Tag Archive for: Business Consultants

From owner dependence to staff empowerment and accountability

When you start a business, it is natural to be very hands-on and want to be across everything. But, as the business establishes and grows, if this approach continues you begin to disempower and demotivate your staff. While perhaps not the intent, you start to heavily micromanage your team. While this management style is typically disliked by staff, it is also a style that creates a lot of problems for the manager. If you always need to oversee all the details and sign off on everything with limited delegation, you end up working a lot more than you’d like. More importantly, time that could be spent on the wider picture – company strategy, direction, and vision – must be set aside, to make space for the day-to-day. Never a good plan for a business to succeed.

This was very much the case for a client of ours. A small manufacturing company that initially came to us with issues involving a poor company culture, and succession – the owner was keen to step back from the business. With a turnover of $2.5 million in sales with a 15% Earnings Before Interest and Tax, from a financial standpoint, the company was doing well. But staff morale was low, and the owner saw no possibility where he would be able to reduce his involvement in the business.

As is often the case, we may be called upon to address a particular challenge with a company, but when we take a closer look, other issues become apparent. Certainly, there was a lack of opportunity for succession and company culture issues, but we also found significant micromanagement in place to maintain efficiency, quality, and service levels. Understandably this was not helping the low morale which was prevalent throughout the workplace. There was an extreme reliance on the owner who as a result had a very poor work/life balance. Systems were under-utilised and human resource processes very lacking. Moderate to high levels of supervision were required because of the skill levels within the company.

Over a 2-year period we worked with this company to address the need for human resource processes, structures, and staff development that were required to overturn a poor company culture and too much reliance on the owner. We defined and sourced a General Manager for the organisation. The owner wanted (and needed) to become less hands-on and this would only be achieved with a highly skilled and experienced General Manager to take over a lot of the tasks the owner had acquired. A suitable reporting structure with the General Manager was enabled to ensure that the owner remained appropriately informed.

We established human resource processes and provided training as appropriate to support this. Staff were restructured in line with appropriate skill levels and cultural fit with the organisation. Training processes and procedures were set up to ensure skill fit with role and upskilling as required. Training reviews and retraining were included within this along with processes for non-conformance. To support staff engagement and to improve morale, human resource engagement and recognition tools were determined and initiated.

As a result of our work, there were significant improvements in quality, efficiency, and throughput across the business with less support from the owner required. Staff morale has substantially increased, the company culture is much improved, and the owner is mostly stepped back from the business. Having the support of Gibsons provided the focus and expertise to work through the solutions needed. Often this can be difficult when you are too close to the problem, or do not even see all the issues in place.

The benefit of having a Gibsons Consultant support your business is having an expert with extensive, hands-on business experience. Not an academic or theorist, but a realist who can provide practical advice and assistance that will deliver increased productivity, greater efficiency, and improved profitability to your business. Find out more about the services we offer and how we can help you reach your business goals.

Let us take the following tasks off your list:

  • Strategic analysis and business plans.
  • Becoming an Employer of Choice.
  • Marketing and sales plans.
  • Brand development and promotion.
  • Business process modelling.
  • Improving systems and workflows.
  • Optimising organisational structure.
  • Pinpointing skills gaps and implementing training.
  • Reviewing financial performance.
  • Profitability improvement programs.
  • Managing organisational change.
  • Mentoring to develop executive leadership.
  • Business process modelling.
  • Mergers and acquisitions.
  • Technology strategy and implementation.

We wish you a Merry Christmas…

…and a Happy New Year.

As 2023 starts to draw to a close, we would like to extend our seasons’ greetings. We hope you get to enjoy some relaxation and fun during the festive time. To all our clients, present and former, it has as always, been our privilege to support your businesses to reach and extend their potential. Our intention is always to work collaboratively with you to meet the goals and objectives for your specific business. We look forward to continuing our work with you in 2024. If you have not engaged our services this year, please know that the door is always open if you are keen to reinvigorate your business performance, as we enter 2024. We can be contacted at https://gibsons.com.au/contact/.

The Gibsons team.

Our services

As consultants each with a career lifetime of industry experience, there’s little we haven’t seen and little we haven’t dealt with in business. Each Gibsons business consultant, in addition to their personal area of career specialisation, has extensive, hands-on practical experience meeting challenges with solutions in a wide variety of scenarios, industry sectors and business model types. We are not theorists. We bring advice and assistance that has been “road tested” and known to deliver productivity increases, improved sales, and increased profitability in a business just like your own. We have a keen eye for the issues and opportunities that need actioning, and we’re here to help you build a stronger business right across the functions of people, marketing, processes and profit.

Let us take the following tasks off your list:

  • Strategic analysis and business plans.
  • Becoming an Employer of Choice
  • Marketing and sales plans.
  • Brand development and promotion.
  • Business process modelling.
  • Improving systems and workflows.
  • Optimising organisational structure.
  • Pinpointing skills gaps and implementing training.
  • Reviewing financial performance.
  • Profitability improvement programs.
  • Managing organisational change.
  • Mentoring to develop executive leadership.
  • Business process modelling.
  • Mergers and acquisitions.
  • Technology strategy and implementation.

Our business pillars

Map out a better business with Gibsons. The first step on the road to success for any business is a strategic analysis. Our analysis reviews your current position, develops a vision for the future, and evaluates the strategy options available to take your business from where it is now to where you want it to be.

Once we’ve determined the best strategy, we’re able to develop a strategic business plan with you. This plan provides the detail needed across those key business pillars we always come back to – People, Marketing, Process and Profit.

People – Empower the agents of your success. Many people say their people are their most important resource, but do they act that way? Gibsons Business Consulting offers a range of people management services and capabilities to help you build a team that will drive your business forward.

Marketing – build a market-focused operation. Gibsons offers expert, tailored solutions beyond the scope of most marketing agencies because we approach marketing through the business-strategic lens. Whilst Gibsons excels at coordinating the tactical marketing activities involved in marketing promotion, we’re well known for strategic marketing which is the foundation that effective advertising, public relations and sales promotions should be built on. Ensure that everything about your business is meeting needs and reinforcing why customers should buy from you and not your competitors.

Process – build practical processes for greater productivity, efficiency, and profit. The primary reason for implementing business systems is to build consistency and, therefore, predictability into the quality of outcomes. Better systems and processes also establish the means for day-to-day operational activities to manage themselves, leaving managers with the time they need to deal with exceptions and to work on business development.

Profit – maximise business profit and cash flow. The aim of any business is to generate sustainable profit and positive cash flows consistently. If a business is unprofitable or isn’t cash positive, it can’t survive. It isn’t a viable business. We make sure you have the right measures and review processes in place so you can take informed action when you need to and keep your business on track.

Structure and process change to turnaround business performance.

It’s rare that we are approached by a company requiring assistance where there is clarity about why business performance is not as expected, and what should be done to fix this. Often, there is an understanding of the problem – a drop in sales, financial targets not being met, limited growth and so on – but the ‘why?’ of the issue is not clear, nor are the actions required to turn things around. We may enter our work with a client having been given one brief, only to find that other issues come to light as we investigate the problems that are taking place.

A manufacturing and installation company supplying the construction sector reached out to us for support with cited business performance issues. Sales levels were falling, and the company was experiencing a sharp decline in their Earnings Before Interest and Tax from a level of over 10% to only 2.5% of sales. We conducted a thorough review of the business’ operations and in addition to the problems with sales levels and EBIT, identified an issue with their margins for quoting and pricing. The company simply were not running at a level of margin that was long-term sustainable. They had significant quality and warranty issues which were cutting into profit margins, and there was poor labour management and supervision in place.

Without the right business structure and processes in place, it becomes very difficult to identity the ‘why’ when things go wrong. Clarity is missing, and as such appropriate actions are unlikely to be taken to turn things around.

Our business review identified the key areas to address, and we initially focused on implementing management review practices and reporting within the business to build an understanding of why these difficulties were occurring. We provided training and coaching to the company’s accountant to better analyse and report issues as they arose, and to make appropriate and timely recommendations to the management team. Management and supervision practices were established within production and management teams, and training and coaching of key management staff was enabled. Project management processes were also set up for all new projects initiated. A thorough review of the sales team and sales processes was conducted, and we established a sales management program with a priority to refocus the sales team. Alongside this, pricing and quoting margins were reviewed with a new pricing and quoting policy agreed.

After 6 months of working with this organisation we saw sales return to their normal levels, and after 9 months of sustained implementation of our recommendations, profits returned to 12% of sales. No significant quality issues have occurred for 6 months, and margins are stronger than ever with labour efficiency dramatically improved. The company now has high accountability throughout the management team, reduced stress, and happier staff with more satisfied customers.

Business change takes time, and modifying structure and processes doesn’t immediately impact the bottom line. It is with consistency and perseverance that business transformation is possible.

The question we often get asked is “why can’t a company just do this for themselves – why do they need an external advisor?”. In the case of this company, the management structure and processes were not in place to support the company to prevent these issues occurring. Without a significant and appropriate change to company structure and ways of working, change was not possible. Often it takes someone outside of a business to identify the change required, and once initiated, it can be easier to align with business priorities to meet, and often exceed, performance goals and success indicators. It’s also never an easy and quick fix.

Find out more about our strategic approach to unearth the challenges within your business and set you on the right path for success. Reach out for a no obligation, informal chat with one of our Senior Consultants today to chat about how we could help you and your business, call us (07) 3025 3220 or email [email protected].

[Photo credit: Minku Kang]

What’s holding your business back?

When you’re looking to grow your company but it’s ‘stuck’ it is useful to conduct a full strategic analysis to determine what’s going on. It might not be what you think. Far too often, businesses will make assumptions on the issues preventing their company meeting goals and achieving desired outcomes. These assumptions are rarely based on anything substantial, or there’s a focus on one key issue at the exclusion of all others. To truly understand what’s holding your business back, an objective analysis of all the issues, and the company overall are essential. This can be tricky to conduct in-house, where objectivity can understandably be somewhat clouded. You may believe that you have the right structure in place and the right team to achieve the profit margins you’d like, but often this is not the case.

Take the example of one of our clients – a small manufacturing and installation company operating within the construction sector. Gibsons were approached to conduct a strategic and business plan, with the objective of determining the issues at play that were preventing sales and profit growth. As soon as the planning process was in full swing, we discovered key factors that were holding the company back. Primarily these centred around people and processes. Key staff were modelling poor values and performance, there were manufacturing and installation process inefficiencies, and there was the absence of clear and consistent communications across the business and the management team. People were unsure who was accountable for what, they were disengaged, and were struggling to see a distinct company direction.

Once you have the right people in the right place doing the right things, a business can tackle operational and process issues that might also be holding them back. But you must get the people bit right first.

In our experience, people issues are often the cause of the most serious business problems and can be the most challenging to resolve. However, if ignored they can significantly endanger a business, or at the very least, leave it with a performance and success level far below true capability and potential. We often see attempts to ‘fix’ staff issues which in turn create more problems as structure and processes are used to ‘work around’ people difficulties, which rarely resolves the concerns, and instead adds significant cost and time to the situation.

To address these challenges, Gibsons conducted a thorough review of management practices to build a culture of understanding and a process of consistent and regular review. Next, we helped the company to develop the right business structure to support continuous improvement and accountability throughout its personnel. Progressive review of performance of key personnel alongside the company’s management team enabled the rationalisation of staff via retraining, mentoring, role changes to better suited skill sets, and in some cases, retrenchment. A complete review of operational processes and factory layout was then enabled with confidence that the recommended changes could be acted on with best immediate effect.

Build an effective business structure that puts the right people with the right skills into roles that best suit them, is key to ensuring a business with long-term and enhanced profitability.

The results of Gibsons’ work speak for themselves. Over a 3-year period, working closely with Gibsons, this business increased its profit on sales by 8-10%, culture and customer engagement improved, and there was a $10m rise in turnover. Importantly, the owner is now in charge of a highly self-motivated team with an appropriate structure to support the continued growth of the business.

Find out more about the Gibsons’ approach to ensuring your business is on the right path and your team are focused on what matters, through our in-depth strategic review.

Business growth through sales culture change

It would be understandable to think that issues related to sales are down to the sales process, pricing and the overall sales strategy. This is after all what drives a business’ sales levels and its approach to selling in the marketplace. However, dig a little deeper, and you’ll see the massive impact the culture of your sales team has on the implementation of your strategy. Perhaps the sales strategy is strong and appropriate for your offering, but how is it being executed and how is this being managed?

We were engaged by a major player in the Australian construction landscape to implement changes to their sales process and pricing structure to optimise margins. Our client’s construction reinforcing product had been used in most of the iconic structures in Australia including the Sydney Opera House, Melbourne’s Westgate Bridge and freeway, and Brisbane’s Gateway bridges. The company was well known and well established (100 years).

It initially appeared that the issues impacting sales and ultimately margins were related to the sales strategy. However, after a period of discovery, it became clear that sales performance was impacted primarily by the people within the sales team. While dedicated and committed, the sales team were agreeing to meet every customer requirement. There’s nothing wrong with putting the customer first and focusing on customer needs, but in this case, it resulted in unclear accountabilities. If you agreed to everything, who is going to follow through with the requests, and importantly can / should they be met? Inefficiencies were the result, as the team lacked clarity on what to prioritise and how.

Develop an effective sales strategy that is fully understood by staff to ensure consistency and accountability, but that also supports an effective management of performance.

In this case, there was no ‘organisation’ behind the sales team effort. To address the culture and performance inequities, Gibsons worked to embed processes and practices designed to clarify accountabilities, and to manage sales performance both company wide, and for sales team personnel. In total, 6 improvement programs were established and implemented over a 6-month period. This phased roll out started with the company’s Queensland team and are being progressively implemented across the rest of the business.

No matter how astute a management team is, often there are issues that from the inside are easy to miss, or people are too ‘close’ to the challenges, to effectively manage them. A Gibsons Senior Consultant who lives and breathes business improvement, will quickly get a feel for your business and be able to identify areas for improvement.

With accountabilities now understood and aligned across the entire sales process, these improvement programs have enabled the sales team to be more focused. An ‘achievement’ sales culture that the company was seeking has been established and revenue targets are being exceeded. The business growth potential identified has been enabled through this sales team reinvigoration. As is often the case, it’s not always that a strategy is wrong for your business. Often, the processes in place for implementation and management are not there; or are misunderstood or inappropriately executed by your team. Ensure your people know what they are accountable for and set up ways to manage this. Support your business’ potential by providing clarity in roles and expectations, and transparency in how this aligns with your overall company objectives.

As with many projects Gibsons work on, the reason we are called in is not always the cause of the challenges being faced. A Gibsons consultant is accustomed to scanning operations from a more objective viewpoint, with the benefit of deep experience gained from scores of business improvement projects. They can almost immediately spot problem areas that you may not be aware of. Find out more about the services we offer to support businesses and let us take the following tasks off your list:

  • Strategic analysis and business plans
  • Becoming an Employer of Choice
  • Marketing and sales plans
  • Brand development and promotion
  • Business process modelling
  • Improving systems and workflows
  • Optimising organisational structure
  • Pinpointing skills gaps and implementing training.
  • Reviewing financial performance
  • Profitability improvement programs
  • Managing organisational change
  • Mentoring to develop executive leadership.
  • Business process modelling
  • Mergers and acquisitions
  • Technology strategy and implementation

Raising Capital for Small Business

Most entrepreneurs and small business owners have a need at some stage to raise capital in order to realise an idea or expand their current business operations.

The first port of call is normally the traditional source of finance – the bank.

But most banks are usually reluctant to lend to small businesses without the security of property – often the business owner’s home. It is very difficult to get banks to lend on the strength of the business opportunity if it is in its start up or early development phase. Financing start-ups is basically not what the banks do.

There is a fundamental difference between the business of mainstream banks and venture capitalists. The bank wants to provide loans that are relatively secure, on a long term basis. Business investors and venture capitalists want to put money into something that will provide an above average return and then get out.

It is important to understand the differences between the various types of start-up and venture finance, and to understand what potential investors are looking for and how to approach them.

We often hear it said that the Australian investment market is conservative and will not back the creative and entrepreneurial talent that exists in business. Without wishing to debate that proposition one way or the other, it is fair to say in defence of the investors that they are often presented with propositions that would not inspire anyone to part with their money. Research has shown that only 0.12% of deals that get put in front of venture capitalists actually attract funding.

To improve the chances of successfully attracting finance for your business start up or business expansion, there are a number of things that you as the promoter of the business should consider and address.

First, ask yourself, what is the stage of development that the business has reached? It is very difficult to attract other people’s money when your business is still just in the idea stage.

The most common mistake business promoters make when looking for funds is they do not look at their proposition from the point of view of the investor.

Investors are exactly that – they invest for a return, they are not punters. Nor are they entrepreneurs who want the thrill of developing a good idea. For them, developing the idea is a means to an end of achieving a return on an investment.

So, if there is no cashflow, there is no business, and the chances of attracting business investment are slim. In these very early stages, the only place that money is likely to come from will be the promoter’s own assets, or family and friends. The other alternative is to look at the various state and federal government grants available to assist with the very early stage of development but there are not many of these either.

Once the idea starts to turn itself into a revenue generator, it is at the stage that it might be able to attract some seed capital. This would typically be in the range of $100,000 to $300,000 and come from an individual investor or business angel. It is still fairly speculative from the investor’s perspective, but if the investor can see that the idea has merit and has a chance to become a good business, they may put money into it. This form of finance is often by way of a loan rather than equity and will be at an interest rate commensurate with the risk. The investor in this scenario will probably only invest an amount that he or she is prepared to lose and is not likely to put in anything at all if the promoter does not have their own money at risk.

The next stage of development for the business is where it has become established and has the potential to expand. At this point, it can start to look for venture capital which will typically be in the range of $2.5 to $5million. The venture capitalist is only interested in investing in a business that will deliver a return and will not back something based only on the potential of an idea.

This is a critical point that business owners need to understand. While the entrepreneur is focused on the potential of the technology or product or service, the venture capitalist is really interested in the quality of the business and the management.

The venture capitalist wants to know who is going to be responsible for his or her money and how will they achieve a return for him or her.

If the business survives these early stages and continues to develop, it will reach a point at which it becomes attractive to the mainstream banking industry for long term debt finance and possibly public listing if it needs to raise further capital.

All of this suggests a few things that a business owner who is seeking capital should take into account.

1. Do it in stages

Even if the idea or product has the potential to change the world as we know it (which many entrepreneurs passionately believe their pet project will do), it is better to start by trying to attract a smaller amount to get it off the ground, rather than the amount required to take on the world.

2. Present the pitch from the perspective of the investor

The investor will want to know how much is needed, what he or she gets in return, when does he or she get it and how and when will he or she exit. (A typical venture capital supplier will normally look to exit the enterprise within 5 to 7 years). Of course, the investor will also need to be convinced that the business has a good chance of succeeding and thus deliver the promised return.

It will require a fair amount of homework to produce:

  • A business plan that shows an effective business and revenue model. It needs to demonstrate a quantifiable need in the market that the business is capable of fulfilling. It should also show how the business compares with competitors on relevant industry indicators and the sensitivity that the projected outcomes have to key assumptions.
  • An investment summary and business valuation model together with an exit strategy.
  • A strategic marketing plan that demonstrates exactly how the potential will be turned into reality. The plan must address the value proposition of the business and the branding strategy that will deliver above average profits.
  • Evidence that there is adequate protection of any intellectual property involved.
  • Evidence of a management team with the credentials and credibility to deliver the result.
  • A clean ownership structure where the assets of the business are clearly distinguishable from the assets of the owner.

All of the above will need to be available in two forms:

  1. A brief presentation that will capture the attention of the investor and answer his or her critical questions.
  2. A detailed set of documents that will stand up to the scrutiny of the third party that the potential investor will inevitably engage to carry out due diligence on his or her behalf.

Remember,  the investor is highly unlikely to slash his or her wrists if an investment gets away from them because it was poorly presented. There is always someone else waiting outside the door to pitch the next opportunity.

 

Here is a checklist of things to consider for small businesses looking for funding.

1) What stage of development is the business at?

STAGE OF DEVELOPMENT TYPE OF FUNDING REQUIRED
i) It is a new product or idea with potential. Self-funding, family and friends, government grants.
ii) It is starting to generate a cash flow. Self-funding, family and friends, government grants.
iii) It has a consistent cashflow, the potential to grow and needs $100,000 to $300,000 to go to the next level. Seed capital from private investors and business angels.
iv) It is self-sustaining and profitable with a positive cashflow and requires $1 million to $5 million to continue growing. Venture capital from private equity firms.
v) It is a substantial company with strong asset backing that needs a large amount of money for further growth. Debt finance from an investment bank or commercial bank. Partial trade sale or private equity placement through an investment bank. IPO.

2) If the business is at stage (iii) or beyond, ensure the following are in place:

  • A business plan that details the business model, demonstrates a viable opportunity and contains competitive bench marks.
  • A strategic marketing plan that demonstrates exactly how the revenue and profitability targets will be achieved.
  • Evidence that the intellectual property is adequately protected.
  • A management team with the know how to deliver the plan.
  • Evidence that the business owner or promoter has a serious financial interest in the venture.
  • An investment summary and business valuation model.
  • A viable exit strategy.

Having an awareness of what investors are typically looking for and doing your homework ahead of time will significantly increase the chances of you successfully attracting funding for your business venture.