Every single time I go into a business, I sit in their office for a day or two and start getting a very clear idea of how the business runs and where the risks are. One thing I have found is that each time it comes down to just four pillars that enables every business to grow effectively and as profitably as possible.
Sales & Marketing
This one is kind of obvious. A business can have the best product or service in the world, and the best back-office operation ever, but if they’ve not got a mechanism for marketing and selling it, it’s unlikely that they’ll ever achieve ‘proper business’ status.
Having a solid system for properly marketing and selling your products and services is the first battle to tackle as a business owner. Honestly, this section is so obvious and the businesses we work with tend to have this bit covered, that I’m not going to expand on it.
In my experience, finance is, I think it’s fair to say, the most undervalued but one of the most important parts of any organisation. If it goes wrong, it’s easy to go from ‘happy days’ to ‘oh sh*t’ VERY quickly.
This is the first thing we tackle when taking on new clients and I’ve not had one instance of it being right yet. Often business owners fall into the trap of thinking the finance function is just a cost to business, and they only need an accountant or bookkeeper to run the day to day, but the danger of this is that there is a whole level of experience and knowledge missing which is worth its weight in gold if you have it, and gives you a huge advantage over your competitions.
To give some context on this, I’ll use two of the many examples we’ve come across.
1. Luxury travel business: Coronavirus caused their turnover to go to nothing, quite literally overnight, with around 6 months of survival with no income. While their competitors were going under left, right, and centre, we were helping to mobilise them for survival, by cutting overheads by 85% and restructuring operations, giving them around 2 years at the time. They’re still trading now and will continue to do so for the foreseeable future. Only now they have less competition.
2. New client engaged mid-year last year. A previously very healthy and cash rich business. Their previous bookkeeper very nearly put them into insolvency due to not managing cashflow during a dip in sales due to coronavirus. Their accountant also didn’t take any interest in what was happening. We got cash under control, conversed with their suppliers and set up payment plans which gave them room to breathe while trading through it. They’re still going and continue to go from strength to strength. Had they kept the original structure, they likely wouldn’t be around now.
Our clients win because they have that additional experience and knowledge within their company.
Often business owners think that they need to keep people because they’ve spent too much time or money on them, even if they are not the right person for the role or the wider organisation. Or they might think that having 10 good people will make up for the one bad one; this is not the case. Having one weak link can be very, very damaging to the entire staff culture, as well as what the outside sees.
Similarly, we often see directors promoting people from inside because they’ve been there longest or employing family members because they need a job or it’s a way for them to get more money out. This is not always the best course of action.
Staff should be judged on their individual merits relating to the role being filled, and then when they’re in those roles, they should continue to be judged based on their ability to do the job to a high standard and fill their responsibilities effectively.
If they are not doing those things, objective decisions need to be made on whether they are right or not and action taken either way (either through exiting or training plans etc).
Does your organisation run like a well-maintained machine? You’ve got the staff, finance function and sales and marketing systems nailed, but can you fulfill your client’s needs in the most efficient and effective way while providing the highest levels of service?
The idea is to systemise and streamline operations enough so that your increase in turnover doesn’t need to run at the same percentage as your increase in staff levels or general overheads. This means getting the right software in place, automating what can be automated and reviewing every single aspect of what happens day to day and ensuring it’s as streamlined as possible.
What actions are you taking today to make sure you get the four pillars nailed?