You might be the boss, but should you earn the most?

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You might be the boss, but should you earn the most?

 
 

You might be the boss, but here’s why you shouldn’t be the company’s top earner.

All good bosses know the buck stops with them. But, contrary to popular wisdom, that doesn’t mean it’s the boss who should be earning most of the bucks.

Top talent is incredibly hard to find and even more difficult to retain. If you want to rise above the competition and reach your goals, you should consider rethinking how you structure your salaries. The payoff for some unorthodox thinking could be enormous.

 
 

 

Specialists, not generalists, deserve special pay

It’s probably fair to say that the boss is the highest paid person in almost all businesses. It makes sense, right? A hierarchal structure will tend to have a pay grade scale that reflects it.

At ValueMaker, we don’t believe in following conventions unless they are guaranteed to get the best results. When it comes to pay, there are plenty of reasons why the boss may not always be the number one earner.

A great example of this way of thinking can be found in sport. A football striker has one main duty. To score goals. A football manager? Here are just some of their duties: picking the team; analysing the opponents; speaking to the media; reporting to the board; signing players; drawing up tactics; following new trends and tactics; hiring and managing coaching staff; firing those that don’t perform, etc, etc.

Who usually gets paid the most in top teams? The striker. Hardly seems fair, does it? But the special traits and abilities the top players possess are so rare, that to win trophies it is essential to have them. And that means paying top buck.

 

 

Put ego aside, reward those that move the needle

Now think of a world class salesperson. They have one job. To get you sales. As the boss, you will have countless roles and responsibilities and a far more complex workload.

But the truth is, there is no other person in the business that can have as an immediate impact on your bottom line and company health as a salesperson who is bringing you the biggest and best clients. Doesn’t it make sense that you should do what needs doing to attract and retain that talent?

It doesn’t have to be a salesperson. Anyone who is taking your company forward and getting measurable results, needs to be kept on board. If that means they take home a bigger pay packet – or fatter bonuses – than top executives, then so be it.

Ego is your enemy. Leaders should make the tough decisions that take the company forward, not blindly follow the pay ladder because “that’s how things are”.

 

 
 
 

How do you find the right pay grade?

When hiring, to get the very best you need to at least offer financial incentives that match the market rate for that role.

Too many companies work backwards when setting pay - starting with the boss’s pay as the top line, then making sure to offer a certain percentage lower for a new hire, depending where they sit in the company pecking order.

A smarter approach is to start with a blank sheet of paper and forget about the pay of senior staff.

 

The focus should be on:

- What is the market rate for that role?

- What is the level of competition for candidates?

- What experience does that candidate have?

- Do they have a ‘black book’ of key contacts that could bring results?

 

Once you’ve considered the above, what is the difference you now believe your preferred candidate can make to your company? What will be the value exchange for the level of salary offered? It’s important that your new hire knows exactly what is expected of them and what they need to be delivering. That way there are no surprises and performance goals are clear for all from day one.

The only question that should remain isn’t whether the salary you need to offer is more than the boss, but if you can afford to NOT hire them.

Most senior roles will have a probationary period to pass when they first arrive. If things don’t work out and they don’t have the financial impact you hoped, you can exit them. But if you’ve made the right hire, they will be more than paying for themselves. Just because you may be a small business, doesn’t mean you should always think small.

 

 

Value, value, value

Your hiring decisions should be based on long-term strategic thinking. What hires can best boost the value of your business? Top talent will be expected to increase a company’s top line revenue at a level relative to their salary.

Understanding what you can afford is of course key. But you shouldn’t be afraid to pay at a level you haven’t before to get the right people.

Do what you’ve always done and you’ll get the results you’ve always got. Turn the world upside down, however, and you have a real shot of going places and striking gold.


Getting hiring right

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Getting hiring right

 
 

When a promising hire fails to excel, it may be you, not them, that’s the problem.

Recruiting the best senior executive for your organisation can be a costly and time-consuming procedure. But just because you’ve put a lot of time into the hiring process, paid a hefty consultancy fee and put in place an attractive salary, it doesn’t mean you can just throw your new hire in at the deep end.

Many high-profile appointments fail because it’s assumed a senior hire should ‘earn their pay cheque’ and fend for themselves from day one.

It’s the wrong approach and often leaves companies having to jump right back on the recruitment treadmill, all while still trying to figure out what went wrong.

In this blog we look at the key areas you need to get right to ensure your hires have the best possible chance to make the impact you expect.

 
 

 

Managing (everyone’s) expectations

A lot of ‘hiring mistakes’ are explained away by candidates not ‘living up to expectations’. But sometimes it’s the employer who sets false expectations.

If the job description laid out in advance doesn’t align with reality, then the problem isn’t them, it’s you.  Both the advertised role and your expectations in terms of results and progress must be crystal clear.

During the probation period, the new hire should have constant feedback – formally and informally – to measure them against agreed upon KPIs and goals. That way everyone knows where they are at all stages along the road.

Nothing is worse for a new hire to have no feedback until the day their probation ends and to then suddenly be told they have lots of areas to improve in, or – in the worst-case scenario – they haven’t performed to a satisfactory level. There should be no surprises.

Regular progress meetings are not only motivating, but they allow the new hire to get the support and advice they need to do their job and hit their targets.

 

 

Even the best need help onboarding

Taking a superstar from one football team and dropping them into another isn’t enough to guarantee success. Even extraordinary players need to learn their new team’s strategy and tactics, understand on-field calls and spend time jelling with colleagues.

It’s no different in business. A talented senior executive moving between organisations deserves focused support. From quirks of company culture to unique decision processes, it can take time to get a handle on things.

Have them spend time with different people and departments in the company – both before they start and in their early days. Keep them up to date on all aspects of the business and put them in front of customers.

Even senior staff may need a while to understand their environment before they can make the necessary changes to enhance things for everyone else.

As Richard Branson famously wrote, you should train people “well enough so they can leave, but treat them well enough so they won’t want to”.

 

 

 

 

Have your house in order

Another common mistake around hiring is leaving the newcomer with a list of things to fix that should already be in place. Whether its personnel resources or problems with tools and tech, things that need fixing should ideally be done in advance. That way they can hit the ground running, not firefighting.

It goes back to the point about managing expectations. If you’ve sold them a Ferrari to drive, you can’t offer them the keys to a Robin Reliant.

 

 

Rewards are key

Paying a good salary is essential to get quality staff, but there’s more to motivation than just monthly pay cheques.

If you want someone to go above and beyond you need to incentivise them. Equity is one of the best motivators there is and a powerful way to recognise those making a significant impact on your company’s growth.

A good salary gets them in the door, but equity can keep them in the building. And if you’re a founder and CEO, you can’t worry if they earn more than you. If they are getting results, you can’t afford not to retain them. Don’t lose out because you feel you should be the highest paid. It’s short-term thinking.

 

 

 

Hiring is the beginning, not the end

The hiring process isn’t over when the candidate is offered a job. That’s the start. If you invest in new employees early and consistently offer them support, you will reap the rewards. It’s not about micromanaging, it’s about constructive support.

Not every hire will work out. But if you take this approach, your success ratio will reflect your attention to detail. And you’ll be able to hold your head high knowing you have done your part. Because, as with most things in life, the more you put in, the more you get out.

 


Why the non-executive director model is broken

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Why the non-executive director model is broken (and how to fix it)

 
 

Why the non-executive director model is broken (and how to fix it)

Sometimes a practice is so commonplace in business it becomes hard to objectively weigh up its true value.

One such tactic is the appointing of non-executive directors (NEDs) to a company board to inject fresh insight and expertise into an organisation’s decision-making process or to challenge conventional thinking.

It’s a practice almost universally accepted and utilised in the business world and when NEDs and companies are in true sync – it can certainly be beneficial.

But in many ways the NED model is broken. Too many companies are bringing outside expertise into the boardroom but failing to align their company goals with the people they invite in. Often, the NED tactic is utilised because it’s the ‘thing to do’, without any objective consideration of whether it’s the right thing to do.

 
 

 

It’s about value

A NED must constantly add value. It’s no different to the products you make or the services you offer. There has to be value in what you are doing or you need to trim the fat.

A common flaw in the model is appointing and retaining a ‘safe pair’ of experienced hands - perhaps someone who has succeeded previously in the sector your organisation sits in. They can say the right thing and give some smart insight, but are these things actionable? Are they able to help you get things done, rather than just theorise?

NEDs aren’t accountable the way other board members are, and it can be easy for them to look the part but not actually walk it. If your NED is simply steadying the ship, it’s not enough. They must be leading the ship through fresh waters.

It’s easy to speak wise words about things that have already happened in your company. NEDs should primarily project forward, not look back. They must advise on what needs doing to reach company goals. If your NEDs aren’t moving the needle, they need to go.

 

 

Value must last

Relationships in business are like those in life. What starts with a sparkle may not last. It’s possible someone can really be a fantastic NED for a period of time, but not add the same value later on. Perhaps their skill set was suited to a certain phase of your growth and now you need something else. There’s nothing wrong with that.

Build a ‘get out’ clause in from the start or risk getting tied up in knots down the road.

 

 

Getting off on the right foot

If an NED relationship is failing to bear fruit, the roots of the problem can usually be traced back to the recruiting process. At a minimum, the selection and interview process for an NED should be as thorough as when hiring a senior executive.

When appointing an NED take your time and meet lots of people. Don’t immediately be seduced by someone’s CV or impressive black book of contacts. Try to forge a relationship before formally bringing them on board. Talk strategy, get to know why they want to be an NED and understand fully what they offer. Make sure you have a meeting of interests or aligned goals.  You wouldn’t get married after one lunch meeting, so don’t jump into business bed after one either.

Remember, you will struggle to pick the right NED if you don’t have a business plan. If you don’t know where you want to be, how can you pick someone to help you get there?

 

 

Motivation is everything

Another flaw in the NED model is masked motivation. Being a NED can be quite lucrative, with significant financial rewards for a relatively limited time investment with little accountability.

There’s a thriving network around NEDs and it’s not uncommon for some people to make a very healthy living as an NED for a range of companies. While that doesn’t automatically disqualify them as candidates, it’s something you should be aware of.

Are they fully committed to each project?

Can you find out the measurable impact they’ve had in each company?

Do they do what they say they will do?

One way to test the commitment is to see if they will work a trial period without pay. A good NED, who will be committed to your business, will usually be willing to work pro bono to kick things off. That allows both sides to evaluate if the partnership is right for all.

 

 

 

Ride the carousel

For me, the main flaw with the NED model is it’s very difficult to have one individual meet all your NED needs in perpetuity.

A far more attractive model can be to work with a team of talent, instead of one person, and ‘carousel’ the right expertise through the business. At ValueMaker our model is based around partnering with organisations by offering them constant access to all of our expertise. Meaning those we work with get heavy face-time and expert insight from our whole team – all of whom have specialist skills and specific experience. This provides a much deeper well to draw upon and one that continually adds value. 


Pick the solution that works for you

The NED model can work if you make sure you approach it strategically, align your candidate to your business plan and are vigilant about measuring the value it provides you and when you are certain your chosen candidate has your best interests at heart.

But it’s worth considering other options, especially bringing in a team of advisors, rather than one individual. Allowing you to draw on an extensive range of both expertise and experience.

Whatever model you choose, the relationship must always be about getting your company where you want to go.

It isn’t about making the ‘trains run on time’.

It’s about having someone take those trains and help them reach new destinations.

 

By Ian Beswetherick

Goodlife Case Study

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Goodlife Case Study

 
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GoodLife Foods Limited is one of the UK’s leading innovators in vegetarian food. Formed in 1989, its own brand vegetarian sausages, burgers, Kievs, falafels and readymade meals are favourites with health-conscious shoppers in supermarkets such as Waitrose and Morrisons.

Nick Hamlett worked with Goodlife Foods for over two decades, serving as Managing Director for fifteen years.

Prior to Goodlife’s recent successful acquisition by Dutch food manufacturer Izico Food, Nick partnered closely with ValueMaker for a number of years - helping Goodlife to put in place the internal structure and working processes to make it an attractive organisation for sale, management buy out or long-term investment.

 
 

 

Goodlife Foods was already a thriving family business when you first approached ValueMaker. What was it that made you want to work with the ValueMaker team?

We had some big ambitions for Goodlife. These included a new focus on our own branded products over ‘own label’ products and a desire to get the company ready for a sale or management buyout.

I’d heard that ValueMaker were experts at taking ideas and objectives and formulating them into concrete plans and then assisting you in executing those plans. After meeting with Zoe Tibell and Ian Beswetherick, I was impressed by how quickly they understood what we wanted to do and I saw how they could assist us in getting to where we wanted to be.

Crucially, they helped us understand not just what was good for the business, but what was good for us as leaders and owners of the company. Together, we put the systems in place to get us moving in our journey.

 

 

What did ValueMaker identify or make you think about that you hadn’t thought about before?

ValueMaker instilled a discipline that made sure we always prioritised the things that took us closer to our goals.

When running a business, you’ve got so much to do, you can get bogged down by the day-to-day tasks and take your eye off what you want to achieve. You’ve got twenty or thirty things you need to do. It’s so easy to do those urgent things and not get to the things you need to do to hit your targets.

ValueMaker brought clarity, driving home the point that we had to continually make key decisions and we had to make them quickly.

 

 

Can you give an example of how they helped in this area?

Our brand was very important to us and we were keen to nurture it. At the time we were working with an external sales team. They were very good, but they were not particularly brand focused.

ValueMaker could see that the sales team weren’t the right fit if we wanted to grow the brand and made us re-evaluate the relationship objectively. We had worked with the sales team for over twenty years, so it was a tough decision to move on and build our own sales team internally. Ultimately it was the right decision and we wouldn’t have made it without ValueMaker. That outsider viewpoint they brought gave us the motivation we needed to make better business decisions.

 

 

Did ValueMaker help with developing an internal sales team?

Yes, they helped us to recruit a Head of Sales. Clare Goodrham was closely involved in both the recruitment and interview process.

With ValueMaker’s help we appointed Gregg Goldsworthy. We wanted someone with a branded background and who knew how to sell, which is a difficult combination to find. The results were immediate and within a few months our Goodlife branded products were in major outlets like Iceland, Morrisons and Sainsburys.

ValueMaker kept asking questions about our team. Did we have the right team? Where did we need to bring in people and strengthen? Did we have the head count we needed? They have the experience in this area to make a rapid, but positive impact. With their guidance we soon made other internal hires that kept pushing us forward towards our objectives.  

 

 

How did ValueMaker help in the long-term?

The main contribution they made was in getting the business plan in place. With their help we got a three-year plan created. They helped us to concentrate on the resources we required to make things happen.

In business making a plan is only part of what it takes to succeed, you also need to think about all the logistics and structure you need to get you to your end goal. ValueMaker know instinctively what the potential issues or shortcomings you face are and the strategies to overcome them.  

 

 

Can you talk about how ValueMaker helped on the leadership side of things?

The entire ValueMaker team spent quality time with our senior leadership in one-to-one coaching sessions and Gareth Coombs ran some fantastic team facilitation sessions. All of these things enabled us to solve challenges we were facing and also think differently about leadership itself.

One major cultural change ValueMaker implemented was having the senior leaders think of business problems as a collective group, rather than as something that only impacted one department or team.

So instead each head of department solely solving their own challenges, it was actually saying these are joint business problems we are facing. Let’s all work as a team together and solve things together. Not as a blame culture, but as a way of making the business work better. It was a massive change for the better.

And in terms of board meetings, ValueMaker sat in with us and exerted pressure on us to make decisions and get critical things done. It brought a stronger structure to what we did and ensured all departments were doing what they promised to do in meetings.

 

 

Can you talk about the results you saw from working with ValueMaker?

The growth of the brand was fantastic. Our branded sales soon became 50% of total turnover – up from 10%. They also helped to put in place a formal business plan that got us in front of private equity and other funding companies. ValueMaker open up an impressive network that you can tap into.

 

 

What was the big takeaway from working with ValueMaker?

When things are difficult, sometimes as a managing director you don’t have anyone to talk to, all the pressure is on your shoulders. Things can seem worse than they are. ValueMaker can give you some much needed perspective. They can look at it from the outside and help you understand what the problem really is and how to resolve it.

They’ve been there many times before and got results. Above all, that’s why I would recommend them to other organisations looking to grow in value.  

 

To find our how ValueMaker can work with you to achieve your organisation’s objectives, get in touch at enquiries@valuemakeruk.com.

Why you need a progressive accountancy firm behind you from day one

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Why you need the right accountancy firm from day one

 
 

Why you need a progressive accountancy firm behind you from day one.

Whether you are looking to exit or attract major investment, as an ambitious founder or leader you need to assemble a team focused on growth.

Your senior management – as well as any outside partners or agencies you work with – must be able to make the bold strategic decisions that nurture your expansion and development.

Yet when it comes to finance, a surprising number of organisations place very little importance on their selection of accountancy firm – going for convenient, low cost, conservative options and putting an innovative, forward looking attitude well down the list of requirements. That’s a major mistake. From day one, a relationship with a multi-skilled, progressive accountancy firm should be a priority for any business wishing to thrive.

 

 

A culture of numbers

Regular readers of our blog will know we are strong believers in taking a transparent and positive approach to your finances and aligning your company culture with how you run your finances.

All departments should be fully bought into a company’s mission and philosophy. If an exit strategy is your primary objective, then you need to hire experienced and proactive accountants that support that.

There are plenty of competent, trustworthy accountants out there who can keep your books ticking over with efficiency, but they may not be the ones who have the experience or passion you need to get you where you want to go.

You need to be asking if your potential accountancy firm understand the journey to exit and what buyers are looking for? Are they able to pull out the key drivers that investors are interested in to help get them on board? These questions are critical.


Don’t compromise on partners

Hiring a firm that ticks off the boxes listed above may well be more expensive than going with a smaller, local firm. But if your business is built for success it will ultimately pay off. Furthermore, mid-sized firms aren’t always as expensive as you think. If your company has real potential, the best firms will often be prepared to invest in you, understand the pains of bootstrapping and offer you the right support.

Larger firms can offer a wider range of support beyond basic compliance, enhance your credibility with investors and may be able to introduce you to the right people to help you grow.

Investigate all options, even if at first it may seem a firm will be out of your price range.


Think clouds, not calculators

Technology has transformed accounting just as much as it has any other function. Utilising the advantages of today’s cloud accounting systems – such as real-time financial reporting – is essential.

Not only does technology make it simpler to stay atop your finances, boost cash flow and make better, more informed decisions, it also makes it easier to communicate your financial health to outside partners or investors. The excellent visualisation tools that now exist can help you formulate strategy both quicker and with more accuracy than ever before. Ensure potential partners are embracing and making the best of the latest technology.

An example of that approach can be found in Mercer & Hole Chartered Accountants – a firm ValueMaker works with with when helping clients looking to outsource their accounting and financing. 

“We utilise cloud accounting as part of our outsourcing service for SMEs,” says, Ross Lane, General Practice Partner at Mercer & Hole. “Tapping into this type of technology allows SME owners to spend far less time on daily administrative tasks – freeing them to focus on running their business. Cloud tools can also make sure businesses are best-placed for the future - both in terms of commercial decision making and compliance with the ever-changing tax landscape.”


A taxing question

The complexities of the tax system can be overwhelming, but tax compliance is only a small part of what your accountancy firm should excel in.

An up-to-date understanding of Research and Development (R&D) tax credits is one of the best ways to drive growth. R&D tax credits are a blind spot for lots of companies – especially those who use smaller accountancy firms. Some assume schemes won’t apply to their area of expertise or that they are not a large enough firm to qualify for the benefits they can bring.

The potential cash flow they can help open up and the opportunity they bring should not be overlooked. Ensure your accountant specialises in this field.


Progressive, not aggressive

Many organisations are understandably nervous when accountants start talking about ways to make major indents into their tax bill. But the key is to identify the difference between aggressive and progressive accountants. Overly aggressive number crunchers should be given a wide berth. Potential missteps, failed audits and needless complications just are not good for either your peace of mind or the smooth, long-term growth of your company. 

Reckless accounting – such as massaging revenue figures - will almost always be identified by smart investors carrying out audits when weighing up whether to come on board. The best investors will steer clear of a company which can’t truly stand behind its figures.

Progressive accountants are the ones that creatively – but legitimately – look at how best they can work within the tax system to open up opportunities for your business.

 


 

Paying for themselves

Developing a relationship with a multi-skilled accountancy firm as early as possible in your business’s journey will be one of the best investments you’ll ever make. The cost of getting it wrong, could be a lot higher.

If you would like to find our more about identifying or working with the right accountancy firm, please get in touch with us at

enquiries@valuemakeruk.com

Growing your business in 2018: What will be key for founders and leaders?

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Growing your business in 2018: What will be key for founders and leaders?

 
 

Growing your business in 2018: What will be key for founders and leaders?

The start of a new year inevitably gets the mind thinking about making a fresh start. It’s especially true for business leaders.

The changing of the desk calendar can spark a surge of energy to tackle a new era and hit the goals and objectives that

weren’t quite scaled in the previous year.

We recently took a look at the key insights we gleaned here at ValueMaker working with our partners and clients in 2017. So we thought a good way to start the year would be to do something similar and look ahead at what we feel will be the crucial factors leaders and founders will need to consider in 2018.

 

 

Global uncertainty requires boldness, not meekness.

It doesn’t matter what side of the political fence you lean on, there’s no avoiding the fact the current political climate is akin to a threatening storm cloud looming over the business community. Whether it’s the confusion around Brexit,  the unpredictably of Donald Trump’s trade views or potential shifts in global monetary policy, it’s a nervous time for people looking to grow their businesses.

As we’ve always reasoned at ValueMaker, it’s vital your financial radar is attuned as it can possibly be. Are you confident you know how far you can extend your sales pipeline? How much capital do you have access to if you need to make a major investment in resources at short notice? Knowing the answers to these kinds of questions will help your company adapt, survive and - managed rightly - even thrive in the toughest of times.

Political volatility will always be dealt with best by the organisations with the strongest leadership. Because while others are losing their nerve, battening down the hatches or retreating, robust companies remain bold and are still prepared to take (informed and calculated) risks.

Be flexible, be informed and be responsive and you’ll be well positioned to overcome challenges and respond to opportunities and steal a march on your rivals.  


Keep your door open to the world.

2017 has at times given the impression globalisation has come to a shuddering halt – or at the very least someone is trying to poke a stick in its wheels.

From American protectionism to the complex trade negotiations that lie ahead between Britain and the European Union – the world could potentially be becoming a much more bureaucratic place. This mood has been compounded by the uncertainty being radiated out by plenty of big businesses.  

All of these global events filter down eventually to even the smallest of enterprises. Don’t be disheartened. Never has it been more vital to remain outward looking as a leader. Refuse to draw up mental borders around how you trade, partner or who you cooperate with.

The truth is there is so much uncertainty in how things will play out that the best route is to keep exploring all the opportunities open to your business. Leaders must of course be pragmatic and prepare for the difficulties of problems like Brexit, but they should not become purely reactive to external events. They must look to drive their own destiny.

Get out there and network as much as you can and keep talking to everyone who may be able to help your business grow. In a period where many UK businesses are nervous about what the future holds, portraying outward confidence and tackling the future with relish will likely pay off in moreways than one. In particular, this positive outlook may also stand in stark contrast to what your competitors are doing and perhaps, as a result, offer more opportunities than would normally be the case for your business.


Third decade of the 21st century lies ahead.

It may make you feel old, but we are in the twilight years of the second decade of the 21st century. The ‘twenties’ rapidly approach. As mentioned above, agility should be a core part of your leadership strategy and companies must respond to a constantly changing world. But leaders must always have one eye on the long-term too.

Ask yourself where you want your organisation to be in 2020. It may seem like, especially to smaller companies, that nascent technology such as AI, machine learning and robotics will only really affect major corporations. That’s not true at all. These new developments are already filtering down into how small to mid-sized business work. Each year their impact on business and society will multiply rapidly.

Is your company playing the long game and preparing for the changes these technologies will bring not just to you, but your customers and competitors? Smaller businesses may not be able to fund expensive R&D departments, but nothing is stopping them keep an eye on developments and seeing when the moment is right to start incorporating parts of AI and other technologies into their workflow.

Imagine trying to explain to a small business owner ten years ago the changes the internet, smartphones and social media would have on their business. It would have been incomprehensible. Yet here we are with all these things an essential part of the DNA of all our companies.

Major changes present thousands of micro opportunities. Keep your eye on both the big picture and the millions of ripple effects it has so that you are best placed to evolve with a changing world. Don’t be caught napping.  Be on the front foot.


Examine the road ahead before setting off.

So as you head into 2018, make sure you’ve taken stock of where your company is, where you want it to be going and what the road ahead looks like. Those that plan for the journey ahead will always arrive at their destination quicker (and in better health) than those who just head vaguely in the direction of the sunset.

Here at ValueMaker we wish you all the very best for 2018. 


2017 - Reflections on a big year and our top five insights

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2017 - Reflections on a big year and our top five insights

 
 

2017 has been a big year for ValueMaker. We’ve had the privilege of meeting and working with some inspiring businesses. Organisations who have a fantastic blend of products, people and services and are brimming with growth potential.

While every business that we have met over the last 12 months has been different, we have seen that they are

unified by a series of common themes that have directly influenced their performance. During the year we blogged about the challenges these organisations face and how business leaders can strategically overcome them.

Our top five insights for 2017 are as follows:

 

 

Business owners rarely understand their financials as well as they think they do.

In 9/10 businesses that we have worked with, we have found something material in their numbers that has changed their view on the real position.


As a result of the above, all decision making in the business is slightly inaccurate

If you don’t truly know where you are in your business journey, you can’t make informed, strategic decisions - undermining the energy in your business and slowing growth.


The simplest thing to do to impact growth is also proving the hardest thing to do – businesses consistently doing what they say they will.

It’s easy to commit to actions, but we see many often fail to follow through. Simply delivering the right actions, in the right timescales, can make a radical difference between mediocre growth and step change growth.


The behaviours of leaders has a direct impact on the speed and level of growth.

This may sound like an obvious one, but it is critical. We have worked with many business leaders this year and those who are the most open to change, willing to listen and whose behaviours are consistent, are the ones that have delivered the strongest results and are the ones we are most likely to help succeed.


Having somebody qualified to give you a view on the business from the outside and act as a critical friend is invaluable.

You don’t know what you don’t know. An unbiased outsider looking in can move the needle for your company like nothing else. As people who have grown, bought and sold businesses, we believe we are well qualified to help business owners achieve their ultimate ambitions.


 

2017 also saw the re-launch of ValueMaker’s branding and website and we feel proud that our own personality is better represented than ever before.  

We consider that our success at ValueMaker is based on good business karma. Good business karma is founded on trust between us and the people and businesses that we have the pleasure of meeting.

And at all times for our team, trust comes before the commercial aspect. We want to know that we can truly help a business achieve transformational growth and we want business owners to believe that we can make a genuine difference to the likelihood of them reaching their growth and investment goals.

People, trust and better relationships lead to great achievement.

 

The power of the outsider: Why every business needs someone who doesn’t know its business

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The power of the outsider: Why every business needs someone who doesn’t know its business

 
 

Good business leaders expend a lot of effort creating a positive internal business culture. They spend time getting to know their teams and delegating the right tasks to the right people. They know their product and services like nobody else and have an unparalleled understanding of their organisation.

If anything needs adjusting or something needs to be overhauled, great leaders will be the first to identify it and act. Right?

Well, not as often as you would think.

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The power of a fresh perspective

It may seem counter intuitive at first – but one of the most important factors in ensuring your organisation runs to its potential is to constantly have someone who at first knows very little about it to come in and take a look.

That outsider comes in with no pre-conceived ideas or – perhaps even more importantly – no political baggage, personal affiliations or ideology. If they see a problem, they see a problem. It’s that simple. They aren’t bringing a personal agenda or bias the way even the best internal leaders may do subconsciously.

The right outsider can do more to overhaul and refine your processes in a few weeks or months than most internally built working committees can do in a year.


Challenge and support in equal measure

Realising you can benefit from an outsider is a good start, identifying the right person is a delicate task.

Firstly, it’s not about bringing in the smartest business genius you know. Often successful business people make terrible mentors. They may do things instinctively they simply can’t teach to others as they don’t have the skills to impart that knowledge. As a result they can be emotional in trying to get their message across, rather than practical. Your mentor should offer an honest perspective grounded in practical actions you can take forward. Empathy is more important than genius.

The person you bring in should have real world experience in what you need their help with, not just be academically sharp. There is often a large gap between theory and reality and you need to know the person can bridge the two.

The right outsider challenges you, rather than simply supports you. It may be nice to have someone constantly patting you and your team on the back saying how well things are going, but that’s ultimately self-defeating. You need someone who also makes things a bit difficult and forces you to revaluate why you do what you do.


Getting internal buy in

When bringing in an outsider, it’s vital everyone internally is on board. This is especially true if you bring in someone you may have an existing relationship with. You don’t want it to appear like you’ve brought in an external ally to help force through your ideas.

When they first come in have them meet all the key stakeholders at the same time. Make it clear everyone has a direct channel to them if they want to discuss things. Critically, make it clear that no stakeholders – including yourself – will have ‘off the record’ or ‘secret’ meetings. Everything needs to be transparent and above board. That way your team will know the outsider is there for the company’s best interests and it becomes much easier to make changes.


Without focus, you have therapy

If you decide to bring in an outsider, you face a choice between picking somebody you have a strong relationship with and may work ‘pro bono’ (for want of a better phrase) or someone you pay for their time and insight.

There’s nothing inherently wrong with paying someone and many business people feel more comfortable with this arrangement. At a minimum, it’s easier to set down clearly the time and commitment a paid outsider will give – something that is trickery when someone is working for free and there is always concern you will feel you are asking too much of them. 

The key factor if you decide to pay for external advice is to make sure that the arrangement you come to is directly linked to the challenge you face. For instance, if you are struggling with productivity and bring in someone to try and identify a strategy to fix this issue, then set a performance goal. That way, the advisor is striving to help you reach that defined objective.

If you don’t formalise a goal, it is possible the advisor can drift along for years on your payroll with no real measure of whether that are genuinely contributing to a better performing company. You could effectively be making in the advisor’s interest to remain an advisor indefinitely.

Focus is also key for an advisor you aren’t paying, of course. But it’s a particularly costly lesson if you have a commercial agreement.

Additionally, if they are with you too long there is a risk they no longer offer the advantages an outsider does as they eventually become part of the status quo.

Without focus you are paying for therapy, not mentoring.


‘Change leaders’, not cheerleaders

Having a sharp, professional external pair of eyes on your business at all times is one of the best ways to add value to your business .

You need someone who support you while never flinching from asking the difficult questions which keep you on your toes. Finding cheerleaders or supporters is relatively easy. What’s difficult is finding someone who makes things tough but does so for the greater good.

If you want to fix things internally, often the answer lies outside.

 

ValueMaker supports teenage entrepreneur raising money for charity expedition to Cambodia

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ValueMaker supports teenage entrepreneur raising money for charity expedition to Cambodia

 
 

At ValueMaker we love working with entrepreneurs. We are energised by empowering passionate people to succeed and realise their ambition.

Which is why we are especially delighted to be working with a very special young entrepreneur who is looking to be part of a major charity initiative and faces a tough challenge to achieve his goal.

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15-year-old Marcus Cunnington is striving to raise £3,000 to join a Camps International expedition to Cambodia in 2018.

Camps International organise ethical and sustainable school expeditions across Africa, Asia and South America. Students are put to work on projects which transform communities and help them overcome the significant issues they face such as access to education, housing and clean water.

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The trips also aim to challenge a student’s view of the world, expose them to different cultures, teach them new life skills and help them realise the difference one person can have on the world with the right attitude and hard work.

 

Getting shirty for the right cause

To reach his £3,000 target Marcus – a student at the Samuel Ryder Academy in St Albans - has set about coming up with all sorts of fundraising concepts and putting them into action.

Showing a flair for promotion and marketing, Marcus’s most successful idea to date was contacting several organisations - including ValueMaker - offering advertising space on a t-shirt he planned to wear at all fundraising activities as well as on the expedition itself.

“I’ve managed to raise a £1,000 through t-shirt sponsorship,” said Marcus. “It’s by far the most I’ve raised from one single activity. I’ll be sharing images of me in my shirt as often as I can across social media and online. It’s wonderful to have the support of ValueMaker for something that means so much to me and I’m very grateful for their backing.”

In addition to the t-shirt income, Marcus has been busy doing everything from selling cakes at school fairs to earning money as a football referee.

“I recently qualified to be a football referee,” explained Marcus. “Some weekends I referee two games for games involving teams with players ranging from ages eight to fourteen. Everything I earn from this I put towards Cambodia.”

A keen rugby player, Marcus also plans to take a small rugby ball along with him to help him engage with the local children he’ll meet and “maybe teach them a new skill”.


ValueMaker proud to support passion

To date, Marcus has raised an impressive £2,136. Meaning he is over two-thirds of the way to his final target.

“I was really impressed by the positive way Marcus has gone about raising the funds,” said Ian Beswetherick, Co-Founder and Director at ValueMaker. “£3,000 is a daunting target for anyone to raise, let alone a 15-year-old boy in school. I admire the entrepreneurial spirit he’s shown in not just coming up with good ideas – such as the t-shirt – but putting in the work to make those ideas a reality.

“The focus Marcus has shown in going after his goal is admirable and I’ve little doubt the fundraising process will teach him almost as many valuable life skills as the expedition itself. We are delighted to have contributed to Marcus’s fundraising and proud to be one of the logos on his t-shirt. I’ve no doubt he’ll hit his target in no time and we look forward to seeing our logo on him in Cambodia!”

“I am really looking forward to immersing myself in a new culture, seeing new places and trying new foods,” said Marcus. “But most of all, I’m excited about being part of something that’s helping people less fortunate than I am.”

Based on his efforts so far, nobody at ValueMaker has any doubt that Marcus will soon raise the full amount and be set for the experience of a lifetime. Everyone at ValueMaker wishes Marcus the very best of luck.


How can you help Marcus hit his goal?

There are a couple of ways to help Marcus’s fundraising efforts. Firstly, if you shop online – for anything from travel insurance to toasters – you can help Marcus raise money by signing up to his easyfundraising account here. Easyfundraising is connected with over 3,240 online shops and sites. If you register with Marcus’s details and make a purchase with any of the affiliated stores and sites, a commission from these purchases will be given to Marcus’s cause.

Alternatively, you can donate directly to Marcus’s dedicated bank account. Drop a line to [Marcus Cunnington via julie@thecunningtons.co.uk and mention ValueMaker] to find out more.


Is fear of planning stopping your company from reaching its potential?

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Is fear of planning stopping your company from reaching its potential?

 
 

It’s never a great idea to set off on a journey without some kind of a map to guide you. A good map stops you making bad decisions, taking wrong turns and wasting time and money.

Yet too often CEOS, founders and senior executives set out to try and make their business a success and attract investment without any kind of formal plan mapping out their future.

For some organisations the word ‘plan’ seems to be a four-letter word. But without a plan to follow and measure your organisation’s progress against, your company is effectively travelling blind.

In this blog we examine why making a map for the future of your business is essential for helping your business grow efficiently. We also take a look at some of the common reasons businesses give for not making formal plans and why your business shouldn’t fall into that trap.

 

Fear of planning

In my experience there are three popular reasons people offer for not having a formal plan in place:

 

They don’t have time

They never made plans before and the business has done well so far

It’s just more paperwork
 

But when you dig under the surface, the above excuses are usually just fronts for a far simpler reason so many fail to make plans: fear. It’s fear of sitting down and putting targets in place and fear of being held to account if that plan doesn’t come to fruition.

These fears are understandable, but they are also misguided and ultimately damaging to the future of a business.


Start small and build up

There’s a misconception that creating a plan involves months of work and hundreds of pages of jargon. But that isn’t the case. A good plan does not have to look like War and Peace. Planning is essentially simply putting down in writing the who, what, where, why and how for your business.

For leaders who find it hard to sit down and plan it’s okay to start small. A plan for one quarter – or even a month – is better than no plan at all. Even a one-page document setting out key goals, listing who is responsible and setting out a time frame for actions to be completed can have a surprising effect on productivity.

Over time plans can extend to cover longer time periods and get more detailed as and when needed. But forming the habit of making plans will only have a positive impact on your business.

Saying you ‘don’t have the time’ is ultimately flawed reasoning. Because without direction and focus an organisation will inevitably lose even more time (and money) in the long run on initiatives and processes that won’t get results or lead them down the wrong path.


Everyone can make a plan

Lack of planning isn’t due to senior leaders lacking vision or intelligence. Far from it. But often leaders feel that detailed or formal planning is a task for others.

No manager or leader is too important that they cannot pen a plan or be heavily involved in one’s creation. What’s more, plans that come from respected senior management and clearly outline what a company wants to achieve can really aid internal communication.

Employees always feel better knowing what the company’s strategy is and making plans is a great way to ensure objectives cascade down into the wider business. Communicating your plans will help bring consistency into the business and energise your teams.


Plans are flexible, not rigid

Not even the most efficient business will hit every objective in their plan. The real world doesn’t run that smoothly. But this is not a reason to not make a plan. Plans should be seen as guiding principles that help you focus and avoid surprises.

A plan gives you benchmarks to check progress against. When you excel and succeed above your expectations this generates an immense amount of positive energy in your organisation.

If you fall short you have something to get your teeth into to try and analyse why and fix going forward. If you aren’t planning you won’t even know if you have failed to hit your potential.

And this is the danger that many leaders who say ‘I’ve never needed a plan before’ fail to recognise. In reality, they are unable to accurately measure performance. It’s possible a company is content with 50 sales a month, not realising that with a few tweaks here and there in their practices and processes, they could be making 100 sales.

So if your company is travelling without a map to guide it, pull over and start drawing one up. If not, don’t be surprised if you end up continually wondering when you’ll arrive at your destination.

Why CEOs need to know when not to change, as well as when to change.

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Why CEOs need to know when not to change, as well as when to change.

 
 

Are you a leader that is addicted to change? Do you get carried away with the ‘razzle dazzle’ of change but then fail to see things through? Our latest blog takes a look at what CEOs need to know about change so they keep moving their company forwards, not backwards.

Change is essential for success. For a business to succeed it is critical to evolve. The products and services it offers must grow and adapt as the audience expands, new trends develop and competitors mix things up.

Which is why the best business leaders constantly seek out new strategies or tactics that may take their organisation to the next level.

But although CEOs and founders must be open to change, knowing when and how to change is just as important a skill. Leaders must be able to objectively understand when change is needed, how to make changes and, crucially, when change must be resisted.

 

A changing leadership

I once worked with a very progressive CEO who appreciated the value that comes from being open to new leadership techniques. He ticked many of the boxes that make a great leader: forward-thinking, open to external ideas, willing to listen to new concepts, eager to learn and willing to act.

The problem was he was addicted to change. Nothing remained constant. Just as soon as one new management practice was put in place another one would be brought it. Change was so frequent there was never enough time to see if the previous set of adjustments were getting results. It was a classic example of a leader’s behaviour having a negative impact on a company’s value.

Eventually staff stopped buying into new theories as they knew that by the time they had gotten into the rhythm of a new way of working the beat was going to change again.


Know what positive change looks like

Sometimes a change can be made because new ideas can be seductive or inspiring. But if you plan to enact change you have to know what success looks like first. Is it a defined amount of increased revenue? Is it a shorter production time? Whatever it is, you need to have defined your goals clearly. Otherwise, you are making changes with no focus on what you are changing for and how to work towards the end goal.

Change must be measured, evaluated and compared to what came before. Set yourself goals, benchmarks and KPIs before your revolution. This is how you figure out what aspects of your new regime is having a positive impact and what changes are not matching up to what you hoped and need refining.


Simple changes are often the best

If something feels complex, it probably is. Plenty of management theories or radical new company structure models may work fine in the ink of a textbook or in the razzle dazzle of a conference presentation, but may not hold up as well in the real world.

If communicating potential change to your stakeholders and staff is complicated, then most likely the system you are bringing in is overly-complicated. Complexity rarely works under pressure. Simple and practical real-world change almost always beats complex theory. And sometimes, small changes are all you need.


Is your team able to change?

Even if a strategy or idea is sound, you must have the team in place to put it into action. Don’t force systems onto staff who are not suited for the role they need to play in the new environment.

If you have a young, inexperienced team, asking them to run a system that requires large amounts of self-sufficiency will likely break down as individuals may lack the confidence or knowledge to make good decisions without guidance. Pretty soon you’ll see a drop in both performance and morale.

Have a clear picture of the talent and abilities of your team and be 100% sure the new process will fit their core skill-set. You can’t force it.


Commit to change

If you have carefully weighed up the case for change and are confident you have the people and resources to put it into action, then you must commit.

It takes time to see results and time for people to get used to a new way of working. You can’t panic if things don’t seem to immediate improve or if early mistakes are made.

Staying power is vital. As a leader you have to display confidence in the course you have set. If you don’t, who will?


Explain your thinking

You must get buy in from your team on why you are making changes. If they don’t understand what you are trying to do, how can you expect them to be motivated to overcome teething problems?

Explain clearly why a new process or tactic is needed and why you think the new method will work. Get feedback from people you trust (and act on it). Think of it as pre-emptive troubleshooting. Once you’ve had outside influence then you can set out your plan and decide whether to put it into action.


Change must be about progress

Leaders need to make the decisions that move their organisation forward. Change is at the core of good leadership. But change will only lead you upwards if it’s done in the right way, for the right reasons at the right time.

Change, as they say, is good. But only if it’s the right change done the right way.

 

CEOs – is your leadership style helping or hindering company growth?

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CEOs – is your leadership style helping or hindering company growth?

 
 

If you were to list the ideal attribute a CEO needs to successfully lead their company to growth and expansion, what comes to mind?

Most likely you’ll think of the ability to lead and inspire others. To be able to take a company vision or mission and build and empower a team to ensure their organisation reaches its goals.

But an often-overlooked strength of the best CEOs, but just as essential, is the capability to constantly reflect on their own behaviour and leadership style and adapt it for the greater good of the organisation.

Because for every company led to success through inspired leadership, there are a dozen great ideas killed off by the behaviour or failings of the person at the top.

So as a CEO, what is your style and is it likely to lead to success or send things to a shuddering stop?

 
 

 

Valuation is linked to behaviour

Even if the product or service is great and the revenue keeps growing, leadership directly impacts the worth of a company.

Negative leadership traits eventually have negative financial outcomes. Whether it’s arrogance, needless aggression, lack of attention to detail (or attention to the wrong things), failure to respond to change or not holding oneself to account, at some point these traits will come back to haunt an organisation.

As a CEO you need to constantly be assessing your behaviour and actions and asking if their impact adds to your company’s value or lowers it.

 

 

CEOs are not meant to have all the answers

Perhaps the most damaging trait a CEO can have is to believe they have the answers to everything. Or, if they don’t, they should act like they do.

This refusal to defer to the expertise of others is particularly common when a CEO also founded the company and was initially involved in every single decision a company made.

An inability to step away from being involved in all aspects of a business can be a real red flag for investors. Firstly, it indicates a CEO may be difficult to work with post investment. Investors need to be confident a CEO is open to change and innovation and outside help. It can also signify that the CEO has not built a capable team who can stand on their own.

Finally, that kind of leadership is likely to frustrate current employees and scare off potential future hires. The very best talent will not want to work in an organisation in which they will be consistently undermined or overruled.

Sit back and ask yourself how many key decisions are made without you having the final say? How often do you overrule senior leaders? If the answer is anywhere near 100%, it’s time to re-evaluate.

 

 

Ask others

Great leaders don’t surround themselves with ‘Yes’ men. You need to have somebody in your inner circle who is prepared to talk to you about your flaws and strengths. If you don’t have anybody inside your organisation who you can go to and ask for an honest appraisal of your leadership, you need to find one.

External output should be highly valued too. A mentor or experienced leader from outside your business who can take an objective view of things in your organisation can really help keep you focused and making smart decisions.

In the short-term you can perhaps look to a friend or family member for some insight, but ultimately for the good of your organisation you need to have that kind of person with you day-to-day.

And if you are really struggling to find anyone able to speak honestly with you from inside your organisation, then that’s a problem in itself and probably an indication that your leadership style is too aggressive.

 

 

Great CEOs hold people to account (especially themselves)

Your team want to be held to account. Good managers respond to clear goals and a clear assessment of whether they have hit them. It motivates them, gives them something to measure performance against so they can improve and – ultimately – helps the company grow.

If as a CEO you don’t create a clear business plan and install a culture which pushes for progression in performance and results, then you will remain in a ‘startup mentality’ and likely get stuck going around in circles.

CEOs should lead from the front in this regard and above all hold themselves to account. Demonstrating where you’ve both excelled and fallen short provides a great example of what you want in your organisation and is the best way to show your team of the need to be able to adjust to change and face new challenges.

Again, this will be noticed by potential investors or buyers and give them confidence that your organisation has the flexibility to meet what the future holds and the changes investment brings.

 

 

Passion (and behaviour) is infectious

CEOs can be very good at looking at external challenges and producing solutions. But sometimes they are not so good at identifying problems closer to home.

Some leaders may find it the most difficult thing of all, but it is vital to be able to have a ‘heart-to-heart’ with yourself. The sooner you can admit to and acknowledge any issues with your leadership style, the sooner you can take steps to address it and realise your ambition.

Passion and behaviour is infectious. You need to be setting the right example from the top and shaping a positive culture. Because if you want your company to grow and you don’t change your behaviour, why would you ever get any different results to what you are getting now?

You’ve got the plans to expand your business, but have you got the people skills?

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You’ve got the plans to expand your business, but have you got the people skills?

 
 

Last week we shared a great blog from EFM on what companies need to consider about expanding a business and dealing with mergers, acquisitions and funding requirements [click here to view].


The piece did a great job of setting out the processes that need to be in place when expanding our organisation and the importance of numbers and strategy. It really got us thinking at ValueMaker about the other side of the equation in these matters too. The people side.

Because while having the structures in place and the numbers aligned is essential, it’s also just as critical to make sure the people side of things are in a strong place too.

So how do you go about measuring the ‘human capital’ in your organisation and making sure you are in the right place to expand? When you hold a mirror to your own company, what is it you should be hoping to see?

 
 

 

Does your team have that ‘crackle’?

One of the things I enjoy most in my role is having the chance to visit lots of growing companies who have the potential to do great things and excite investors. But just as important to me as the figures and processes behind the scene is the ‘crackle’ among the team.

Crackle is what I call the energy that radiates from the team in everything they do, how they do it and the way they talk about it. It’s hard to explain on paper, but it’s something you learn to pick up through experience over the years. And it’s something investors sense too.

A team’s passion should shine through and as an owner or founder you should be feeling it. If you don’t sense others sharing the enthusiasm or belief you have, it’s probably time to evaluate either what you are doing or the people you have doing it.

 

 

Are your leaders responsible AND accountable?

One of the toughest things to balance as a company grows is making sure the key stakeholders or leaders feel accountable for what they do.

There’s an important difference between being responsible and feeling accountable. Some executives or leaders may take on responsibility for a department, plan or product, but are reluctant to be held accountable for the success or otherwise of it – always finding an exterior reason for failure that absolves them from blame.

For companies looking to expand this is of particular relevance. This reluctance to be accountable will become even more exposed if your organisation grows and the things they are responsible for increase in size. It’s often the elephant in the room, but if your key leaders are not stepping up here, the elephant will overwhelm you. Confront it head on before it’s too late.

 

 

Attitudes to change

Organisational change is always a delicate matter. Even the most progressive workers can find it hard to change a groove or routine. But the attitude shown to change is what matters.

Expanding your business, taking investment or being acquired will always result in major structural or process changes. Does your team have the right cultural attitude to cope?

Always make a note of how individuals in your company respond to change. Whether it’s their job role evolving or new project management techniques, the way they adapt (or fail to) will give you a good indication of how they will react to major expansion or investment in the future.

If too many of your key leaders or staff are resistant to change, you need to take care. It’s vital for success that your team is dominated by those willing to embrace change. Nothing saps moral like resistance to progress.

 

 

It’s about the pack, not the lone wolves

Combinations and chemistry forge success. Hiring great people is always a goal, but hiring people prepared and able to work together is even more vital. Just as sports teams packed with superstars don’t always do as well as a team of grafters, so the best CVs don’t make the best business.

When hiring trying to find out as much as you can about a candidate’s ability to work with others. And test out new hires as soon as possible with teamwork situations. Expanding your company will involve plenty of recruitment drives and possible mergers with other companies.

If your team is full of lone wolves, you’ll soon suffer for it.

 

 

Doers, not talkers

Language can reveal so much about leadership and potential. In fact, it may be the most crucial aspect of all.

Do your leaders talk about what they plan to do or do they talk about what they are doing? There’s a big difference. Expansion involves actions, not just words. Always measure up the language used by an employee against what they actually deliver.

Great ideas mean nothing if the person behind them can’t spark them into life.

 

 

Look inwards, before looking outwards

Few businesses build their success on a single great idea. Most companies that excel do so because they are built on the hard work and dedication of great teams.

If you want great business growth or investment, you need to make sure you put together highly able, highly motivated teams with an open and honest culture. Half the challenge is having a robust plan, the other half is how you deliver it.

Remember, due diligence isn’t something the best investors will run on your accounts and processes, it’s something they will also run on your team.

Will your’s pass?

Guest post from EFM: How to expand a business, deal with mergers & acquisitions and funding requirements

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How To Expand A Business, Deal With Mergers & Acquisitions and Funding Requirements

 

Our contacts at EFM have penned a great blog on the subject of how to expand a business. We wanted to share it with our readers and we’ll also be publishing a piece inspired by it on our blog next week.

EFM is a nationwide team of Finance Directors and Business Advisors who provide ‘pay as you go’ financial management services to businesses that want the benefits of a Finance Director – but without paying an FD’s full-time salary.

They provide practical commercial support to hundreds of growing businesses across the UK, complementing the services of your Accountant.

Find out more at www.efm.uk.com

“Expansion should be avoided if a business is in trouble or financially unstable as this will only magnify its problems”

Chartered Accountant and MD of EFM Network of Finance Directors – Gary Jesson on expanding a business and what to do when involved in Mergers and Acquisitions. 

For some, driving sustainable growth through expansion can be a nightmare, as expansion can be risky and in some cases, unsuccessful. It is necessary to strategise and research any expansion plans properly as well as consider alternative sources of funding, some of which are discussed in this piece.

 

Expanding businesses

REPLICATING business success is the dream of many entrepreneurs. For some others, driving sustainable growth through expansion can be a nightmare, as expansion can be risky and in some cases, unsuccessful. Business owners often face a dilemma in deciding when the right time is to grow the business. Rapid expansion or attempted growth in the wrong market may be disastrous, causing huge losses, especially if the business is not financially strong. Expansion should often be avoided if a business is in trouble or not financially stable, as this will only magnify its problems.

A certain level of intuitive reasoning combined with strategic planning would be required for the analysis. Identify the inherent risks associated with the growth process in order to choose the right time, the right market and the right expansion route. In the case of mergers & acquisitions, it is important to be aware of the time and resource required to run the project – prior to, during and following the deal to enhance the chance of success.

Planning: 

Assess growth options based on your industry, availability of funding, the skills required, product and service offering. Also assess your goals and the possible risks of expansion. SMEs are usually more at a disadvantage because they lack the marketplace leverage that their larger counterparts enjoy by virtue of their size, but can often respond quicker to growth opportunities, as they would normally be more agile and quicker in decision-making when finding new markets to expand into.

Devise a business plan that is flexible enough to allow the business to capitalise on emerging opportunities. Establish a dedicated growth team with focus on a finance person who will be key in budgeting and projecting future cash flow, and will help understand the financial risks of the expansion strategy.

The Right Route:

 There are many options to consider – some of which include new physical locations, licensing, franchising, joint ventures, product diversification, globalisation and online growth. Do not underestimate the complexity of integration if you are considering collaborating. Likewise, when looking overseas, cultural fit and local law can have a significant impact on your planning. Some of the risks you may encounter during expansion include loss of key staff, incompatible technology, growing too soon and having to shut down some outlets/branches, funding crisis, and in the worst case scenario, losing your once profitable company.

Evaluate each route carefully and speak with appropriate advisers who have experience with similar businesses. Can you demonstrate proof of concept via a pilot, orders or signups for the new offering before the official launch date? This will validate your offering and its sustainability.

Organic Growing Pains: 

The greatest disservice any business owner can do is to grow too quickly and then subsequently collapse because the business is ill-equipped to handle new market demands. Incorporating contingencies into the business model will help in minimising to minimise some of the less palatable symptoms of change and reduce the risk of failure. Some of the problems that may occur during expansion include chronic understaffing or under-resourcing, high staff turnover resulting in low morale, system crashes, running out of cash or poor organisation due to increased responsibilities.


To address some of these issues:

Get flexible support until the job or role becomes clear and certain.

Create systems and processes that are scalable and replicable. If you do invest in machinery and equipment, endeavour to use these assets to their full potential and focus on the aspects of your offering that advance your core competence and strategy. Delegate or outsource the rest.

Do not lose sight of your strategy. Your business plan and budgets will keep you focused when demanding routine activities distract you and temporarily disturb your plans. Keep a core team of supporters and advisers to provide creative ideas, legal, financial and marketing support.

Knowledge is power. Find out everything you possibly can. Background information will assist the business in leveraging the key steps for achieving a successful transaction, as either the purchaser or the target of a deal.

Mergers & Acquisitions: Many businesses would normally gravitate towards physical locations and new product development for growth, so it is important to focus on this delicate route here. Strategic mergers and acquisitions can be a quick and effective way to attract talent, market presence and income for a fast growing business. However, risks abound for the negligent. Management teams need to fully understand the mechanics of M&As to be effectively involved in the lead-up to, during and after the deal, transaction and integration stages.

Is there a cultural fit? Are there any skeletons in the closet? Are there any troubling press or integrity issues? Review every aspect of the business including the asset values (balance sheet), team quality, contractor and supplier agreement, liabilities, compliance, pay structures and contracts. Don’t forget invisible items such as intellectual property, strength of customer, order book, websites and domain names.

For the strategy to work, effective communication is key as this it will facilitate integration and promote trust. Do not underestimate the time required to complete mergers and acquisitions- it could take up to a year. To minimise staff disruptions and deal with their fears, have clear organisational goals and share them to get cooperation and support. Bring in flexible additional resource to help over this period.

This is a very strategic route and should only be embarked upon with careful planning, research, support and advice. If this plan fails, what is your backup plan?

Obviously, there are inherent risks and these potential threats cause many businesses to choose to stay small. However, careful planning and precise execution will guarantee the success of any growth plan and help to optimise value, mitigate potential risks and implement the new business line effectively.

Why shining a light on your finances is key to growth and getting investment

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Why shining a light on your finances is key to growth and getting investment.

 
 

What is it that consistently makes a great business stand out from the competition? What continually persuades investors to support one organisation over another?

Surprisingly, it’s rarely the company’s USP. Great products and services may get companies noticed, but they don’t get them bought.

What’s music to the ears of all investors is how a company manages its cash flow and plans its financial future.

Yet too many companies looking to get investment or make an exit neglect the numbers. Viewing tasks involving calculators and spreadsheets as chores to be endured rather than opportunities to grow and reel in investment.

So here’s why you should focus on the figures as much as you focus on your product or service.

 

Good finance is about acting, not reacting

At ValueMaker the most common fear business owners talk to us about is running out of cash. That nervousness stops leaders make brave decisions about the future of their business and leads to growth opportunities being missed.

This usually occurs because small companies often don’t have the right people in place to focus on things like cash flow and forecasting. Instead, finance departments are frequently set up to react (pay bills, chase late payments) rather than act (handle cash flow, plan for growth).

Shifting to a proactive financial attitude is one of the most significant and positive changes a company can make. Hiring a progressive finance leader is as much a game changer as bringing in a great product designer or expert marketer.

Good leaders create structure, which leads to consistency, which in turn builds confidence. Confident companies find it easier to build momentum and are the ones that ultimately succeed.


Cash (flow) is king, not profit

Virtually all companies experience challenges with cash flow. It’s part of being in a growth business. What’s key to overcoming this obstacle is to always shine a light on your finances, rather than try to ignore them.

A frequent mistake is to focus exclusively on profit, instead of on cash flow. It’s vital you have visibility of your cash at all times and one way of doing that is to always set yourselves cash flow targets.

Get your invoices out quickly and be clear about payment terms with customers. Ask yourself what you can do to make it easier for customers to pay. For instance, would an instalment payment plan for clients keep the cash flowing more smoothly? Keep asking questions and you’ll soon find what works for you.

Even if your business is healthy, you still should set cash flow targets. Cash flow discipline is central to how investors view your company, so get it right.


Young companies need to be as analytical as mature ones

Many startups delay implementing more rigorous financial processes until they reach a certain growth point. It may save hassle in the short term, but in reality it’s simply shifting the problem to another day.

The sooner you put in place robust financial structures and forecasting the better your company will function. Technology today means it’s never been easier to have a comprehensive view of your finances. Not only is there plenty of affordable software that allows you to efficiently and effectively stay atop your finances, these tools allow you to have real-time insight into your figures. Meaning potential cash flow challenges should be spotted before they happen.

In an increasingly fast moving global economy, real-time cash flow figures and forecasting tools aren’t a luxury, they are an absolute must.


Strong forecasting leads to better investment

Good planning and forecasting not only increases your chances of getting investment, it also means that you are more likely to get the right amount of capital injected when you do need it.

Few things are worse than winning investment and finding out six months down the line you need to go back to the well for a top up. This not only disrupts your work flow, it will also concern investors who will wonder why you were off the mark in the first place.

Putting forecasting and cash flow projection at the heart of your planning also ensures you and your employees understand the language and culture of investors. Making it easier to communicate with and work with those who can help your business step up to the next level.


Look ahead, not behind, to inspire investor trust

Going to investors requires opening up the inner workings of your company. It’s uncomfortable, but necessary. But it can often do more to seal the deal than any USP can.

A progressive financial culture will always inspire confidence in partners as an attention to detail and an accurate understanding of everything from your cash flow to your projected annual income will minimise the financial risk to potential investors.

So make your philosophy one of looking forward as well as backwards. It’s a mind-set investors will really buy into.

Written by Zoë Tibell and Anne Blanden

Want to grow your business? Then spend 80% of your energy on just 20% of your tasks.

 
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Want to grow your business? Then spend 80% of your energy on just 20% of your tasks.

 
 

How long is your to do list today? How many tasks, meetings or events are in your calendar between now and the end of the month? Dozens? Fifty? Hundreds?

Now, how many of these will actually progress the growth of your business? How many will move the needle and directly contribute to revenue? Hazarding a guess, you could probably count the ones that will really have an impact on your company’s bottom line on your fingers.

 

To keep your business moving forward you need to be able to distinguish between two kinds of tasks: progressive tasks and maintenance tasks.

Until you can tell the difference and act on it, your business is unlikely to reach its potential.

 
 

 
 

Moving forward or standing still?

So what’s the difference between maintenance and progress tasks?

A maintenance task is something that has to be done, but doesn’t actively move you forward to your business goals. This is everything from filing your expenses to ordering new computers for the office.

In contrast, progress tasks clearly have an outcome that puts your organisation in a better place. It could be closing off a series of sales or signing a contract with a new client.

No matter how tough business leaders like to think they are or how many caffeine fuelled late shifts they can put in each week, the reality is there is only so much energy you can put into your work and keep the quality up.

What you need to be able to do as a leader is devote the bulk of your energy to the progress tasks.

 
 

 

Complexity is your enemy, simplicity drives success

Momentum is everything in business and you need to focus on using your drive where it makes a difference.

Your maintenance tasks must be done of course, but you must have the discipline to do them efficiently and effectively. You simply can’t expect to devote most of your energy to admin tasks and be an effective leader. Whether it’s delegating your tasks to the correct member of your team, hiring new staff or getting in the right technology and software, you have to find a way to free yourself up to remain focused on the core issues.

Sit down and figure out the split between progress tasks and maintenance tasks. In my experience, when a business is struggling to grow consistently or experiences success in short fits and bursts, one of the key reasons is managers are spending as little as a quarter of their time on progress tasks.

As hard as it may seem, you need to flip that dynamic. 80% of your time and energy levels should probably be spent on just 20% of your tasks.

Ignore business gurus who try to overcomplicate running a business. Complexity will clog things up, keep it simple. If Task A moves the needle, focus on it with everything you have for as long as is needed. If Task B doesn’t flip a switch, be brisk, efficient and move on.

 

 

Tomorrow never comes

I’ve attended countless board meetings where a company is struggling to break through a seemingly invisible barrier halting their growth. I always ask them what is the one thing they would most like to be able to do that would make a difference to the company’s bottom line. What’s the one thing they haven’t gotten around to because they are too bogged down in other tasks?

Almost inevitably at the next meeting that task still hasn’t been tackled. The excuse? “We were too busy!”

When you look at that situation in isolation it makes no sense. But that is the extreme reality of what happens when energy is filtered into maintenance tasks over progress tasks. It’s a mind-set and if your company has it you have to change it.

Once you’ve identified the one task that can transform your company, that’s where you must focus every drop of energy you have. Because if you are waiting until the maintenance tasks are all done before starting, guess what? They never will be.

 

 

Focus and move forward

It’s not about how many tasks you do a week, it’s about how many steps you’ve taken on your journey. If you try to do everything, you’ll either end up doing almost nothing or doing things below par.

You must always be moving forward. So take a look at your diary and put 80% of your energy into the right 20% of the tasks you have lined up. You won’t regret it.

 

If this blog has struck a chord and you’d like to get advice or insight from someone who has experience in this area, then please get in touch.

 

Why you should change the way you think about equity and who you should be sharing it with.

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Why you should change the way you think about equity and who you should be sharing it with.

 
 

Sharing equity can be tough. As a founder you value every single drop of blood, sweat and tears that has made your company to what it is today.

It’s understandable that for some people ‘giving’ away chunks of the fruits of their labour to people who weren’t there in the tough early days can be a difficult process. Surely these newcomers haven’t earned it yet?

But as counter intuitive as it can seem, giving up equity is more often than not the best way of getting more for all your hard work, not less. Because if you really want your efforts to pay off as much as possible, chances are you are going to need a lot of help.

And most importantly, if you are too cautious with sharing equity it can actually become damaging and end up souring all the great results you’ve had to date.

 
 

 

Change the language around equity

In our most recent blog we discussed how shareholder agreements should be tailored specifically for each company. That it should inspire, not restrict, you and your team.

It’s the same for equity. The way a company shares (or doesn’t) its equity is a strong representation of a company’s culture. It should be at the core of your planning, not an afterthought. It’s all about strategy.

A key step to take when you think about equity is to change the language around it.

Don’t think about ‘giving up’ equity, think about ‘sharing’ it. Rather than ‘letting it go’, think instead of ‘investing’ it in someone with real potential to help you. It’s a small adjustment, but a worthwhile one. Too many people see sharing equity as a ‘loss’ or something to regret, when if it’s done correctly it should be seen as positive progress.

 

 

Share a little (but do it often)

A useful philosophy for sharing equity – especially for founders a little hesitant to do so – is to give a little, but give often.

The starting point should always be asking yourself if one of your employees consistently performs in a way that really pushes your company forward. If they are always moving the needle for you and taking others along on the journey with them, then you need to do all you can to keep them.

Because if you don’t recognise it and reward it, then sooner or later someone else will and you’ll lose them. You can start by offering them a small amount that can grow to a higher figure if their performance continues on its upward trajectory. That way you show how much you value them, boost their morale and incentivise them to keep performing, all at the same time.

You only need to share more equity if they keep getting results. A little, but often.

 

 

Follow the leaders

The best companies have the best leaders. Leaders should be at the forefront of the people you consider offering equity to – either to retain them or to attract them.

Look at your leaders and identify who are the ones that make a real strategic difference and would be incredibly difficult to replace. Who is most important to growth? Then invest in them.

The advantage of doing this is threefold. Firstly you motivate your leaders to keep growing. Secondly it makes it easier to develop internal talent, as employees can see a potentially great outcome if they keep developing. Thirdly, it helps you attract leaders to fill the areas where you lack depth.

The last point is crucial. Make equity a part of your recruitment process where appropriate. This is especially vital as you approach the stage where you are looking for major investment or even an exit. Getting experienced people in who have been there before can be tough to do if equity isn’t on the table.

 

 

Where to share

The key functions we always advise our clients to look for strong leaders and to consider sharing equity with are operations, sales, marketing and last, but not least, finance.

These are all critical components to scaling your organisation and increasing its value. Finance is probably the most overlooked of the four functions, but at ValueMaker we simply can’t stress enough how key this position is.

Finance isn’t just number crunching and backwards looking process. Finance is critical at every stage of your journey to success. If you have a handle on your finances coupled with a strategic leader who adds real insight into your decision making process, you are halfway to realising your business ambitions. So make sure not to neglect finance leaders when it comes to equity.

 

 

A little can lead to a lot

Equity should inspire, not restrict. Make the sharing of equity a key part of your strategy for growth and the way you reward employees and recruit the best talent possible.

Owning 100% of your company but lacking the means to truly nurture it is futile. Better to own less, but have it really flourish and be ripe for investment. So get sharing.

A shareholder agreement isn’t just a legal document, it’s the essence of what your company is.

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A shareholder agreement isn’t just a legal document, it’s the essence of what your company is.

 
 

Setting up your own business is a hugely inspiring experience. Most founders will talk of the thrill of the first day of trading, opening up new offices, hiring their first employees or winning that first customer and making a sale.

One thing you’re unlikely to hear being remembered with fondness is the day the founders sat down with their lawyers and wrote the shareholder agreement. That’s a chore, isn’t it? Something to be endured, rather than enjoyed.

Well, not quite. The shareholder agreement should be a bit more than that. A lot more, in fact. Here’s how you can turn what’s usually seen as a dry legal document into something that can inspire and drive your team on to success as well as help you avoid potential obstacles down the road.

 

More than just words

Shareholder agreements are, in legal speak, ‘a binding contract between a company’s shareholders which defines shareholders’ rights, privileges, protections and obligations’.

It’s understandable why that kind of language hardly makes the hair on the neck of an entrepreneur stand up. But while it’s absolutely vital to make sure your shareholder agreement is legally sound and drawn up correctly, smart leaders see an agreement as far more than just a formal document.

A good agreement will reflect your business. It will accurately present the structure you have in place, the processes that drive it and contain the essence of what your company ultimately wants to be. Get these things right and the agreement will be far easier to draft.

This is where you can put in writing clearly what the roles and responsibilities of your team are. Where you can set the goals for your company growth and put in place the rewards that will come when everyone works together to hit those targets. Think of it not as a mill around the neck, but a strategic document to help pull you up and keep reaching for where you want to be.


Avoid cookie cutter templates, build an agreement unique to you

A frequent mistake made by many founders is to craft an agreement from a template online, or base it on a previous agreement they may have been seen before.

This is dangerous. Your company is unique. It has unique goals and a unique team striving to reach them. Therefore, your agreement must be built with all these factors in mind.

To truly motivate the agreement has to consider the skills, roles and contributions of the people who will be working together to make your company succeed. Putting this in a formal document will give your team confidence that their work will be recognised and that the company is heading in the right direction.


Don’t avoid the awkward conversations

There’s little doubt shareholder agreements can be an emotional issue. Especially when a company is founded by close friends. As a result, many shy away from having tough conversations about the legal side of things until it is too late.

So if later on something goes wrong, someone wants to leave or somebody doesn’t fulfil expectations, then if the right agreement isn’t in place it can be a genuine roadblock to growing your company. In extreme (but not uncommon) cases it can actually rip a company apart.

Which is why it’s better to go through the ‘awkward stuff’ at the start, when relationships are at their best, rather than later when the pressure of running a larger operation is on and you can’t see the wood for the trees.

If you can educate your team as to why it’s important to get things right from the off, it’ll help bring them on board as well as make them realise just how important the right agreement is.


Always ask the experts

Lawyers are expensive. In an organisation’s early days, when capital is low and so much money needs to be found for setting up, it’s common to cut costs when it comes to hiring a lawyer to help with things like your shareholder agreement.

However tempting that is, resist. Think of it as investment. While you should approach your agreement in a positive sense to motivate your team, getting even the most minor detail wrong can by incredibly costly at a later time.

Take the hit now and you can avoid all sorts of possible issues. Additionally, a sound legal agreement will also impress future investors when they carry out due diligence, showing you are professional to the very core of what you do.


Keep it flexible

Finally, your agreement shouldn’t be set in stone. Your company is an evolving organism, changing as you hire new staff, open new offices and launch new products and services. So your agreement needs to change as well.

As mentioned earlier, your agreement should reflect what your company is and where it is going. So as these things change so must your agreement.

You can set a date to review annually or look to make changes when a major hiring is made or new goal set. Again, work with a lawyer to forge a mechanism that allows for flexibility.

An evolving agreement presents an image to your team of a company that refuses to stand still and keeps looking to improve itself.

So stop thinking of your shareholder agreement as a legal process, think of it as your company charter, leading you forward.

 
 

Accelerating towards your Exit Strategy

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Accelerating Towards your Exit Strategy

 
 

At ValueMaker we obsess about what it takes to grow a business successfully. Why some SME’s can increase their business value effortlessly and why others, which seem equally well set up, have difficulty. We notice that the most successful SME’s relentlessly close the gap between what they intend to do and what they actually do.

This may not seem like a very revealing insight or one that can be a foundation of rapid business growth, but in our experience this explains differences in performance more precisely than any other measure. And it is a measure many SME’s are unaware of.

All SME’s that are planning to realise capital via an exit are on a journey from small to larger - and that journey is one of mind-set more than anything else. The journey can be made difficult as the motivation that leads an entrepreneur to set up his or her own business may conflict with the development of a large-business mind-set. Freedom and control, being in charge of your own destiny, are often more powerful motivators than the desire to be rich, yet for many entrepreneurs the aim of scaling the business to the point where it has realisable value is at least part of the dream.

 

Doing this involves the willingness to forgo some aspects of freedom and control. It involves working in a disciplined, planned way (closing the gap between intention and execution) and allowing others in the business to make decisions and initiate actions. (We would never advocate switching completely to a large-business way of operating – just recognising there are some key strengths that are characteristic of big-company thinking).

Many of the businesses we talk to believe they are doing just this. However, too often what we find is businesses where the leaders are involved in every aspect of business delivery, have no confidence in the ability of the business to deliver the everyday without their active intervention and are therefore committing too little time to the issues of accelerating growth and profitability.

The big strategies that could deliver transformation remain just that, strategies, while the leadership team run the day-to-day.

The good news is that it’s possible to change. The bad news is that the necessary changes may not be obvious, desirable or even, at first glance, that important.

 
 

Things to do more of in 2017

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Things to do more of in 2017

 
 

How will 2018 start for you? If 2017 has begun with a clear plan and an aligned and focused leadership team it is likely that 2018 will begin with a buzz of happy optimism. If things aren’t quite so clear it’s time to get focused.

2017 feels like the kind of year that isn’t going to be waiting around for stragglers. With that in mind – this is our check list of things to be on top of throughout 2017.

 
 
 

One

Focus on your customers’ needs, not what you need their needs to be. Get radical if you want to remain relevant.

Two

Focus on your people. Aligned, engaged, motivated people will change what the business is capable of.

Three

Achieve forward financial clarity. Knowing where you are and the effects of any changes instantly will transform the quality of your decision making.

Four

Identify the blind spots in the business and attack them. These often form around things the business doesn’t want to address so be prepared to enter the discomfort zone.

Five

Understand the AI revolution, how quickly it’s coming and what it might mean for your business – good and bad. If you think it won’t affect you - be prepared to be tsunamied.

 
 
 

ValueMaker would like to wish every SME good luck in 2017. And remember, the best SME’s will make their own luck!