Managing Fast Growing Businesses: The Planning Process

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Managing Fast Growth

Whilst planning is important for all businesses it is vital in a high growth company. More importantly planning needs to be more thorough and detailed than in companies where growth is at a more leisurely pace. Its obvious really, issues come at you faster and more frequently in a high growth scenario and you and your management team need to be ready to deal with it. You can’t do this in a purely reactive mode, you and your management team need to have explored in detail the key linkages in your business and have some understanding of the potential stress    points as well as solutions for different scenarios.   If this seems a bit of overkill, it isn’t. Having been in the senior management team of a business that grew from 250 to 3500 staff in less than 10 years I know the pressures consistently fast growth puts on an organisation. One of the key reasons why so few businesses can consistently manage a high growth rate is because of this management commitment. It also demands that owners/directors have confidence in their management team and that they are able to properly delegate responsibility to this team.

So How Much Detail is Enough?

The answer is as much detail as you can get. The more detail you can obtain the better. I’m not just talking about P and L information but key metrics that drive the business, for example production metrics, recruitment metrics, detailed overhead costs, detailed variable costs, machine performance, average earner income, average earner output, recruitment costs, sales cycle length, average order value, and so on.  The benefit of this information is to provide you with a very detailed understanding of your business. It also offers you a broad range of levers to use in guiding your business through the inevitable ups and downs of life. Most importantly it gives you a number of early warning indicators that if acted upon will require only a gentle nudge on the tiller, rather than a last minute heavy handed yank.

So Now You’ve Got it What Do You Do With It?

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Managing Fast Growth

Once you have all this information, you develop a reporting mechanism/model which requires all 
key members of your management team to understand report and manage their functions or business using this standard. This is vital to provide the management team with the same business information where ever they are in the organisation, it also means that whatever job they do they can quickly get to the key information because they will be familiar with the format. In a high growth business, management regularly move around a so need support of model so they can quickly get to grips with their new position as the information and its format will be the same. 

In a personal example I was relocated from the UK to Australia. When I arrived I was able to get up to speed very quickly because the model used down there was exactly the same as that which I used in the UK! 

It should become the basis of your regular management meetings as your knowledge of the model increases you will be able to more accurately predict company performance and be better able use the information to avoid difficulties.

Exigent Consulting provides specialist services for High Growth Business , Business Turnaround, and Mentoring to the Small and Medium Business. We help Business Owners improve the profit performance of their business. 

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Managing A High Growth Business : Matching Your Organisation to Your Sales

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 Growth Businesses Organisational Stress Points

This is the first in a series of posts concerning the successful management of high growth businesses. One of the most common problems high growth businesses face is how to match organisational growth with sales. 

The Problem 

Simply put sales can grow discretely and tends to be quite smooth as shown as the red curve. Organisations growth, by contrast, tends to be much more lumpy. This is because a certain staffing complement has a finite growth capacity and beyond that point just adding people doesn't help. In fact at some point adding people reduces performance. What is required is an organisational restructure which will create a step change in a companies ability to support its growth. However this is not easy to accomplish because most SME's address this problem too late. This often results in business growth reverting to the typical "lumpy" organisational restructure rather than a smooth increase. The reason for this is that sales now have to wait for the organisation to catch up so you tend to end up with a year of rapid growth followed by a year or even more of no or even negative growth.

Typical Situations

Smaller Businesses tend to rely too heavily on a few key people, this results in a stagnation of performance of the remaining staff who have little or no chance to develop their skills. So when the time comes to reorganise the business owners or management are reluctant to make the step change necessary to reorganise the business because they cant see who, apart from the usual suspects, who will be able to take on additional responsibility.  What this results in is either a re-oganisation which is often half hearted or too late.  To provide a sporting analogy, hammer throwers are always told that they must remain ahead of the hammer. So as they speed up their revolutions in the circle they can properly time an effective throw. Small businesses rather like a novice hammer thrower end up behind the hammer (read sales growth)  losing control and finding out the hammer is in the wrong place.

The Solution

"Stay ahead of the Hammer!" 

Some key actions:

Always! Always Always! Implement a reorganisation ahead of its need. This gives you time to fine tune it is also the only way you can main that rapid growth.

Establish a model for organisational growth. That is how will your business deal will sustained and rapid growth. Your plan must also be able to estimate at what point (size of revenues) will you be needing to consider the next reorganisation.

Reorganisations must have longevity. Typically a major reorganisation should last about 24 months, with interim adjustments taking place yearly.

Recognise that reorganisations get bigger as you get bigger, so have a post reorganisation quality control process.

Let me know what you think

Exigent Consulting provides specialist services for High Growth Business , Business Turnaround, and Mentoring to the Small and Medium Business. We help Business Owners improve the profit performance of their business. 

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Taking Your Business to the Gym: Getting Your Business Vision

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The importance of your Business Vision

In order to build a business that will growth rapidly and sustainably you must first get "that Vision thing."  George Bush Snr most notably suffered from his lack of what he called ‘the vision thing,’ a clarity of ideas and principles that could explain his philosophy. Without a solid and well thought out vision your chances of it acting as the beacon of your company’s aspirations and intentions will be short lived.

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Understanding and developing your Business Vision

For most people realising what their vision is and then putting it into words is a daunting task. I don’t think it helps when you hear examples of the visions for well known companies like Disney which is “to make people happy”. Many people I speak to are put off by the prospect of matching such examples. Don’t be put off, we can’t all be Disney.

Your vision is about your values. You could see your vision as how the future will change as a consequence of your actions. It is vital that you understand that your vision must have permanence and should not change over time.  A good way of developing your vision is to describe it in a few words for example you might descri
be it with words like, ethical, profitable, fun, focused, detailed, customer centric, national, regional, global, local, quality, price-conscious and so on.

Resisting pressure to change

Inevitably at some point either you or more likely your employees or customers with put pressure on you to change your vision as it won’t suit them. This is the first test of its strength and your commitment. Your vision was set out because it reflects your personal aspirations about what your company should be. If you compromise then either you don’t really have a vision and your company is just a surrogate for a paid job, or more likely you lack confidence in your own view. Don’t weaken, by following your vision it will help you quickly decide which business opportunities are right for you and which not.

What a strong Vision gives you

Your vision determines your employees approach to business and it gives them a structure around which to work, it is the unifying force that turns individuals into a team. It also ensures that any new employee understands what is expected from him. It provides the underpinning of your company culture. It tells you customers what to expect from you. Your vision gives you above all consistency. Consistency is the mark of any successful business as both your staff and customers will know what to expect and know that they will receive it.

Inconsistency is the scourge of too many businesses and is often an indication of an absence of a vision or weak management unable to implant their vision on their employees.

Getting “the vision thing” right is absolutely fundamental to the development of a successful business, so take time to put your in place. 

Leave a comment and let me know what you think.

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Exigent Consulting specialises in providing Business Turnaround, Sales, Marketing and Mentoring to the Small and Medium Business. We help Business Owners improve the profit performance of their business.

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Why Businesses Are Too Late in Seeking Turnaround Help

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We all know that addressing problems early makes them easier to solve, and even when the treatment is unpleasant, like going to the dentist by and large we go in good time. Why is it, then, despite the harsh economic conditions and the large number of business owners clearly struggling to cope; it still seems that too many smaller businesses in the UK are reluctant to call in outside assistance even when it is clear that finding solutions to the issues impacting their business is beyond them?

Most independent businesses are in the hands of its founders, consequently these more than others find it difficult to view their business objectively. Most don't follow best practice and won't have regular management meetings nor generally do they have a detailed financial knowledge of the business. This lack of objectivity is the real issue. I cant count the number of times I've gone into a turnaround to discover that the owners have reluctantly called someone in, not because the business is in bad shape, but because they've exhausted their personal wealth in propping up a non performing business and now they've GOT to do something. Sadly, often at this point its too late.

Whilst no doubt there are clear legal tests to signify insolvency, these are seldom recognised by the management. They are invariably late talking to IP or turnaround specialists such as myself for the following reasons 

1.they're emotionally tied to the company, 

2 the stigma of failure, 

3 being overly optimistic (well you have to be an optimist to run your own business) and as such you tend to overestimate income and underestimate costs,

4 poor business management. 

There is a debate to be had about the almost complete absence of any type of business related subjects in general education which I submit leaves our entrepreneurs and business owners unnecessarily exposed. Many run businesses without even the most basic knowledge of financials or business or people management, so the wonder is why more businesses dont fail!

I would also observe that whilst accountants should provide advanced warning to business owners many don't because they are themselves technicians, and they concentrate on getting accounts completed on time. Experience has demonstrated that accountants are no better at running businesses than owners of other types of business. Also, because often their relationship with their client is too weak to survive bad news.

Exigent Consulting specialises in providing Business Turnaround, Sales, Marketing and Mentoring to the Small and Medium Business. We help Business Owners improve the profit performance of their business.

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The problem with Board Meetings....

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We seem to be very bad at prioritising meetings within organisations; we seem to be driven by knee jerk reaction rather than common sense, although I wonder if it should be more accurately described as uncommon sense. This is especially true of the SME sector, where board meetings seem to be the exception rather than the rule. Some of this is due to owner managers having little or no understanding of what as board meeting should cover or how to manage a meeting of this type. In my opinion a board meeting is the most important internal meeting a company can have. It is probably the only setting where strategy is discussed and policies made. It is not a place where detailed operational decisions are made, but in my experience this is all often what is discussed. This leads to confusion in the minds of participants and doubts about its importance/relevance and results in questions like don’t we cover this in the operations / marketing/ finance meeting?

So what are board meetings about? They’re the meeting that set the direction for the company, confirm policy, and directs the business response to unforeseen events either external like for example a significant change in market conditions or the arrival of a new or stronger competitor. The unforeseen events maybe internal like the loss of key staff or a major issue with sales or production. To get the best out of these meetings they should be held regularly and it should involve a review of the company’s performance.

So the problem with board meetings is simply that they’re not understood and not taken seriously so they can’t deliver the benefits to the business they should.

Exigent Consulting specialises in providing Business Turnaround, Sales, Marketing and Mentoring to the Small and Medium Business. We help Business Owners improve the profit performance of their business.

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5 Steps to Making a Groupon Promotion Successful

Groupon and Groupon style promotions are growing at an astonishing rate. The size of the Global opportunity is enormous. Originally developed out of the concept of the power of group buying, Groupon is now so large that it is now more about the exploitation of deep discounting to bring in new customers.  Using this kind of marketing is by no means a sure thing. A recent study by Rice University Texas has highlighted some of the downsides of using Groupon. So what can you as a business owner do to maximise your chances of success?

First; do the numbers.  The typical Groupon discount is 50% from which Groupon will take 50% of that leaving you 25% of the sales price. Calculate how much loss you will make on each sale. Its not quite as simple as this because some of the coupons purchased in advance will not be redeemed so you will get some revenue for nothing, a reasonable estimate would be about 10% of coupons will not be unclaimed although it will vary by product.

Second; using the numbers that you have calculated in the previous step calculate how much you are prepared to invest in this promotion, and therefore the number of discount vouchers you want to offer in this promotion. It is important that you set a limit as some businesses suffered serious losses because they underestimated the amount of take up of their offer and by not setting a limit had left themselves with an uncapped liability. By doing this you will also be able to identify how many extra full price purchases you'll need from your promotion to break even on your investment. Whilst it may not be important to you as an objective, it is always worth understanding the performance of your promotional activities. 

Now you have set up the parameters your third step is to prepare your staff. Let them know when the promotion starts and the potential number of addition customers that might visit your premises. You want your staff to be ready to meet any sudden influx without a reduction in service levels. You also need them to understand that a significant number of  clients will be paying by coupon, so you need to have a process in place to handle this efficiently.

Fourthly, plan your upsell programme, Groupon sales are only worth the investment if you can get these "Groupon" customers to purchase products at the full rate. Decide what and how you are going to upsell and encourage your staff to make this offer to everyone. A good way to do this would be to have a competition to see which member of staff has sold the most.

Fifthly; have a proper follow-up plan. If social media and CRM have taught us anything then it is that we should create a dialogue with out customers which will encourage new sales. 

Exigent Consulting specialises in providing Business Turnaround, Sales, Marketing and Mentoring to the Small and Medium Business. We help Business Owners improve the profit performance of their business.

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To Groupon or Not To Groupon That Is The Question

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Groupon has been, and indeed still is, a business phenomenon. Its growth across the US has been explosive. It is now growing rapidly in the UK. Its message is to use the power of groups to get big discounts purchases of goods and services. In reality it is a careful repackaging of the discount  Coupon.  

For those of you who may be unfamiliar with the this company Groupon's business model is "group coupons": If enough people sign up, the deal "tips" into action (because Groupon is so large, and has so many followers almost all deals now tip).  Groupon now has more than 50 million subscribers and aims for 150 million by year-end. Its revenues—about half the value of total transactions—were an estimated $760 million last year and should hit $2 billion or more this year. In addition there are a growing number of "Groupon" like competitors springing up. The market for this type of promotion, currently at least, is huge.

Many companies have benefited from Groupon style promotions but it does present longer term issues for business and particularly smaller businesses mainly because it is purely a price based promotion. Typically Groupon will want you to provide a 50% discount on normal price as a promotion. Groupon will then take 50% of that discounted figure. So a £10 meal nets the merchant £2.50.  The objective is of course to encourage the Groupon diners to come back for a full price deal. The evidence for this is however patchy. A recent study indicates a growing number of "Groupon Customers" who only frequent establishments featuring Groupon deals and will only spend the minimum required. Still with those businesses with high fixed costs such as Restaurants and Spa's, getting additional customers in on slow days in the hope of converting them to full paying customers is relatively low cost marketing approach.

The longer term issue as I indicated earlier is that it is purely a price based promotion which will lead to a reduction in brand loyalty as customers recognise that they can return as new on the Groupon discount.  Leading to a steady fall in the number of true new customers, matched by an increase in the number existing full price customers converting to Groupon customers to obtain the deep discounts.

Evidence is appearing that Groupon is excellent as a tactical marketing ploy, but increasing repetition could have a significant negative impact on a businesses longer term profitability. 

For the smaller business a very careful analysis of the true cost of using a Groupon style promotion needs to be undertaken as getting it wrong could prove very damaging for your business

Related articles

• Does Groupon Erode Price And Is Groupon Right For Your Small Business? (toddstechtalk.wordpress.com)
• Groupon Down 30% (coverboom.com)
• Is Groupon a tool for price discrimination (iterativepath.wordpress.com)
• Why Groupon May Not Make Strategic Sense for Your Business (socialmediaexplorer.com)

Exigent Consulting specialises in providing Business Turnaround, Sales, Marketing and Mentoring to the Small and Medium Business. We help Business Owners improve the profit performance of their business.

Maximising Repeat Sales Is Good For Your Business- Real World Data

I dont often use information from clients but in this case I have made an exception and I am not given away any confidential information. The reason I am using this this information because it perfectly illustrates the old adage that it is better and cheaper to look after your customers, than to continually chase new customer sales. More importantly it puts it more elegantly than I ever could and this is a "real world" example from an online retailer, which is why such detailed information is available. I am very grateful to my client to be allowed to use this information.

Hi Laurence,

Following on from our meeting, I've calculated some costs for acquiring new customers as well as some stats on new vs repeat customers which makes interesting reading as below.It would seem a disproportionate amount of time and expense is focused on gaining new customers, when clearly there is greater advantage in targeting existing customers.

New visitors = 78% (of total visits), Revenue Share = 53% (of total revenue)

Repeat visitors = 22%, Revenue Share = 47%, Average order value = +5%

Cost of acquiring new customers = £8.60 per customer

Results: 47% of the revenue comes from 22% of visitors (repeat) who also spend more per order. Acquiring new customers is relatively expensive compared to marketing to existing customers.

Conclusion: Focus on existing customers more and/or increase number of repeat customers.

Another e-tailer client of mine struggles to build profits despite rapid turnover increase because of their very low repeat order rate; in their case 9%. The moral of this story is don't neglect your customers. They are your best source of revenue and they already know and like the products or services you provide. 

Exigent Consulting specialises in providing Business Turnaround, Sales, Marketing and Mentoring to the Small and Medium Business. We help Business Owners improve the profit performance of their business.

Not Understanding Your Obligations to Staff Will Damage Your Pocket

This post is about the importance of understanding the legal obligations a business owner has to his staff. It also illustrates that for Health and Safety and Employment Law there is little room for manoeuvre if the owner doesn’t get it exactly right.

The circumstances relate to a client of mine who ran a retail business. He had, as a result of an incident with a client, cause to disciple a member of staff which subsequently led to her dismissal. I should say at the point that the said staff member concerned was pregnant and we were all acutely aware that processes, procedures and actions had to be transparent and obviously above board. As I might add you should be with any disciplinary procedure. It is however well understood that with a pregnant lady involved additional close scrutiny is placed on the process by the tribunal and legal systems.

Following the dismissal an appeal process was followed and the decision upheld. The person concerned then sought to take the company to an industrial tribunal for unfair dismissal for discrimination because she was pregnant.  The twist came on receipt of the claim. It was not only for unfair dismissal but for breach of health and safety because no formal risk assessment was undertaken by management once she had informed them of her condition. This issue had never been raised by the employee at any time through the process. Although informal discussions and agreement took place legally it doesn’t appear to make a lot of difference, although it might provide some mitigation, so rather unexpectedly my client has moved from having what he and his advisers considered a solid defence to a position where he might expect a 4 figure fine.

Whatever the rights and wrongs of this case and indeed the fairness of the situation it is crystal clear that owners must be absolutely on top of their legal obligations to their staff. This is a significant investment for many small businesses but as this owner found out not doing it could be more expensive still.

Exigent Consulting specialises in providing Business Turnaround, Sales, Marketing and Mentoring to the Small and Medium Business. We help Business Owners improve the profit performance of their business.

Do You Get Business From Social Networking - UK Poll Results

Do You Get Business From Social Networking

I have been operating in the social marketing world for over 2 years now and during that time there has been a dichotomy of opinion about the merits of social networking as a means of obtaining business. There are the well know stories from the likes of Dell, Zappo's  etc, but I wanted to see how Mr Small Business UK was fairing. So I put up a poll to find out.

I have been running this poll, aimed at UK based social networking activists to try to get an idea of how successful companies or individuals are at getting businesses using social media. My poll was posted on my blog and I was regularly referring to it via twitter and facebook. Over 3 months I got nearly 200 responses a small number I admit, but large enough to draw some conclusions. Broadly its 50/50. 50% are getting some business and 50% aren't. In order to to separate purely social users or those with no interest in business returns I separated the No's into No and No but I'd Like Too. It was this latter category that held the big surprise, 43% of people who'd like to get business from social networking are not. This left me wondering what was the reason for this, was it the fact that people hadn't been using it long enough to get results or was social networking a less productive marking strategy than has been touted.

To try to make sense of the results and to get a bigger sample I've put up a similar poll but made it more generic. That is relevant to social networking participants outside the UK. Hopeful I can have some more interesting results to report soon.

Related articles

• Social Networking To Play Bigger Role In 2011 (socialnetworkingwatch.com)
• Not getting recruited via social networking? Don't worry, you're not alone. (socialmediatoday.com)

Exigent Consulting specialises in providing Business Turnaround, Sales, Marketing and Mentoring to the Small and Medium Business. We help Business Owners improve the profit performance of their business.

4 Simple Steps to Creating a 1 Page Business Plan

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It’s that time of year again. No not Christmas, but a time when businesses should be measuring their performance in 2010 and putting in place plans for 2011. I hesitate at this point to bang on again about the need for planning but in my experience e

ven a simple plan makes a difference. Its not the plan itself, but the thought processes we have to go through to get there which is so valuable.  If you are a business owner then before putting together any kind of business plan you need to get your personal goals sorted before you start on the business goals. It’s stating the obvious but if you want to reduce your work down to 3 days a week, there is no point in setting challenging growth targets for the business.

That aside what are the 4 steps?

Step 1 work out your overall business goals for 2011, they could for example be headline revenue or profit numbers, market recognition, market share or finding a full time manager. Don’t set too many of these 2 or 3 is sufficient. Having done that, you now have a baseline on which to focus.

Step 2 is to identify the non-financial Key Performance Goals, ideally no more than 4 or 5, which need to be achieved to help achieve your overall goal(s). They might be: staff morale, attendance performance, expanding a range of products, identifying other profitable niches.

Step 3 is to identify cost reduction goals. These might include for example, reduction in debtor days, or dead stock, or seeking early payment discounts. These goals are there to balance the operations of the business and not to let the drive for revenue to get out of hand. They are also important in supporting profit centred objectives.

Lastly Step 4 which is to identify revenue objectives. This is the easiest to identify for most people, the difficulty of course is to identify the 4 or 5 which are the most relevant. It should be clear t

o everyone that having too many goals will only distract the business because it will lose focus on what is really important.

Image via WikipediaHaving completed those steps you have defined and clarified your goals and the key steps you need to achieve to get to your overall goals. This is not a plan to put in your bottom draw and forget, but something to use to review monthly performance with your staff. Its simplicity helps you focus on the key issues to keep conversations focused on what is important. You can also break the plan down into its constituent parts and use it for different parts of the business. So typically revenue objectives can be given to sales, cost goals to finance and administration and so on.  This simple plan has transformed the success of businesses who’ve used it so grab the opportunity and get a plan for 2011 now.

Exigent Consulting specialises in providing Business Turnaround, Sales, Marketing and Mentoring to the Small and Medium Business. We help Business Owners improve the profit performance of their business.

Are You Worried That Your Business Will Fail?

For my last post of the year I thought I'd have another Guest blog. This is more as a help to an old friend who has recently published a book entitled “50 Essential Business Advice Tips To Help Prevent Your Business From Failing” This blog explains the thinking behind his book. You can get it as a free download and I'd encourage you to do so.

A happy Christmas to everyone and a prosperous 2011

Kind Regards

Laurence Ainsworth

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There are over 4.5 million businesses in the UK and every year 400,000 are formed, with nearly as many failing. Most businesses stay small or plateau at a certain turnover without being able to grow - probably because business owners are working ‘in’ the business rather than ‘on’ it; making tactical day to day decisions rather than strategic ones.

No one wants to fail in business; however statistics show that 1 in 3 businesses fail in the first year of business and a further 50% of the remainder don’t progress after the third year.

So what distinguishes a successful business?

How about the following?:

●     Knowing your strengths and weaknesses

●     Having targets in place

●     A business plan covering all aspects of the business

●     Effective targets and measurements in place

●     Ensuring that product and service offerings meet the needs of the market

●     Ability to create a competitive edge

●     Efficient, clear and consistent business processes

●     Inspired and driven leadership

Whatever stage your business is at, you could probably benefit by getting back to basics and reviewing all aspects of your business to identify what is missing.

Consider that your business is covered by the following ‘pillars’ of business: strategy, finance, sales, marketing, operations, resources and personal issues - if you could look at each of these in turn and identify what changes are required to ensure the future success of your business, this could form the basis of a business plan for your business.

Once you  have identified those key areas in each ‘pillar’ that need addressing, the challenge is then to take action and improve the way that your business operates. The important thing here is to prioritise which actions to take from the list generated - what needs to be done ‘now’ and what can be done ‘next’? Then who is going to do what, by when and what is an indicator that this step has been achieved.

Finally put some appropriate targets and measures in place to ensure that this simple business plan is moving forward and impacting the profit and performance of your business.....leading to success not failure.

To help you with this task, a book has recently been compiled by Paul Green - “50 Essential Business Advice Tips To Help Prevent Your Business From Failing”. Available as a free download here: http://www.paulgreen.biz/success_tips.htm