With a New Year under way I am sure there are plenty of resolutions that you have made with the best intentions. What about your business though? What resolutions have you made for your business? Have you made any? Will you do anything differently? Will you do the same thing you have always done yet expect a different result?
For many this year will be like groundhog day and I don’t say that lightly. It is not they don’t have the desire to change or make a difference but often it is they get caught in the grind and don’t know where to start. This here is one of my longer posts but I think it is needed and I am sure you will get a lot out of it.
I sit on several advisory boards for clients and also provide coaching to many business owners and businesses via coaching groups and individually. I tell you this because I know what works to make businesses better and beyond better…great. Not to sound arrogant but I am quite selective on the clients I take on and by no means do I take on all the businesses that approach me or get referred. I also don’t limit the type of businesses that I take on as a client. The only real criteria I have for a business to become a client is do they want to work on their position and are they willing to follow a plan? This might sound obvious but you would be surprised how many people say they want help or that they will do something, when reality is they will do the same as they have always done or ‘they know better!’. I won’t do business with the majority of people or business owners that read this post which is fine as the motivation for writing it is to help as many businesses as I can. I choose to share the framework that has worked with many clients and will work for you should you choose to adopt it and do something different this year in your business. Whether you have been in business for a long time or are just starting out I know it can help you. The framework is called ‘Amplify’ and a summary of the key steps are as follows:
- What do you want? Owners need to understand and articulate their goals; you need to make them pointed and measurable. Short term, long-term, financial, non financial, whatever. You need to start with what you want out of your business and life as everything will flow from this.
- What is your why? Why do you do what you do? Google search and watch Simon Sinek’s TED talk on ‘Start With Why’. If you can articulate and communicate your why, you will get better results with the stakeholders in your business.
- Where is your business going? You need to set your strategic plan. This is about allocating your limited resources to achieve your objectives; your business of choice or design rather than default. This should link back to the goals you set above otherwise there is no alignment. Include a SWOT with more focus on strengths and weaknesses (internal factors that you can control) rather than opportunities and threats (external factors that you can exploit and mitigate).
- Do you have the right legal structure? Only create another entity for the right reason rather than for the sake of it or because someone else told you that you need one. You want to ensure you have the structure to support your strategy and ownership model, ensure tax efficiency and provide asset protection from the various risks. What does your structure look like? Do you understand it?
- How do the numbers look? Build a 3-way budget; by that I mean profit and loss (P&L), balance sheet and cash flow. Too many business owners do not have a budget and many of the ones that do have a purely P&L based budget which does not deal with capital expenditure, taxes or debt and ultimately doesn’t deal with the most important aspect of running a business…cash or liquidity.
- What is included in your regular reporting framework? Reporting is important to check on your progress and be able to right the ship when things are not going to plan. It also provides the basis for accountability for performance. Reporting needs to be timely after end of month and accurate and should at least cover the KPIs important to your business, variance to budget periodically and YTD and cash flow.
- Who do you have on your bus? Your people will make or break you and your business; you need to understand who is accountable to who and who is responsible for what. Complete your organisation structure chart focusing on the roles required rather than the people. Once you know what is required and which role reports to another in order to achieve your strategy and goals, you can back fill with the current people in your team. The trick (and the trap) is to look at the attitudes of people, their strengths and weaknesses, their skills etc. Just because they have been in your business for a long time is not reason to have them stay or fill the wrong role. Just because they do not have a particular skill is not the reason to have them leave either but reality is if you do this properly you will lose people and will need to recruit the right people. Generally you know who should not be in your business but will you act?
- Do you have accountability in your business? It starts with your people and you. You need to ensure you have a performance review and management framework that clearly articulates an individual’s and/or team’s expectations, what will be measured and when and how consistent non-performance is managed.
- How do you ensure your delivery is consistent? You need documented and accessible procedures and processes for your team. It is fine to continually improve and find better ways but apply this to the one way your business does it so everyone does that thing the best way and there is no misunderstanding. This will ensure there is less, if any, reliance on key people and your team has good support in doing their jobs.
- Finally where is the money? You need to ensure you understand and have in place your funding and capital facilities. Understand your funding gap and also the additional capital required to achieve your strategy and ultimately goals. Not only do you need funding but you need to ensure it is appropriate to purpose and structured correctly. Without this being sorted, the other points will likely be irrelevant.
Ideally to complement this process you would have a coach or a mentor or even an advisory board. This person or these people are independent so they bring challenge and perspective and help you achieve more than you can alone. Either way, if you apply the points above your business will be in a much better place than through just working hard.
You can see from the above that I have not even considered wealth creation and planning, succession or things like risk reviews. These all have a place but the above is designed to make businesses great and cut out the excuses. Hopefully it can help you. Why not make this year different and get what you deserve.