Managing a High Growth Business: Getting your Vision Right

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Getting Your Vision Right 

I have worked with many high growth businesses and contrary to much of the published research it is clear that many owners of successful and high growth businesses do not have a clear vision of where they want to go or indeed and why they should need  to know.  Many of the business owners I have worked would describe themselves as accidental success stories. That is to say they can't explain why their business is consistently successful or what actions they put in place got them to where they are now. However what is common, they all recognise that this is not a satisfactory state of affairs. Formalising their thoughts into a vision is not just an academic exercise it is important to be able to articulate why you are business. 

A vision is not about targets or goals, it is about the reason you are in business for example Disney's vision is simply "To make people happy" Whilst Google's is "Make internet advertising better - less intrusive, more effective, and more useful" Kelloggs is  "To be the food company of choice"

You will all have some kind of vision in your head but to communicate it effectively to your staff and the outside world it needs to be put down on paper, in doing so it will help you clarify your vision. You will see from the examples I have shown that a company vision is not about targets or goals but why you do what you do and how you do it. It should not change and it should be just as valid whether you are a 5 person company or a 5000 person company. It should be timeless.

Getting your vision right is important for any business, but for a fast growing business it is essential. Having a vision will provide the common sense of direction that will focus peoples’ activities to the benefit of the business. This common purpose is vital for the maintaining of consistent fast growth.

Related articles

• Three tips to clarify your vision (iowabiz.com)

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: Its the Culture, Stupid!

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Culture is one of the most under rated aspects influencing a business. Get it right and you can support and promote cooperation to support and reinforce success. Get it wrong and you can say goodbye to a successful business and say hello to a world of hurt.

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BRITISH POET AND CRITIC MATTHEW ARNOLD
VIEWED "CULTURE" AS THE CULTIVATION
 OF THE HUMANIST IDEAL.

Every business has a culture whether you know it or not, whether you've consciously tried to set one or not.  Culture is set the day you start a business as it is a reflection of you, the owner, your values and personality. So if you like playing politics, politics will become an integral part of the business. Your values on customer service, sales, staff management in fact everything you do in business both internally and externally is influenced, if not dictated, by your culture.

Given its importance why is Culture not higher up on the list of things to explore when building a business.  In fact it’s often completely overlooked. The reason for this I would suggest is that the critical impact that Culture has on a business is not well understood. It is often completely overlooked by advisers and start ups alike, under the misguided impression that culture is something for a big business to consider. This totally ignores the fact that having the wrong culture is likely to prevent you from getting to a big company in the first place.    It is also because Culture is one of those soft touchy feely issues that tend to be avoided by by business people and is shunned by an ever more materialistic society. This is not intended to be a commentary on the importance of culture in our society but rather impact ignorance as an owner of what your business culture is and what it should be.

Taking this analysis further; incompatible cultures, or rather a lack of interest by the sellers of business and ignorance of the importance by buyers is the number 1 reason why so many acquisitions fail or at least fail to deliver a significant portion of the expected benefits. More worryingly ignorance of the importance of culture is the most common reason why the cost of integration is substantially more than projected.

How do you identify your culture?

This is a two step process. Firstly identify what you would like your culture to be then secondly ask your staff what they think it is. In order to make it easier for your staff to explain what they think is the company culture, distil the description of your culture into a few words. So for example; customer service, quality and price. Also recognise that the order of the words indicates their importance. For example a business with the keyword priority customer service, quality and price will have a significantly different culture to a business whose keyword priority is price, quality and customer service. Try it, you’ll find the answer illuminating.

If the culture is not what we want, how do we change it?

Changes in culture are notoriously difficult to implement because we are trying to change people’s attitudes. Change starts with you, as in all probability, you created the original by your actions or the appearance of your actions.

Step 1 clearly define what you want your culture to be in as much detail as possible, explain your rationale, then go on to describe how you will expect your management and staff to act. Then you follow a long process of reinforcing the culture across the business, but how you do this is the subject of a future article.

Related articles

• The success of Oracle's acquisition of RightNow will reside in the details (forbes.com)
• Culture or business? (rolanfest.wordpress.com)

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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Cash is King -Yes, But Not at Any Price

I was reminded the other day how people can get so focused on a mantra that they lose sight of context. Yes in a tough market Cash is King but not to the detriment of everything else.

Cash Is King

Let me explain, I was having a discussion with an internet business owner who was moaning about poor sales, and the fact that to get cash in he needed to reduce his margin. The more we talked the more I began to question the strategy of reducing price to get the cash in. His response always started with "well you know in these times Cash is King... 

Eventually I got him to show me an example of how this worked for him. Once he had finished I asked him a question "Ok, so if you are giving away margin, are you making any profit at the reduced level?" 

"Well that doesn't matter what is important is to get some cash in to pay suppliers and re order product." came the response.

"But surely if you are losing money on each sale getting the cash in, you are making the situation worse, not better. " 

"At the moment getting cash in is whats important"

"How regularly are you doing this? Is this just to clear dead stock for example?"

"Quite frequently because when we put our products out at full price we are losing sales to cheaper providers so we use this to strategy to get the cash in"

At this point I was getting a little concerned, "But surely you must know if you are making a profit otherwise you will only be building up bigger and bigger losses, after all if you are only losing £1 per item if you sell 1000 of them you've lost £1000!"

"Yes but if you don't get the cash in when you need it you can't pay suppliers and they put you on stop"

We were in danger of getting into a circular argument, so I suggested that if he wanted we could look in detail at his pricing to see if he was making the situation worse or better. What we discovered subsequently was that he was indeed making a loss on his reduced items but more worryingly also on some of his regular priced items, and that his dedication to blindly follow the Cash is King mantra was killing his business.  

So the moral of this story is yes "Cash is King" but getting cash in is only worth pursuing if its in the interests of your business. I do appreciate that there are times when you may make a loss sometimes; for example if you are off loading poor moving stock, but generating cash flow by cutting your margin without understanding the consequences of your actions is a dangerous strategy.

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: The Problems of Badly Managed Growth

Running a high growth business, requires a good deal of planning, and active management. It also requires a longer term view, unfortunately in very many cases fast growth happens by accident and therefore without sufficient planning to maintain growth and certainly not as a result of any long term view.  


Never is this more relevant than when talking about plans for growth. The chart explains what happens all too frequently during a period of high growth. This is that after a year of rapid growth the organisation struggles resulting in little or negative growth for the next 18 month to 2 years before resuming . This is extremely stressful for businesses and often results in management backing away from further high growth because of the difficulties experienced 


These difficulties include :

1. Huge effort from owners and staff delivering little or no rewards
2. Minimal or even negative financial returns as the cost of correcting the consequences wipe out most or all of the financial gains.
3. Deteriorating customer relationships because service levels cant keep up with revenues.
4. Low staff morale leading to lower productivity and high staff attrition which is made worse because typically that attrition is made up with a disproportionate amount of your best people.
5. Finally lost opportunity as management adopt a very cautious growth strategy because their experience of high growth was so painful.

It needn't be the case, making sure you manage the special circumstances that come with a high growth business you can maintain consistent growth over a longer period and consequently become a larger business more quickly and with much less pain.
  

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 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.