BUSINESS ADVISORY. YOUR BUSINESS GROWTH STRATEGIST

Feature One

KAIZEN The cycle of continuous improvement & focusing on the 1%

The concept of Kaizen and its focus on gradual improvement is an incredibly sound business practice. The essence of Kaizen is that everything can improve continually and the status quo must be tested. The Kaizen approach seeks to find problems, create a solution, Test the solution, analyse the results, then standardise positive results, then repeat the process on an ongoing basis. At the core are the people within an organisation and the systemised execution of processes. The same could be applied to our personal lives and endeavours.

At the heart of Kaizen is the respect for people which further delivers on the cultural premise that your organisations greatest asset is the people within. Sir Dave Brailsford the man attributed to the massive success of the Great Britain Olympic cycling team’s gold medal tally rise has further translated this concept referring to it as the “power of culture by marginal gains” (Harvard Business Review, Eben Harrell, Oct 2015) or the Power of 1%.

The power of an organisations culture when the common purpose is aligned to the improvement process can produce incredible results. At the very core is the focus on “critical non-essentials”. Some non-essentials could be random areas of your business or process that you may never have considered previously such as work environment, desk space, food availability, repetitive or menial processes, or excessive management reporting methods. Collectively they all have a psychological and productivity impact. Many SME businesses do not pay attention to the critical non-essentials as they take a reactionary approach and always responding to crises and firefighting within their business. A shift in mindset can lead to a fundamental change in how the business is run and how decisions and responses are handled provided the groundwork is continually improved.

Some additional points that Sir Dave mentions are: *Invest in people * Recruit the best * Give people ownership * Provide absolute clarity of the roles * Provide clear standards on what is expected with regards to Behaviours and performance *Accountability * Provide a happy environment where happy people operate in a safe environment that encourages and accepts constructive criticism and feedback.

Some may subscribe to the view that 1% improvements are no match for large impactful changes. Perhaps the long-term sustainability of large implementations could be challenged. Gradual change perpetuated by all those involved is undoubtedly more sustainable and perhaps significantly better for culture, buy-in, and retention. There is no doubt that some old workplace paradigms are going to change as a result of the CoVid-19. CoVid is a dramatic event with a deserved focus on essential issues, however, when things return to normal a stronger focus collectively on ‘critical non-essentials’ could provide some huge business benefits for all in the Brave New World.

What is your view?

Get in touch! [email protected]

Feature Three

12 Mistakes to Avoid When Running a Business

Whether you live in Australia, USA, Canada, NZ, UK, or South Africa the research is the same. There is a massive amount of business owners that will be looking to retire over the coming years.  

30%-40% of small business owners in Australia are now over 50 years of age and this rate is increasing each year.  

In Canada, it is estimated that within the next 15 years, more than half of the country’s current small business owners will retire. 

In the US it is estimated 12 million Baby boomers who own businesses and looking to retire in the near future, considered to be around 34% of the population. 

Did you know that? In Australia 66% of business owners plan to use their business as their primary source of retirement income; 43% aim to realise a lump sum benefit from the business; and 31% expect an income stream. 

BUT HERE IS THE THING - 20% that get listed get sold (Exit Planning Institute USA), 80% have No Exit Plan, 22 % Just shut shop! 

Here are the 12 Mistakes to Avoid in Selling your business… 

Mistake 1# Failure to maintain confidentiality 

Mistake 2# Failure to continue to run your business 

Mistake 3# Failure to use proper negotiating   techniques 

Mistake 4# Failure to secure qualified buyers 

Mistake 5# Failure to move the deal along 

Mistake 6# Failure to place the proper value on your business 

Mistake 7# Failure to properly structure the deal 

Mistake 8# Failure to prepare due diligence 

Mistake 9# failure to market the sale 

Mistake 10# failure to seek the right professional assistance and consultation 

Mistake 11# Failure to properly package your business 

Mistake 12# Failure to control the Deal 

 Here is how you Solve the 12 Mistakes… 

Mistake 1# Failure to maintain confidentiality 

Don’t have discussions unless you have signed off. This is difficult for some as it is not natural to them, however, think of it like this…it also piques curiosity.  

People want things more when they can’t have them. Particularly if engaging with Business Brokers, violation of the terms can mean no commissions are payable. Although litigation can be costly, they can be enforced. Make all efforts to engage the right profession – check past deals, speak with past vendors, and ask about how they will market your business and what makes them different to other brokers. 

Mistake 2# Failure to continue to run your business 

Some owners tend to “check-out” when they have decided to sell or listed their business for Sale. This attitude permeates through a business and to those customers who deal with you. Maintain the Status Quo.  

The average sale can take a long time (over 12 months), you need to keep your numbers working to substantiate the business and the growth prospects. 

Screen all potential buyers (or get a broker / accountant to do this for you). Weed out the interested and attract the committed buyers. Learn to say ‘No’. they can burn your time. A good broker should do this for you. 

 Mistake 3# Failure to use proper negotiating techniques 

Know your position. It is often a foolish owner that represents themselves as they are conflicted and often not skilled in the nuances of a sale and the approach of valuation and substantiating a financial position. 

Often buyers are represented by professional advocates – accountants, attorneys, or buying agents. There are numerous methods of sale and negotiating techniques that are best equipped by others typically.  There is also no emotion and appropriate levers can be used during the process to get the best price and terms. Where a third party is rewarded for performance this can work in your favour.  The cost of paying such people can outweigh the potential returns from a professionally handled sale process. 

Mistake 4# Failure to secure qualified buyers 

Facilitating a sale, yourself is hindered from the onset. You cant properly qualify interested parties...and besides it detracts from your own business or genius. A broker or accountant can pre-qualify and assess potential buyers without impinging on your time. Buyers must have funds or access to funds to complete the purchase. This won’t be everyone. Push away the curious and attract the interested. You will save a lot of time. 

Mistake 5# Failure to move the deal along 

There can be many issues during the sale process. Having someone focussed on this process and continually pushing the deal along is invaluable and more professional. Removing the roadblocks can be a skill and needs the emotion removed from the equation. Lawyers and Accountants can focus on the issues and remove the roadblocks while a Broker could focus on you and the business side. 

Mistake 6# Failure to place the proper value on your business 

The proper value is achieved by having a professional assessment of the business, all to often owners have inflated ego’s and perception of the value of their business.  A poor valuation is like telling an owner “he has an ugly child”, however honest appraisals are necessary. Alternatively, a good third party appraisal can add substance and justification to support a price being sought. 

Having good integrity in your figures can be validated by an audit and protected by their PI (Professional Indemnity) insurance. 

Mistake 7# Failure to properly structure the deal 

Some sales require structuring to get the end or most beneficial result for the parties. Not having this knowledge can put the seller at a disadvantage. Such structures could include leveraged Buy-outs, Royalty payments, earn outs, on going consulting agreements, or non-compete contracts. Structuring the deal for your favour is important. 

Mistake 8# Failure to prepare due diligence. 

Figures must be substantiated and defendable. An audit can help to do this. Having good figures that are reliable instill confidence in a purchaser as this is understandably a key area of risk for them…they are taking the word of others before they commit their resources. 

In business dealings I have had I always maintain that going through the due diligence process on several occasions really ‘sharpens your sword’, each event you learn something different as different purchasers test your business. By the time you have been through two sales processes your offer will be quite tight with no gaps in your answers. 

Mistake 9# failure to market the sale 

When selling be it yourself or your agent should commit to a marketing budget. Why? You cant sell a secret! There is no more frustrating situation than having a business sold to a party when not long afterward a stronger buyer offers more and better terms. By advertising and marketing the business you stand a higher chance of meeting the best buyer at that particular time in the market. Sadly many business owners challenge the advertising. Because they have never really employed it effectively within their own business operations. 

Mistake 10# failure to seek the right professional assistance and consultation 

The wrong advice or the wrong facilitator can be expensive if you don’t chose well. Do your homework in assessing who can best represent you. Look for a history of past sales and transactions with good outcomes both in your industry sector or comparable ones. Seek to understand their process, systems, and how they handle a prospect’s buying journey and what is expected from you. 

Get a match to the complexity or simplicity of your business sale. Don’t get a square peg for a round hole…someone who has had no experience in your sector or business type. 

Your personality and that of the business is entwined in the DNA of your offer, get someone to match this. Hi quality legal documentation is essential 9dont scrimp). The devil is in the details particularly with ‘claw back terms’, work outs etc, warranty periods, terms, and any contingent (potential) liabilities. You always want your position and risk protected. Cheap is not always best. Use a lawyer with experience in these Agreements and preferably one who has been tested before. There is nothing like real world experience and ‘street smarts’. 

Get your team wearing the same jersey…get them together (formally or informally) cementing relationships can never be underestimated. This is also great networking for all parties. It also means people will go the ‘extra mile for one another. 

Mistake 11# Failure to properly package your business 

Putting together the information that buyer needs if often sadly overlooked and why many sales fail. Presenting the sale as an information Memorandum, protected by confidentiality, with interested parties signed off shows professionalism. 

Your Information disclosure should have amended financials reflecting the business in light of the sale and tax minimisation. Add backs should be included where appropriate, special categories created and disclosed to provide the buyers with the best insight possible to the financial soundness of your business. Sometimes these figures produce lower profits than you expect. This is where leveraging your customer base, competitive advantages, financial history, and industry characteristics come in to play. Your systemisation and processes, documentation, and efficiency all assist. These things must be illustrated to the buyer. They also assist in their understanding and transition. 

Have all your licences, certifications, certificates, titles, Rental agreements, client or customer agreements and, compliance's bundled and ready for viewing. 

I like using a data vault to capture all the information, share it and, keep it in one place – Dropbox etc is good for this. Continually update this. 

You must remember they are not buying past history but the potential of future earnings – this is often forgotten. You have enjoyed the past they need comfort for the future. 

Mistake 12# Failure to Control the Deal 

As the seller you should have control. Quality of control extends to the quality of your professional team and the cohesive nature of your offering. As an Owner you will have to have some reliance and advice from your trusted team. Remain flexible and conversant with progress on deals. Take counsel but be able to make an effective decision when needed. Being indecisive or difficult can cause potential buyers to walk away. Don’t be flaky. When running a business you have to make daily  decisions; this is just another one- consider your options and take action. Timing can be everything. 

So, you have just learnt about 12 Mistakes commonly made in Business Exits. The value in understanding these mistakes is to be able to counter them, prepare in advance and avoid these mistakes through good planning, good systems and leveraging their benefits, and creating great Value (being able to demonstrate this financially and in the efficiency of how the business operates).

Need to know more and need to discuss your situation? get in touch [email protected]

Feature Two

Friction to Flow

I have had the pleasure of facilitating teams in workshops where we incorporate the use of personal profiles of individuals to identify their natural and adaptive behaviors and how these may integrate into the workplace with regard to communication, roles, productivity, and business efficiency. They are great fun and quite revealing. I use the Extended DISC behavioral profiling system to do this.

The goal is effective communication in the business and aligning people to their natural strengths while understanding how they have adapted themselves to current roles and positions. Sometimes this can be conflicting! Understand why some tasks, people or circumstances are very draining to your natural style... then how to compensate, cope or adjust to the work or stressful situations.

Creating an open dialogue with transparent conversations amongst the team members causes discussions to evolve that bring about better outcomes for both the team and the business. The alternate one-person viewpoint doesn’t really encourage openness, safety, or full transparency. Interesting right! but often overlooked. It's about people and the business and how to get better outcomes for both.

These sessions can provide some amazing revelations about your business, your people, and how individuals can contribute more and achieve better satisfaction in their roles. This can create some dynamic shifts in communication but also in identifying and closing gaps within your business. It is about engaging with your people and their genius.

Problems solved: Improved team communications (breaking old paradigms), gap analysis and action plan to close these gaps, identifying and expanding on the right person for the right job, identifying bottlenecks with your people and process, turning friction to flow.

What are your views on facilitated open discussions in your workplace? Want to know more about discovering the hidden potential in your business? Get in touch! [email protected]