Webinar invite: Join us as we chat with Fabric Solutions (22 Oct)

Join us in an AME (Association for Manufacturing Excellence) hosted FREE online ‘Fireside’ Chat this Friday (22nd October 11am-12pm AEDT). We’ll be talking with Rohanna Abberton, the General Manager for Fabric Solutions Australia, about our transformational work with them over the past 3 years. Learn about how we’ve supported their business to improve operations – enhancing the company culture and profitability levels, as well as enabling the owner to progress down the path to succession. Specific areas that we’ll be discussing include our work in:

Register your place and find out more at: https://www.ame.org.au/email/8ca7da1f-7036-4bd9-b5c1-7175a511dd68/e8178aaa-ff4a-4d5e-82c0-b70f1646f71e?fbclid=IwAR0AGSby86uAoNnsEyI2U_m70tJw2sogESgam97D1fopcflH7UHMQ4xxb4c

Why strategic thinking was a $10m game changer for this client

Even when your business is going well, spending time to take a step back and address the current market climate, and your company’s strategic priorities and direction is a must do for any senior manager. But when turnover is growing and profit margins are good, it can be very easy as a manager or business owner to fall into the trap of becoming too hands on. You end up spending your time focused on the day-to-day business operations without giving much thought or time to the company’s future strategy.

Without a strategy for the future of your business, the company and its management will be ill prepared to address issues as they may arise. A lack of direction and clarity in the company’s focus and objectives can result in poor decision making and inappropriate business systems and processes.

A lack of strategic direction is very common and will undermine the real potential of any business. Without a plan and a deliberate focus on where your company is going and how it will get there, it’s unlikely ever to be achieved.

Gibsons was engaged to support a heavy earthmoving equipment company with exactly this challenge. Involved in the repair, overhaul, field service and spare parts for heavy earthmoving equipment, the company’s National General Manager had become too involved in the business’ daily operations. He had no time to work on high priority strategic concepts for the business. He saw the benefit of having an experienced person to act as a sounding board to challenge and discuss his ideas in helping the business prepare for the future.

The company had built a reputation for high quality services and parts across a diverse portfolio of sectors with another division planned. Turnover was at $8m but the company was keen to grow. The need for an external expert with extensive experience in business improvements was sought. Gibsons was able to bring confident insights, ideas and techniques from decades of experience in supporting clients develop the most appropriate business strategies. Stimulating and challenging management team thinking, and ensuring the best approach was actioned.

Gibsons developed an aggressive growth strategy underpinned and supported by significant organisational changes. A management review process was implemented; and mentoring and coaching for Senior Executives commenced. A new Human Resources structure was embedded into the organisation accompanied by a change in company culture. Several process improvements were initiated to streamline operations and provide staff accountability. The resulting impact of strategic change to this company – a growth from $8m to $18m in only 4 years.

During a period of change management, it is essential to get the structure right – management, Human Resources and processes. This is even more significant during a period of growth.

During Gibsons’ work with this company, a significant risk was identified. The company had a large customer who was contributing a third of the organisation’s turnover. The impact on the company of losing this client was significant, and at the time of Gibsons’ engagement no strategy was in place to mitigate this risk, or what to do if it was realised. With Gibsons’ help, the dependency on this one client was reduced over time and measures were put into place should the client be lost. As a result, when the client did leave years later, the company was able to compensate for the loss due to this extensive planning and preparation work.

Gibsons Senior Consultants bring with them decades of experience and are valued for their extensive knowledge and insight into business improvement initiatives. Providing ideas, tools and techniques to challenge the status quo and enact considered change as needed, Gibsons continues to be an indispensable business advisor to this company.

How a robust business review can support sales growth and profitability

It seems obvious enough. If you fully understanding what’s happening in your business, then you are well placed to exploit your company’s strengths and tackle any key issues appropriately. Yet despite this pretty simplistic notion, many business owners do not have clarity on the financial health and operating complexities within their companies. When sales and profitability levels fall, it can be all too easy to focus on the wrong things particularly if you are a very hands-on owner.

All too often we see business owners taking a cut to their salary and operating their business more from a survival standpoint rather than taking a step back to see where the gaps and issues are. This was the case for a small manufacturing business whose Earnings Before Interest and Tax had dropped to -12%, with a turnover of $1m per annum.

Gibsons helped this manufacturing company to access government funding which enabled a rigorous review of the business.

Through Gibsons’ strategic review the key strengths of the business were clear to see – a small and highly skilled team headed up by an owner with a high level of technical understanding, and a satisfied and very loyal customer base who were not sensitive to changes in price. Customers valued the products and service provided by the company and the owner was very passionate about the business.

The strategic review brought to light some fundamental issues to the company’s operations. No financial performance reviews, coupled with little or no understanding of costs in estimating, were central to the profitability issues the company was experiencing. The owner was only taking a very modest salary and was unable to fund any growth to the business as a result. The company had experienced a poor financial performance for the previous 3 years. However, with no financial review being conducted, the specifics and an understanding of why this had taken place was not immediately clear.

Gibsons set into place some key actions to overturn this downward profitability trend and address the issues identified. An effective system for costing and estimating was developed and implemented, with staff trained in its use. Administration support was clearly defined and set up to better support the owner. Freeing up the owner’s time, he was better placed to focus on sales, estimating and overseeing production. Regular accounting and financial review processes were established so the company was better positioned to respond promptly as issues were identified.

Within a short timeframe, these actions moved the company from -12% to 15% EBIT and increased their turnover by $0.8m p.a. The owner was able to take a market-based salary. Gibsons continued to support the business as necessary to enable this level of performance to continue.

Without clarity on your business’ operations and financial health, it is hard for any business owner to take the appropriate actions needed to overturn a drop in profitability. An independent third-party advisor can bring an objective insight to identify and support the changes needed to enable sales and profitability goals to be met.

Culture has a BIG influence on profits…

…and good culture starts with good management.

No matter how skilled and experienced your staff, without a sound management and accountability structure in place, you’re setting your business up for failure. It is commonly assumed that if a business is made up of a group of highly skilled, degree qualified professionals, that the operation and people should be able to self-manage. This is rarely the case.

Management is a skill and discipline in its own right that is essential for every high performing business.

Without good management practices in place, staff are unlikely to contribute equally, enthusiastically and consistently over a period of time. This can slowly chip away at a positive business culture creating dissatisfaction and disillusionment amongst your team and undermining even the best-laid plans.

As a business consultancy with years of experience and extensive expertise in strategic management, Gibsons is well placed to provide invaluable, objective insight into an appropriate management structure for your business. We provide the support needed to meet your business goals and align with your company values as well as setting up meaningful accountability processes and systems.

An effective management structure with appropriate decision-making mechanisms in place, will support the business structure needed to generate profit, accountability and a healthy company culture.

In demonstration of this, Gibsons was approached by a large and well-known firm in the Professional Services sector to help them deliver a Strategic and Business Plan. With no decision-making mechanisms in place, and little understanding of management as a separate area of expertise and skill, the business had started to develop an unhealthy culture.

It became clear during our engagement that a number of staff were underperforming in their roles, lowering the organisation’s efficiency. With the absence of performance measures and little management of expected standards, there was limited accountability throughout the company.

To overcome these challenges, Gibsons implemented its Employer of Choice program to engage staff, align them to business goals, and to build a culture of accountability based on core values. Personal leadership mentoring for the company’s CEO as well as the mentoring of supervisor staff took place. Select staff were provided with soft skills training around people management, personal performance and project management to upskill. An effective board structure and practice along with sales management practices, Key Performance Measures and a management reporting regime were all initiated.

Changes to management structure and processes can take place quite quickly whereas cultural change within an organisation is something that takes time to have positive influence in decision-making processes. The turnaround in this Professional Services company took 4 years and resulted in an EBIT improvement from 10% to 15%. For a Professional Services firm in its particularly sector, this was a significant increase. The improvements made in the company’s staff engagement, culture, human performance and morale which increased customer satisfaction were able to become entrenched in the business and sustainable.

Never underestimate the importance of having all your people working towards the same goals to shared and agreed standards. People and their synchronised alignment with business goals is at the core of business success.

The right technology solutions can make or break a business

When we think about a successful business, whether large or small, there are some key ingredients which cannot be overlooked. Yes, you need the right people, in the right roles, and a well thought through business strategy with considered objectives.

Matching your IT strategy to your business strategy seems like a ‘no-brainer’ but many businesses don’t perform this step and run the risk of limiting their ability to achieve their goals. For instance, if your strategy is growth then your IT infrastructure must be easily extensible – if it is not then your business processes will falter when you hit the limits. If your strategy is customer retention and growth, then your customer care application software must add value to your relationships, not just perform transactions.

But, even if you have the right strategy, underpinning your success is a need to get your business processes right, and the technology that supports them. Without trust in the data that you have about your organisation and appropriate systems in place, business decision making is based on ‘finger in air’ conjecture. You run the risk of spending time on activities which could be automated rather than time on more strategic endeavours. Financial and administration errors can often start to become more commonplace.

A technology solution that caters for the data and IT requirements of each member of your team, is needed. A specialist consultancy provider like Gibsons has the expertise and experience to conduct a rigorous Business Requirements Analysis to identify needs, and to determine how to best fulfil them.

Often your typical company ‘IT guy’ and even many IT service providers, are not in a position to support a company with the strategic end-to-end technological solution that it needs.

A $120m organisation came to us in need of such support. A national student accommodation provider, their technology solutions were letting them down. Legacy systems were either not scalable or were not an ideal fit for the business model.  There was very little trust in the data in their installed legacy software, and there were significant issues with their accountancy and administration accuracy. Working from the ground up we identified the company’s processing needs in consultation with all stakeholders.

By looking to enable strategic processes, encompass the needs of every role within the business, and heed the lessons learned from the legacy systems, we could ensure the procurement of the most appropriate solutions that would support the business well into the future.  We were also able to identify the real focus for application solutions so that we could specify not just the required features but also the speed and simplicity required in capturing guest data.

Investing in digital and technology strategies for your business that adopt a Whole-of-Business approach, considering both the customer and business outcomes; are crucial for business performance and success.

The technology selection process we adopted was rigorous, ensuring a best fit was sought across managed services for network management, hardware, print, telephony and desktop.

We implemented fit-for-purpose application software and services for the student accommodation industry. We also commissioned general purpose application software for accounting, payroll and rostering that had native integration with the accommodation application. The new technology was implemented at the start of a period of growth at the business and did not required further investment to scale as the business grew.

All too often we see businesses let down by their systems, their processes and the technology that support them. Get these right and you set your business up for greater efficiency and effectiveness across all aspects of your operation.

Get your business fit for retirement

How we helped this business owner double his revenue and retire with confidence

It is possible to exit or sell your business and gain a strong retirement income. For so many businesses, succession planning is an overlooked “nice to have” element of business management; an activity to “get to” when the more pressing matters of day to day management, sales, and business execution are in play.

But, without addressing succession, you can put yourself under too much pressure when things are “down to the wire” with retirement in sight. Your team can be left feeling uncertain about the longevity of their roles and the future success of the business.

As a business owner, keen to retire, sell or otherwise leave the business in a good condition, succession planning is crucial.

One of the key services offered by Gibsons is helping businesses to do just this, and we have many case studies to share. Our experienced consultants can support you throughout implementation and ensure increased business value and success,  helping you exit on the best possible terms.

Over a 4-year succession planning program, we did exactly this. We supported one of our manufacturing sector clients move from an $8m to $18m turnover business, with the transition to a new management structure and clear succession of key management and the owner. This business has since doubled that size, and with a great General Manager and team in place, continues to provide its owner a very healthy income in retirement.

Succession planning can take many pathways and raise many different issues and this business was no different.

The issues were weighing so heavily on the owner, he had begun to doubt he could ever retire and extract the value that his family had spent three generations building.

Working closely with him, we created a business plan to identify key strategies to revitalise the business and introduce succession preparedness activities, like management team structures and formalisation of processes. Mentoring of key management staff commenced. Operations were reviewed and rationalised, and transition plans implemented. Human resource processes and an accountability structure was set in motion.

A future for the business was mapped out, with career paths for younger members of the team and exit strategies for the older members of the team.  A Customer Relationship Management and sales management process were also established, and key management roles were transitioned.

3 years into the plan, the owner/Chief Executive Officer was in a position to semi-retire.

The final year of our succession planning saw a marketing program enacted, to grow attractive markets and position the company as the leading Australian manufacturer in those sectors.

A much larger and more profitable business was created, and Gibsons are still relied on to this day by the owner, to ensure the business remains on track with growth and success into the future. Placing Gibsons in this kind of role can bridge the gap between business owner vision and new management, allowing them to retire with peace of mind.

 

Getting started with Linkedin

It’s no secret, Gibsons is really only just getting started with LinkedIn. Like many of our clients, it’s not a lack of understanding of how important it is, it’s been the challenge of coordinating busy team members and developing an actionable LinkedIn plan with dedicated resources.

However, we coach many of our clients in LinkedIn. Herewith, a summary of our wisdom!

LinkedIn is the world’s largest professional network with 706+ million users in more than 200 countries and territories worldwide. It should be a key part of your marketing and sales plan.  Here’s how you get started, and remember, Gibsons can conduct a Zoom with your team at your convenience to walk you through these steps, whilst each team member is at their own computer.

Personal Account

The first thing you need to do is create a personal account on LinkedIn.  To make a company account, you have to also have a personal one.  To begin, just go to www.linkedIn.com and enter the basic information.  When you complete it, just click “Create My Profile.”

LinkedIn Profile

Before you complete your profile, a confirmation email will be sent to your email account.  It will have a link in it – you need to confirm your account by clicking this. It will take you to the sign-in page where you enter your email and password.

LinkedIn offers two services—a basic “free” one and a premium “paid” one.  After you choose the type you want, you’ll be ready to click “Profile” and begin to edit your profile.

Create both your personal and company profiles.  For your LinkedIn profiles it is recommended that you add a lot of information.  All the information you enter is searchable, so the more you have, the better it is for your business, and the easier it is to be found.

When you’re finished preparing them, you can link your personal profile to your company profile. Make sure to add a detailed description of your business!

Company website

You’ll see a field for your company’s site and the type of industry. When you put your site, use the format:  http://mywebsite.com. This will automatically become a hyperlink to your company from your personal profile.  All the members of your staff can use this hyperlink to link back to your company.  It’s a great way to be seen.

Your industry field is searchable, so think before you choose.  It will be a very good way to find potential clients and for them to interact with you.

Get involved

LinkedIn is the same as any social media site.  If you want to be seen, you have to get involved.  As soon as you meet someone new, connect with them. Connect with your existing contacts to start building your network.  The exposure will help lead you to a bigger audience.

After you get set up on LinkedIn, there are several features that it has that can be useful to help build your business.

Here are a few:

    1. LinkedIn Search—Search for others in your industry and/or for potential customers.  The more you connect the bigger audience you will have.
    2. Ads—You can look at several of the ads for businesses in your industry.  This will let you see how they use LinkedIn Ads for paid advertising.
    3. Import your email contacts—On LinkedIn you can import your email contacts from other email applications. This way you can begin to add LinkedIn connections to your existing email accounts.
    4. Post Updates—Like Facebook and Twitter, LinkedIn has a status update field.  You can begin a conversation or post a link to an article you’ve written.
    5. LinkedIn Groups—Like Google+ circles, LinkedIn has groups.  They are members who share a common interest in a specific topic. They help you build a community, so this is great for your brand.
    6. Research client pages in your key sectors and find out what groups THEY follow. You can # these groups in relevant posts, and your post will appear in the newsfeed to members of that group.
    7. Reply to Updates–You can see all updates posted to LinkedIn. Begin conversations yourself or reply to someone else’s update. If you choose, you can elect to only see messages from your connections or even set your own criteria.
    8. Build a following by asking members of your network to follow your page. (One of our clients, Cookon, has achieved a following of nearly 1400 in just 6 months just by doing this regularly. They are one to watch on LinkedIn!)
    9. Banners—You can add up to three custom banners to your company page for free.   You can use them to:
  • Take customer testimonials, highlight them, and link them to your page.
  • Link to and promote an upcoming event or webinar.
  • Improve your target market by highlighting and linking to your blog posts.
  • Promote a video you’ve posted about your business.
  • Let others know of the various social channels so they can reach you there.
    1. Post company updates regularly — every day might be too much for you, and your audience, but weekly is good, monthly is minimum. Post updates during the time of day you get the most traffic. For most, it’s in the morning.  You can try different times to see what works best with your audience.
    2. Send messages to your target market—LinkedIn has a Sponsored Inmail feature that works like email.   You don’t need them on your email list.  It just works from your LinkedIn. This isn’t a free service, but it can be worth it.

Need help? No problem. Contact Gibsons for a LinkedIn starter session with your team.

How to ‘win’ in a market that isn’t growing

How Gibsons helped Pro Powder grow its profit by 600% in 10 months. 

Profit is the one metric that matters most, for nearly all businesses. There are a number of measures that each business should be keeping an eye on, but deciding which ones are more critical for YOUR business requires getting under the bonnet to find out what really makes it tick.

A thorough examination of a business’s operational processes, human resource function, sales and marketing activities, core value proposition and key business drivers is required. While many tried and true theories of business management can guide you on this, the reality is often more fluid, unexpected, and industry specific.

When you are completely immersed within the operations of a business, it can be difficult to see what is actually going on. You are in effect too close to the issues to see them clearly; especially if you, like many business owners, have fallen into the trap of doing too much yourself.

Our work with Pro Powder is a stark example of the great improvements that can be made when a business invites an objective and experienced third party in to help.

A powder coating business, Pro Powder was achieving a $1.4M turnover at the time they engaged with us, but profits were barely reaching the $20K mark. The company’s owner was stretched and feeling that so much hard work just wasn’t paying off.

Despite the company operating at full capacity, its profit margin was still too low to be sustainable without burning out the owner. 

Pro Powder provided our Senior Consultant, Graham Pridham, with full access to the business: its staff, operations and procedures. We assessed financial information alongside insights from discovery sessions, staff engagement and a review of business processes. Because of our extensive experience in supporting manufacturing companies, we could identify how best to support the company very quickly, saving discovery time.

Armed with practical solutions to ensure the team was fully utilised and with insights into more appropriate marketing and sales tactics, Pro Powder were able to invest more time in sourcing and targeting more profitable work. They were able to determine their “ideal” client profile to successfully reposition themselves; as well as focus on sales efforts and accountability.

It can be difficult for businesses like this to choose to invest in getting help when profit margins are so limiting, but the decision to do so can be empowering. The business is now positioned to do well, the owner feels on top of things, and the financial return on investment from third party assistance is very clear.

These are the results Gibsons strives to achieve for its clients, every time, no matter what their size at that time in their journey when they connect with us. We have helped countless businesses to grow and become more profitable, well beyond their own expectations.

Improving businesses is in our DNA.

Plan for the unexpected

Many things can and do go wrong during succession planning, but here are the top 3 we at Gibson’s see during succession planning:

  1. The owner is not mentally prepared. The mind dictates clearly that it is time to hand over, but the heart does not want to let go. It is one of the key tasks of a supporting consultant to prepare the owner for the exit. If the owner is not ready to let go, progress will slow down and can even stop, and the succession ends up in the “too hard” basket.
  2. Waiting for better times. If during the succession planning the business does not perform as hoped, progress can come to a halt. Especially if external circumstances such as market decline or currency exchange rates impact business results, companies tend to put their succession plan on hold and wait for better times.
  3. Different understandings of the same terminology. A classic example is the offer of a multiple (to the profit) for a company. For some, this means all the assets and goodwill, others understand this includes stock, work in progress, etc. The same is true if a business broker is involved: commission on sale price includes for some business brokers, also the value of the owner’s stock. It’s important to be clear about terms and meanings from the start.

You only get to exit your business once, so it pays to get it right. Most owners are very successful managers but have very little experience in selling a business. Bringing in an independent business consultant with the experience and knowledge – one who has no agenda and who doesn’t act as a business broker or legal or financial advisor – can help define the best fit succession plan for the owner and achieve the best overall result.

Putting yourself in the buyers’ shoes

To get a great result on the sale of your business, you need to start thinking like a buyer, rather than a seller.

As a business owner who has decided to sell, this can be a difficult thing to do. But if you can successfully put yourselves in prospective buyers’ shoes and ask ‘what’s in it for them?’ you’ll be much more likely to achieve an optimum result.

So, ask yourself: Who are the buyers? Where do they come from? People buy businesses for many reasons: they may be dissatisfied with their current job, laid off, looking for a family investment or just have a burning desire to have more control over their lives.

No matter what their motivation, all buyers have one thing in common: a desire to see the numbers! Buyers want to see income and expenses and assess the pros and cons of the business.

To present this information, you’ll need to develop an Information Memorandum, a formal document that contains the information a potential buyer will be interested in. In principle, this document is your sales brochure! It must provide enough high quality, convincing information for the potential buyer to decide to make a non-binding offer and move forward to the due diligence phase.

The Information Memorandum must explain:

  • The past business performance
  • The forecasted business performance for at least 3 years
  • A good understanding of the assets and the liabilities of the business
  • Reasons why the business is better than its competitors.

So, what’s the best way to put yourself in the shoes of potential buyers? Simply, to seek advice from people who buy businesses. They know what is important for a potential buyer and what is not.

At Gibbons we work with hundreds of buyers and sellers, and know the potential pitfalls. A top tip from one of our Succession Planning Consultants is ‘Be very careful about what you disclose before the deal enters the due diligence phase. Your customer list and their sales, for example, should not be discussed before due diligence formally begins’;

When developing your comprehensive Information Memorandum, remember to ‘think like a buyer’ or seek help from someone who knows how buyers think!

The real value of your business?

Because business owners have built their company over decades and invested their hearts and souls into it, they’re often tempted to measure value more with their emotions than with a clear logical mind.

To avoid this, calculation methods can help determine the value of a company, with the most applied being:

  • Income approach: Starting point is the gross profit of the next 3 to 5 years, discounted to today’s value. A simple approach often used for small companies.
  • Discounted Cash Flow method: Future cash flows are calculated and discounted to today’s value. This approach is more suitable for medium size enterprises.
  • Comparative data approach: Based on transaction in the past within the same or similar industries the potential sale price is estimated. This requires access to a very large and up-to-date database to get reasonable results (e.g. CoreValueTM).
  • Fixed assets method: Especially if future income is not given or unpredictable the existing assets minus the current long and short-term liabilities are the base for this calculation.
  • Mean Value method: This is a mixed method which considers both, the income and the current assets. Often both a weighted with a different ratio.
  • Strategic method: In some rare cases the value is based on access to patents, markets, etc. There is in principle no generic calculation for this case available.

At the end of the day, it’s important to remember that the value is driven by the market. As Publilius Syrus wrote in 1st Century BC: “Something is only worth what someone is willing to pay for it”.

 

Your role as an owner

There’s a saying amongst business consultants that some business owners aren’t looking for a successor, they’re looking for a monument conserver!

Understandably, leaving behind the business you’ve built up through your hard work is an emotional one. You need to remember however that you’re selling the company, not yourself. When owners are having difficulty letting go, they can send conflicting signals that compromise credibility and create confusion and doubt in the minds of potential buyers.

As the current owner, ensuring your house is in order and that you, your advisers and your team are pulling in the same direction and presenting the business well, is critical.

The first step is changing the way you see yourself – no longer as an operational owner but as a managing director of a strong management team. In many companies the owner wears many hats from General Manager to CFO to Sales Manager. Although this is often for good reasons, it is a big hurdle to overcome in succession planning. The value of a business is enhanced if the owner is not required to run the business. To get your business ‘sale ready’ you need to hand over any unique knowledge, such as customer contacts, special production or product knowledge, to the team that will remain when you leave. Without this, the business is worth far less.

Often it goes ‘against the grain’ to hand over control. But when you are planning to exit your business, you need to find ways to delegate responsibility to streamline the management of the business so that you as the owner are not tied to running every major aspect of the business. For now, you might control of some critical tasks, such as hiring of new staff, sales reviews and cash flow checks, and keep sensitive information such as company profit and employee salaries to yourself. But having a strong management team in place for all day-to-day activities is much better place for a successful succession plan. After all, you will need your employees’ help to prepare the business for the transition and then to make that transition successful. And while you negotiate the sale, you need to know that the on-going management of the company is running smoothly so that no surprises crop up at a critical point in the sales process.

While there is no one-size-fits-all approach to managing the challenge of simultaneously overseeing a successful business and managing a sales process, careful preparation and ensuring you have a strong management team is vital. Employees feel empowered and informed, you are freer to focus on succession planning and the sales process, and the new owner gains a thriving business. In that scenario, everybody wins!

Timing is key

“Retirement timing is always a tricky thing. I think it’s different for everyone. How you say goodbye to the thing you have really focussed on that much is a tough one. I’ve always intended to leave in good shape, to exit on a high note”. – Damian Woetzel

Business owners will inevitably move on from their business, yet the data shows that succession planning is typically last on their list of priorities. Business leaders are usually focused on building the business, and don’t like to think about the day they will leave it behind. But the reality is that planning for the sale or succession of your business is one of the most important decisions you can consider, and that proper succession planning will deliver the optimum results for you, your employees and the new owner.

To understand basis for succession planning, take yourself forward in time and imagine what you want to put on the table for potential buyers. You want to show them:

  • A successful business with a steady sales growth over the last 3 years
  • A stable management team which has demonstrated their management skills over many years
  •  A stable cash flow over the last 3 years, and a strong financial position
  • A predictable future income for the business, ideally supported by long term contracts
  • No legal disputes
  • A stable and engaged work force
  • A very presentable premises with well-maintained assets
  • A managed business that does not rely on the current owner for its success.

When a business can tick all these boxes, a succession plan can be implemented quickly, but unfortunately this is not often the case. This timing can make an enormous difference in what you take away from the closing table.

Succession planning should ideally start more than five years ahead of the business sale, with more detailed planning over the three years before the planned exit. If your circumstances allow you proper time to plan, you will be able to turn your attention to critical issues that need to be addressed before the sale. Depending on the business these types of issues might be:

  • The owner is heavily involved in operations. When they leave, production, sales or other areas will struggle.
  • The product portfolio is at the end of its life cycle or under threat of cheaper Asian imports.
  • Other key members of the management team will also leave once the owner leaves, and the business depends heavily on single individuals because of their knowledge or skills.
  • The company has no sales plan and a very unstable sales history

Within a reasonable timeframe, most issues are fixable – although one of our Gibsons Consultants fondly remembers a client who stated “I am 73 years old and want to get out of the business by the end of the year”.  Succession planning in this environment is obviously challenging and reduces the options on the table. In succession planning, timing is everything!

 

The key to successful succession planning

Whether or not you like to think about it, it’s inevitable that one day you’ll leave your business. It may be that you decide to sell up and enjoy the fruits of your labour in retirement, or you have to exit the business due to health reasons. Whether today or far in the future, the time will come when you, as a business owner, have to answer: Who will continue to run my business?

The key to successful succession planning is to ensure you are not asking this question too late! Leaving it until you have reached an age where you are no longer healthy enough to work, or when the enthusiasm that drove your business to success has disappeared, will devalue your business.

You could decide, or need, to sell at any point in time – but it takes time to have the business in a state to maximise the sale value. The reality is that planning for the sale or succession of your business is one of the most important decisions you can consider, and that proper succession planning will deliver the optimum results for you, your employees and the new owner.

Succession planning has a time horizon for the next ten years and allows you to plan ahead all the necessary changes for an optimal handover. A succession plan answers two basic questions:

  • Who will own the company in the future?
  • Who will run the company in the future?

For many SMEs, the owner is heavily involved in the daily business, so essentially the owner and the managing director are the same person. A Succession Plan might split these two roles, with a potential scenario being that the owner first steps back from operations while remaining the owner, and a certain amount of time, transfers the ownership.

But first, the current owner has to answer some fundamental questions:

 

1. What is my target for the transition?

  • Maximum upfront money
  • Legacy for my family
  • Protection of my brand name
  • Shortest transition period
  • Job security for my staff
  • Monthly income for the retirement

2. How much do I want to be involved after the transition?

  • A day or two per week
  • Consult to the business for some years
  • Bye, gone fishing

3. When do I want to step out?

  • Next 3 to 5 years: Plenty of time to make the company really attractive, optimise the product portfolio, clean up structure, train internally or hire required key positions
  • Next 2 to 3 years: Sleeves up, clean up fast, fix broken processes, prepare accounting
  • Less than 2 years: Doable, but no time to waste. Some transition models might be already gone, avoid a simple fire sale

The answers to these questions will guide your timeframes and approach.  It’s all about having choices. If you have a plan or strategy in place, then you can choose what you really want to do, at the time when you want to do it. And isn’t that what success is all about?

 

Would you wire your own house? Don’t build your own website!

People often ask ‘Why should I pay to get a website developed when I can do it myself?’. Our response is usually something along the lines of ‘You know what, that’s true. I guess it’s sort of like being able wire your own house, instead of using an electrician.’

The reality is that just because you can do something yourself, or do something real cheap, doesn’t mean that you should! This is so true about creating a website for your business. Why would you spend the many many hours and go through the inevitable frustrations to save on something that in today’s world is a vital tool for EVERY business?

To build a proper business website, the following steps (as a minimum) should be thought through:

  • What is the purpose of your website?
  • How do you wish to use it within your business?
  • What message do you want to convey to your visitors?
  • What branding requirements need to be taken into consideration?
  • Develop your site/link map
  • What will your site look like – design each page before you even get close to developing anything
  • Have you included conversion prompters?
  • What will your back end look like? What will you use? How much flexibility does this give you?
  • Create your website to match your site/links map and to look like your design – this is often a  frustrating and time intensive exercise
  • Where are you sourcing images from?
  • How are you going to make the images look professional if they need editing?
  • What tools will you build into your website to: generate efficiencies, help you make more money, better connect with customers?
  • Add the above tools into your website and integrate them with third party products if required
  • If you are creating an e-commerce site: What platform will you use? What payment gateways? How will you integrate these into your site? Have you got your inventory management and your shipping procedures in place and working to your requirements on the website?
  • What about content?? Where is this coming from? Is it well written and legible?
  • Once you have your site created, you need to review, test, change, review, test, change and review once again!
  • Is your site responsive? Have you taken into account SEO requirements?

So as you can see, whilst it is possible for anyone to create a website, if you want it done properly a trained professional with the right team in place (developers, designers and business specialists) will not only be able to get the job done much better than you could, but they can also give you important tips, advice and strategies that will in the end result in a better product and a more professional online image and a structurally sound, secure site.

Top tips to have more productive staff

Despite the fact that staff can make or break a business, many managers and business owners treat their employees with contempt and feigned interest. It is thus no surprise why so many businesses struggle to keep staff for longer periods and why their efficiency and productivity is never going be 100%.

At times, employees can be a handful and can seem to be more of a headache than it’s worth and as business owners sometimes we question why we bothered in the first place. If you want your business to grow however you don’t have choice – you will only be able to go so far on your own.

So what can you do to entice your employees to stay a bit longer, and how can you create a more harmonious and enjoyable work culture?

Our top tips are:

  • Treat your staff how you would like to be treated by your manager
  • Pay a fair wage, at least meeting industry minimum’s
  • Don’t discipline staff in front of other employees – resolve and discipline behind closed doors
  • There is no need to yell at, and verbally abuse staff
  • Celebrate wins and successes, and give praise where deserved
  • Recognise good performers and reward them with random small gifts
  • Coach and guide your poor performers, don’t just criticise or belittle them
  • Don’t micromanage – if you hire someone to do a job then let them do it without your constant interruptions and requests for progress reports
  • Promote a culture of education and continuous development – provide your staff with a means to develop their skills
  • Listen to recommendation from your staff, they tend to see things from a different angle and may have a better understanding of processes and even customer needs than you do
  • Involve your staff in the growth of your business – share your future vision with them and get them actively engaged with this vision
  • You are not running a business to become best friends with your employees – be polite and friendly, but always keep a professional distance and don’t forget you are the boss
  • Lead by example – set the standards and never go below
  • Be decisive – some employees will try to take advantage of you if you come across unsure and indecisive
  • Be prepared to take firm action when needed, but only if it’s justified
  • If you are having business problems keep it to yourself, don’t tell everybody and don’t walk around sombre and depressed
  • Smile, be energetic and your enthusiasm will rub off on your team!

It’s not hard to look after your staff and keep them happy. And if you are ever unsure, ask yourself ‘how would I want to be treated by my manager?’

A Simple “Secret” for Growth – Increase Repeat Business

Have you ever had such a good experience with a business that you have not only used them again and again, but have told other people about their products and services?

I travel quite a bit for business and frequently use taxis to get around. Out of interest I always ask taxi drivers the following question ‘how’s the taxi business treating them?’ The response in almost every case is quite negative, with most indicating that they don’t make enough money and there isn’t much work. Just recently I was in Sydney when I hopped into a cab to head to a meeting. It was about 11am. Along the way I asked my usual question, and the cab driver just looked at me and said ‘it’s very quiet today so I am finishing up and going home after I drop you off.’ After further probing I found out he started his shift at 6am, and that this was normal for him.

I had a second meeting to get to after finishing with the first one, and so I caught a taxi once again. This time however I didn’t need to ask how the taxi business was treating my driver. Within 30 seconds of getting in the cab I realised that I was sitting in the car of a professional driver. Two mobiles were stuck on the dashboard, with a third in the centre console. The driver was wearing a Bluetooth headset in each ear, and he had a thick pad of paper stuck on the right driver’s side door frame with a pen attached. The energy in the cab was amazing!

The phones were ringing every few minutes. The driver was taking bookings, scheduling drivers, rearranging schedules and staying in complete control of the situations that presented themselves. On occasion he would scribble an address or flight details onto the notepad.

In between all of the calls we talked. My driver, Isaac, has been a taxi driver for over 26years. He says for about 20 years he drove for someone else before venturing out on his own and buying his own cab. Over the years he has managed to build up his business so well that he no longer needs to hang around taxi ranks waiting for someone to jump into his car. He has a list of dedicated clientele, including large companies who only use his services to drive their staff around. In fact, he is now more like a private hire car driver than a taxi driver, as his car doesn’t even have one taxi badge on it (how I managed to hop into his car is another story….)! He has several drivers working for him, and he has also got a deal with another company that has over 700 taxis in their fleet. He said to me at one point: ‘Neither me nor my drivers are ever bored or waiting around for work to come in. We are always busy.’

It’s amazing how in the same industry on the exact same day two people with the same jobs have such an incredibly different take of the industry they are in. One is finding it slow, saying that times are tough. The other is so busy that he has had to expand his business to keep up with the demand.

Isaac hasn’t come up with some magical technique. Nor does he spend much money on advertising his business. The secret to his success is very simple and anyone with the right attitude can replicate such success.

From the moment I hopped in the cab to the moment I hopped out, I was made to feel ‘important’ and ‘comfortable’. The car was very clean and smelt nice. My driver was very well dressed, looked clean shaven and professional. No swear words came out of his mouth. His use of words and sentences had an air of courtesy about them and he was friendly and smiling whenever we talked. I used his business services again that evening when I needed to go back to the airport, and although this time I had a different driver, I had the same positive experience.

Whatever business you are in, the following advice is important if you wish to gain repeat business and build a hedge around your business that will enable you to ride through market downturns and fight your competitors:

‘Look after your customers and they will look after you’

Sounds simple and one would think that this is a no brainer? Amazingly though this is hardly the case. So many businesses treat customers like numbers. How many times have you received pathetic service? Not even a hello, a smile, or a nice word? I am not surprised that so many businesses don’t survive the times, just based on the amount of negative experiences I have had over the years. Customers simply take their money elsewhere. Yet if business owners just placed more energy into looking after their customers they would see increased repeat business, increased referrals and a higher chance of blocking competition from taking away their business. It is far more efficient and effective to sell to existing customers than having to rely on continually finding new ones.

Some of my tips for building client relationships:

  • Set yourself apart from the pack. Do things differently and go the extra mile with your service.
  • Take pride in yourself and your business. No matter what industry you are in – whether you own a recruitment agency, are a taxi driver or spend your days covered in dirt, cleaning yards, you can always take measures to take pride in you and your business.
  • Act professionally, always be courteous, polite, greeting your customers with a smile.
  • Communicate regularly and communicate effectively.
  • Deliver what you promise. If you have told your customer that you will do something, then do it promptly. If your products are being sold with the premise that they can do something, make sure that it can deliver on that. Same goes for a services oriented business.
  • Be honest and transparent. Don’t over-promise – if you can’t do something or don’t know something the customer asks, say so and get back to them. It’s better than making it all up and having your customer find out that you lied to them.
  • Be energetic and enthusiastic! This will rub off on your team and your customer will see you in a positive light.

Like many things in life and business, it’s the little, simple things that people often push to the side, opting for complicated solutions when in fact the simple solution is quite often the best.

Quality systems for your business

To produce consistent and predictable quality outcomes you need effective systems in place in your business. Having effective systems in place also streamlines day-to-day operational activities and makes it easier to manage these activities, allowing managers time to deal with exceptions and to work on business development.

What is a system?

A system is basically a set of rules for processing information and facilitating decisions.

Another major benefit of developing and documenting systems and procedures is to help to personality-proof your business. It reduces the level of dependence on particular individuals by downloading their knowledge and documenting it so that the knowledge can be shared with other staff and become corporate knowledge rather than individual knowledge.

What happens when your business systems are lacking or ineffective?

  • Customers are dissatisfied due to unpredictable levels of service and quality.
  • Staff are often frustrated and demotivated because every task becomes a unique challenge rather than an established process with known outcomes.
  • Low productivity: without documented, effective and up-to-date systems, new employees must rely heavily on experienced staff for guidance even for the most basic of tasks resulting in low productivity for both new staff members and for those training and supporting them.

What are the characteristics of effective systems?

  • They are documented.
  • There is some level of automation in data capture and processing information.
  • They are not reliant on individual knowledge.
  • They operate in a predictable and timely manner.
  • They provide guidance in routine decision making.
  • They improve efficiency and reduce costs.
  • They accommodate the ability to measure performance.

If you don’t have systems in place in your business now, where do you start?

First establish a clear picture of the required outcomes, assess the current position, and then develop the logical, step-by-step processes required to consistently achieve the outcomes required. Incorporating input from people at the coal face who work with the processes on a day-to-day basis is essential to develop and refine these systems. They are the ones who are implementing the systems and generally know what works well and what causes frustration.

It is also important that systems adhere to relevant Quality Assurance and Workplace Health & Safety standards.

It is not too late to start developing effective systems for your business and to see predictable and consistent quality results.

7 Tips to Post Valuable, Keyword-Targeted Content to Your Blog

It is obvious that anything you post to your blog should be valuable. Readers simply won’t want to read it otherwise. Here the phrase, “Think before you speak” applies. In other words, “Think before you blog.” Think of important, valuable information you can pass on to your reader, and provide it in a way that will entice them and make them want to return to read what you have to say next.

The second part of this seed is a bit more complicated. You can have the most valuable content on the internet, but if no one ever sees it, it isn’t doing you any good. In order to make sure that they do, you want to use keyword-targeted content in your blog postings.

Businesses have been using keyword-targeted ads for a long time, but many fail to realize how important it can be for blog content. Since search engines pick up on these words and make your blog pop up in searches, they can be a valuable tool to increase traffic to your site. You don’t, however, just litter your content with a few words and hope they get picked up by search engines. There are a few steps you can take to be sure you get the right keywords.

Keyword Research—Research to see how many people are searching for your site. There are tools available from Google and other software developers that can help make the process easier for you.

Target low competition, niche keywords—Google Adwords can be very helpful to see how competitive a keyword is before you decide to use it.

Don’t focus only on your main keywords—Try to think outside the box. Targeting keywords isn’t just about the most popular keywords. For example, if you’re a realtor, just targeting your blog for real estate will get too many hits for you to even be noticed. Target for specific real estate instead, and you’ll get visitors to your site others targeting just real estate won’t get.

Think about what your target market is looking for and put it on your site. Always think of your market first. They want quality content, not keywords. Once you have the quality content, you should write between 200-300 content words for each keyword used. That’s around three to five keyword phrases on each page. Don’t force it. Keywords have to be used naturally, so they flow within the content.

Customize titles and descriptions for each page—Search engines can’t figure out what your subject is or the relevance of each page if you use the same tags for all the pages.

Prepare a site map telling where everything is on your site—Search engines like site maps. Although you’ll get around 1% click through rate, a site map will really help those who know what to do with them.

Build popularity—Just doing the above steps won’t get you on the first few pages of the search pages. To do that, you need to build popularity. One way is having sites that link to yours. You can offer important information so others will want to link to your site. If you don’t spam, and are a well-linked site, you’ll do better in search engines.