  How will your Budget be used to judge Company, Management and Key Employee Performance?  Your Budget is a valuable tool to use for Employee Management, Education and Delegation; Managerial and Executive Goals.

8.  Sales Forecast:

Using your newly developed Sales Strategy and supporting Programs, plus your 1-Year Operational Budget, you now need to develop a 5-Year Projected Sales Summary Forecast.

This Forecast will then be used to develop your Detailed Profit & Loss Statement in the Financials Section of your Business Plan.

If you’re an existing business, you can show your Historical Sales Trends going back 2-3 years, and how this trend will continue/improve based on the new (or revised) Sales Strategy.

It is VITAL to show how you will attain your Annual Sales Targets, and the Assumptions that have been used to develop the Sales Forecast.  The key here is create a Sales Forecast that is achievable and also believable.

It is also very important to show how your Sales Forecast relates to your Market Analysis, Target Market Segments, Sales Strategy and Marketing Strategy.   This ensures your Marketing Plan is a direct influence on your Strategic & Sales Plan, which then keeps everything (and everyone) focused on the Company-Wide Strategy.

9.  Milestones Table:

Your Future Company Goals, Milestones and Strategies, along with your Marketing and Sales Program rollouts need to be measured and managed.  The key way to do this is to define milestones for each key event/outcome, as well, as intermediate milestones that get your business towards the key outcomes.  As a guide, if an event/outcome is more than 9 months away you need to have at least 2 intermediate milestones to track against (that way AT WORST you’re 3 months behind if everything is totally off track, rather than 9 months behind if you didn’t have the 2 intermediate milestones).

For each Milestone Event you need:

• A Qualitative Description – what does the milestone look like;
• A Quantitative Description – a measurable number that validates you’ve made it;
• Start and End Dates;
• Budget Numbers;
• Individual Manager, and Department, Responsibilities;
• Dependencies on other internal (or external) groups to meet the Quantitative measure.

10.  Control Mechanisms:

What Mechanisms for Control of each critical Skill and Resource are available to you?

Is direct ownership necessary for your Resources and Skills or can they be Outsourced and at what discount/premuim?

What contractual incentives/penalties do you have at your disposal with your critical Resource/Skill/Service Providers?

11.  Strategic Planning Advisors:

Strategic Planning is such an important part of running a Successful Business, you NEED to retain a competent team of Professionals, Advisors, Experts and Consultants.

An Experienced Business Consultant can be a very important part of your Strategic Planning Team, ensuring your Strategic Plan is not just effectively developed, but most importantly, effectively implemented throughout your Company Operations.

The key here is that good Advisors have a very broad set of knowledge and experience, particularly in terms of what works and what doesn’t.  Why make the mistake somebody else has already made, when you can avoid the mistake and still get the benefits of the learning that would have come from the mistakes.  It will save you buckets of time and money.

After your Strategic Plan is implemented, an experienced Business Consultant can also help you ensure the Strategy stays on track, reaches its goals and is adjusted as necessary due to market changes and unforeseen problems.

IN SUMMARY:

Some key things to remember, as a cheat-sheet if you like, to get successfully through this sort of a process as quickly (but effectively) as possible.

Products and Services Development:

1. Market Analysis and Segmentation
2. Market Trends
3. Market Growth
4. Competitive Analysis, Positioning and Edge
5. Marketing Strategy:  Positioning, Pricing, Promotion and Distribution Strategies
6. Marketing Strategy Profit and Loss Projection
7. Marketing Programs

The above equals an Effective Marketing Plan.

From the Marketing Plan, you then move through these steps:

1. Strategic Potential Problems and Risk Analysis
2. Company Strategies,  Tactics and Operational Programs
3. Sales Strategy
4. Sales Programs and Alliances
5. Company Operating Budget
6. Sales Forecasts
7. Milestones and Control Mechanisms

The above gets you to a Successful Company Strategic & Sales Plan.

Once you have the Strategic Plan and the Sales Plan, you can build a believable set of Financial Forecasts.

With all of the above in place, you not only have a bit of a clue about what you need to do, but have a comprehensive set of plans, actions and measurements to take the entire business forward to your financial targets.

As the saying goes “If you Fail to Plan, then you’re Planning to Fail !!!!”.

Feel free to contact us if you want more information, or specialist assistance in this area.

This leads me to the question … Why do some businesses achieve great success, while other seemingly similar businesses struggle forever?

My own answer to this is to look for the trail of clues that indicate why a business has (or will) succeed, or conversely why a business has (or will) fail.

The reality is that even though there are many businesses out there with great products and excellent services, they never seem to get beyond survival let alone achieving stellar performance.

Below are 5 critical mistakes that will kill your business’ chances of attaining above-average success.

I see these every day in businesses looking to sell, or raise capital, so I can say with great conviction …. If you make any of these 5 critical mistakes, your business will achieve average performance at best, and likely create a trap where you end up working long hours for mere survival, or even eventual failure and bankruptcy.

Feel free to read on and check to see where you and your business are at.   Be honest with yourself when looking at these common, but highly-detrimental, mistakes.

1.  Short-term focus

Most SME business owners are focused on short-term survival rather than long-term success.  Typically, short-term cash requirements become the driver for most things that happen in the business.

If this short-term requirement is constant, the future development needs of the business are totally neglected.  This also leads to feast and famine as the business pipeline is managed for next month rather than next quarter or next year.

This also tends to create transactional business rather than long-term relationship business.  The cost of acquiring transactional business is 4 to 5 times higher than acquiring relationship-based business.

If you’re spend more than 10% of your time, as a business owner, putting out fires then you’re sealing the long-term fate of the business …. and it won’t be a good fate.

The only way to stop this sort of problem in the long term is to work on prevention in the short term, at least you will know that at some point “it will get better”.  This means taking time out to analyse what’s going wrong and planning what needs to be done to achieve the long-term goals (as well as eliminate the things going wrong).

You need to become proactive instead of reactive if you want to achieve real success.  You need to define what that success looks like and then develop a plan to get it.  Then go out and make it happen.

As Yoda says “Try, there is no try.  Do or Not Do”.

2.  Haphazard advertising

Advertising decisions in SMEs are commonly made based on how busy everyone in the business is.  The corollary being “let’s do whatever is easiest”.  The signs are:

• There is no defined marketing plan;
• Advertising is initiated when sales slow down and stopped when sales pick up;
• Advertising is usually tactical/opportunistic rather than strategic.

This endlessly reactive cycle just tends to keep the business operating around the same level of sales (survival).  In turn, this level becomes the limit to the future success of the business.

Smaller, struggling businesses tend to react by using price as their main competitive strategy.  This sets up a knee-jerk approach to price setting and sales/marketing activity, creating a response from competitors that ends up damaging everyone’s profits and cashflow.

Marketing is about communicating to the market the distinctive reasons why your company’s products should be the logical choice compared to competitive offerings.

Successful companies determine their strategic advantages over the competition and then proactively communicate the value of those advantages to the market.  More often than not, this style of marketing allows them to sell at higher prices than their competitors because they’re focusing on what customers really value.

3.  Ineffective delegation

You can’t grow your business without delegating work to someone else.   THERE IS NO OTHER WAY.

However, most business owners would prefer to do the work themselves rather than learn how to choose the right people, set them up with the right systems, then motivate and nurture them.

Partly this is a trust issue, but mostly this is a control issue.  You just need to learn to hand the steering wheel to the Universe over to somebody else for a while and focus on the areas of your own business where you can significantly increase the capability/competitiveness of your business.

The trust/control issue is commonly caused by the business owner having expectations of employees that are not communicated clearly – therefore they don’t get the results they expect.  The outcome will always be frustration followed by the assertion “you just can’t get good staff these days”.

The best managers know clear interactions between people and good relationships are essential to productivity, so they develop effective communication processes.

These include job descriptions, operations manuals, work instructions and appraisal systems to ensure that expectations about an employee’s role in the business are effectively communicated and understood and that the employee’s performance results are fed back and effectively worked through to the satisfaction of each party.

Delegation can then occur without frustration and antagonism, and everybody is clear about what/why/how/when leading to a highly-productive and positive work environment.

4.  Ineffective control

Many business owners/managers are so focused on getting the work done that they never stop to check how efficiently it is being done or whether performance levels are improving/deteriorating.

Running a business without performance indicators is like walking across a highway with a blind-fold on (you just wouldn’t do it would you ???).

Some business owners/managers don’t even know what their financial position is from month to month.  That’s like guessing how much fuel you have left, then being surprised when the car stops.

Many businesses stay at the level of growth where the business owner can physically see/check how hard people are working.

This method of maintaining control is self-limiting, because it puts a self-imposed cap on business growth.  However, it is often also ineffective because activity and productivity are not the same thing.

Staff have a tendency to try to look busy, even when they aren’t working hard.  Many managers are then lulled into a false sense of security by visual checking.

Without real performance measures that identify actual levels of productivity, operational costs and relativity to targets, a business has no real controls.  Making this critical mistake almost guarantees that it will be impossible to achieve above-average success.

5. Doing it all yourself without looking for help

Significant achievement always involves help from others.

In small business it has long been accepted that you need external professionals for preparing accounts and dealing with legal matters.

However, it is also becoming commonplace to bring in specialist skills to work on improving specific business functions (eg: Strategy, Marketing, Sales, HR).

Running a successful business requires effort, and the effective leverage of everybody’s time.  It is unusual to achieve without a significant amount of mentoring/guidance from people with the right experience and expertise.

It is accepted practice in all sports and almost every elite athlete uses a coach to provide external guidance and tips to improve performance.

The best business owners also accept this principal and look for advice whenever they can.  It seems that only the poor performers try to go it alone and think they have all the answers themselves.

Conclusion

If you make any of these mistakes in business, your performance – and the businesses performance – will suffer and you will most likely tend to spend your time struggling to survive, or at least working longer hours than you want to get where you want to go.

Success leaves clues.  Successful businesses operate in a different way from most average businesses …. that is why they’re successful.

Wouldn’t it be a good idea to find out how they do it and how you can eliminate the mistakes that keep you trapped in a business that is a continuous struggle and a constant source of frustration ?.

Feel free to talk with us if you want to break out of this “Cycle of Despair”.