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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.

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.

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.

Online Business Models – The Basics

In this article, we will outline some of the different online business models that exist so that if you are considering setting up an online business, you have some understanding of how you could structure that business.

  1. Direct sales – physical goods: In general, direct sales (particularly of physical products) is usually what people think of when they think of ‘selling’ online. Direct sale of physical products is where you sell a physical widget to customer A via your e-commerce store, and you deliver those goods to the customer’s chosen location. It is important to understand that the online version of the direct sales business model is different to that of an offline physical shop-based business model, and you will need to make adjustments to your procedures in light of the differences should you wish to move online with your physical store. Some of the variations within this online business model include:
    1. You pack and ship – this is self explanatory. You manage the entire process, from inventory management to packing and handling. This is the model I initially used for my online bookshop, and unless you have good processes in place the chance of making an error is very high!
    2. Drop shipping – This is where you sell a product which you physically do not see or stock yourself, with the order being processed by a third party. In this model you don’t see any products, and if you get it right it can be quite lucrative given the effort involved. Expect your margins to be low however, and if your third party supplier stuffs up then you will be the one blamed by the customer. Drop shipping is sometimes combined with white labelling in order to hide the third party involvement from your customer, making it all seamless in the front end
  2. Direct sales – virtual goods: This is a direct sales model where you sell ‘virtual’ goods to your customers on an item by item basis. The virtual goods can be anything from ebooks, to audio files, videos and anything else digital. The beauty of this model is that once you create your virtual products, you can flick the switch and in very general terms ‘make money while you sleep’.
    1. You produce – This involves you producing the goods for download/distribution, or where you provide the services being offered.
    2. White labelled – This is where you use material produced by someone else, but the customer only sees your branding and does not see the third party in the process, nor do they know that you didn’t actually produce the product.
  3. Direct sales – services: Yes, even services can be sold online in single transactions. For example, an accountant could sell personal end of financial year tax returns, with full payment made online in advance of the service being completed. The customer then simply sends the firm all the relevant required information for completion. Why do this? The firm gets immediate payment upfront, no chasing required, no managing accounts etc. There are many many combinations for service based businesses to take advantage of online sales.
    1. You deliver – This is where you sell the service and complete the service in-house.
    2. White labelled – This is where you sell the service, but the order goes to a third party for completion, all under your branding without the customer knowing otherwise.
  4. Subscription – works for both physical and virtual goods and services: I personally love this model and have several subscription based projects of my own in the pipeline. In the subscription model you sell services/products (physical and/or digital) via your website, taking payment electronically, and delivering according to subscription levels and schedules. This model, if well setup, can be very lucrative, especially if you have minimum subscription periods that your customers must adhere to. In addition, adding a subscription model to an existing direct sales model can help smooth out the frequently seen monthly revenue up and downs, making it easier to manage your cashflow and forecast ahead.
  5. Online marketplaces – this model is often used by start ups, those wishing to quickly move stock and those who wish to create and run an online membership based market business.
    1. Existing – example EBay; Gumtree: This business model is built around the use of existing platforms like EBay to sell. I am personally not a fan of this model as it is not the easiest to get right, given the incredibly high competition and the strong focus from the customers on securing the best for the cheapest. Having said this, I have used this model with great success and built a start up from scratch using Ebay for the start, with a transition away from EBay to a direct sales business model once I hit certain internal targets.
    2. In-house – you develop your own market place: This is for anyone wanting to create their own version of ‘EBay’. This is a very rarely used model that is costly and difficult to execute, so if you have this on your mind I strongly recommend you get in touch with me for a chat.
  6. Combos – This is where you deploy more than one business model to run at the same time, or, you transition from one model to another based on various internal criteria, and business or market needs/factors. An example could be to develop a primarily subscription based business, but at the same time offering some items for direct sale as well.

One of the beauties of the digital (online) world is that the possibilities are broad in terms of how you setup your online business. In addition, a digital model is far more flexible than the traditional bricks and mortar version, allowing you to evolve quicker, cheaper and more effectively than your offline counterparts.

If you have an idea for an online business, or have an existing business and want to know more about transitioning online (or at least including an online presence in your existing offline model), then get in touch and let us help you grow and evolve!