Setting out the Stall

Is it fact or is it opinion?

Imagine a market stallholder who pitches up in a different town each day to sell an array of variously flavoured olives. She has a reliable supplier for her goods, a stream of regular customers and sometimes manages to generate new interest from passers-by. Then, one day, a bigger pitch becomes available in one of the towns she frequents. It’s double the size of her existing pitch, offering our olive lady a great opportunity to expand the business. Now, does she simply accept her previously held opinion that the olive market is thriving, order greater quantities from her olive supplier and carry on doing exactly what she has done so far? Well, the problem with that is that olives can be a bit of an acquired taste and the fact of the matter could be that her particular market for olive sales is already at capacity. It seems as though she will continue to sell the same amount of olives to her regular customers, while having to pay a higher rate for her pitch and probably ending up with a significant amount of stock left over at the end of the day. A path towards ruin looms ahead. To manage the opportunity, the stallholder needs to look at all the facts, taking the time out to find out what other offering her customers might like, along with sourcing potential new suppliers and closely examining costs and profitability.   This is a great example of the reason business decisions should be based on facts. Opinions can often skew our view of the truth and lead to poor decisions making. The opinions... read more

Don’t wait for the wake up call

Last week in my local paper there was a headline that grabbed my attention. Traffic on the roads in my home town were within 5% of total gridlock. Oh happy days! Now this was reported as being a major shock. It’s as if this situation has unexpectedly happened. Interestingly the article went on to state that the houses being built around the town will generate traffic that will exceed this small buffer.   Luckily, the article highlighted that the local politicians were now unveiling plans that will alleviate the problem. Unfortunately the proposed new roads are in fact old plans that have been bandied around for many years and regularly put on the back burner as soon as opposition became vocal. In reality the plans are probably too little much too late. Every resident has experienced the creaking infrastructure for many years and expect it to get much worse before it gets better. (Rant over promise!) Why am I raising this in a business blog I hear you ask? Well, just like the local leaders of the council it is so easy for business owners to become fixated on growth and ignore the infrastructure that is needed to support that growth. Plans for growth are put in place and then shock horror when the growth starts to materialise there is a sudden realisation that things are rapidly going out of balance. The systems, team, space, finance etc. are not capable of supporting the growth. A common business mantra is to “sweat the assets” (both physical and human) with investment deferred to the last moment. This practice often becomes counter... read more

As a business owner, when is a great time to take stock?

  Have you ever noticed that in all aspects of life including business one brief moment, one small change can have a huge impact on your future? Sometimes that change may be intentionally engineered but so often it just happens. Call it ‘fate’ if you like. Whether we always strive to be proactive and avoid being reactive, an event can come completely out of the blue and knock us for six. We may like to feel we can control our destiny but short term fear can quickly over-ride our long term view. Let’s look briefly at a common scenario in business. What would your initial response be to a long term key employee suddenly handing in their notice? Threatening to leave, maybe even going to a competitor. Mild panic? How are you going to cope loosing all that experience? Maybe, your knee jerk reaction is to immediately match or better their new salary package to convince them to stay. When it becomes clear that they are on the move you start recruiting a replacement to fill the vacant seat as quickly as possible. A straight like for like replacement. But hang on a moment, let’s STOP, REFLECT and REVIEW. Let’s not be rushed into that hasty decision. It’s a great time to consider the role that they have been performing and review whether that is now inline with what is best for the future of the company. Has the original job description been lost over the years and the role they perform morphed to reflect their own needs and requirements not that of the business. The business outgrew them... read more

Here’s two great KPI’s for every business.

I’m not a great one for business platitudes but there are a few that are worthwhile revisiting. Here’s one to consider, ready? Turnover is vanity, profit is sanity but cash is king! Hope that didn’t send you scurrying for the sick bowl. However, the overuse of these sayings can diminish their underlying sound wisdom. So, what measure do you use when you want to indicate to someone else the relative size of your business? I have found that the commonly used measure is turnover or sales. The reason being it an easy measure that really does not give away too much information to anyone but actually when comparing businesses we soon run the risk of comparing apples with pears. Interestingly, the majority of owners I meet through business coaching can state the sales figure but struggle when asked about their margin, gross profit or the mysteries of the balance sheet. Indeed many owners believe that if the sales are forever rising everything will be fine and dandy. The economic driver of every business isn’t turnover, it’s gross profit. Put simply gross profit is what is left of the cash turnover once you have paid all the costs directly associated to those sales. Gross profit is the true value added which in turn is the lifeblood of any business, it’s what pays for everything. The resulting profit then ultimately provides security for all the stakeholders of the business, the owners, employees. customers and suppliers. Profit is the pump primer to build long term sustainable wealth for you the owner. In fact go one step further and strike the gross profit... read more

How can you impact the future of your business?

As a business owner how do you know what is going to happen in your business? What do you use to monitor the future effectiveness of your team? Have your finger on the pulse, know whats going on, measure everything I hear you cry! Well let me bring good old Key Performance Indicators (KPI’s) out of the dusty recesses as one of the most powerful tools at your disposal when used properly. Unfortunately, I have found they are also one of the most mis-understood tools. Often they are relegated to reporting on what has happened not what is going to happen. So let’s look briefly at how to use forward looking KPI’s In any business there are a bewildering number of performance indicators- but the important thing is to choose the ones that are KEY. Those that if monitored correctly will give you all the information you need to check on the direction of the business. It is so easy to focus on the result, perhaps a number or ratio, rather than what the indicator is telling you. It is monitoring the TREND that is all important. Is the trend stable, improving or declining. This allows you to impact the future by spotting a change in the trend at the earliest opportunity so that appropriate timely action can either reverse a declining trend of maximise an improving trend. The engine management system in a modern car takes thousands of readings of the performance of your car’s engine every minute. By monitoring the trend of results it is predicting a future problem and only warns you via the dashboard warning... read more

Here’s why reviewing the systems in your business is so important.

The thought of installing a new computer system or upgrading an existing system is often a daunting prospect. Sometimes the decision to upgrade is left until it is forced upon us like in the case of Microsoft’s recent decision to withdraw support for Windows XP. The review of the systems is a fundamental part of ‘Setting out the Stall’ which I covered in Chapter 6 of ‘The Levels‘. Will the system be able support the business to the next Level and beyond? Interestingly the main decisions when upgrading the system revolve around efficiency and reducing staffing costs. Whilst this is obviously important little time is taken to consider what is the true output of the system and indeed what is the reason for system. Without understanding this fundamental point so much of the potential will be missed- leading to the system will not being fully integrated within the business. Individual functions or departments will develop their own subsystems as the purpose is only seen as the process of doing rather than aligning the true output. The real question to ask is what information will the system provide to help me make informed decisions about the future direction of the business. How does it help me make decisions based on facts rather than opinion? This blog is based on strategies found in Can Your Business Step Up to the Growth Challenge? By Ray Moore — I hope you enjoyed the post and found it thought provoking. I published The Levels: Can Your Business Step Up to the Growth Challenge in 2013 and The Levels: Can YOU Step Up to the Growth Challenge... read more

When does ego get in the way of business growth?

Over the years I have found that business owners’ biggest fear is that of being found out or to be seen as not in control. Often, owners will ignore the inevitable and continue along a well worn path, as they see it as their only option. Better to put on a ‘everything is rosy show’ for the outside world rather than face difficult questions. This fear is your ego protecting itself. Realise that the business environment that we all operate in is in a state of flux. Nothing stays the same over the long term. It’s a basic law of nature that holds true throughout the universe. Currently, technology is driving change at an accelerating pace in every market. This trend is undoubtably set for the foreseeable future and as business leaders we must adapt and evolve or run the risk of that well worn path becoming a slippery slope that becomes more and more difficult to escape. Think about the well-publicised business failures over the last twelve months and consider how many had been trapped in a business model that had become unsustainable or just plain out of date. It’s often easy to see when other businesses get it wrong but not so easy to be as dispassionate about our own business. So its time to hold up the mirror on yourselves and your business. In todays environment you must be on your toes ready to accept change. What applied five years or even one year ago may not apply today. The first step may be to put your ego to one side and seek an impartial view... read more

Common Symptoms of an Out of Balance Business

Here is a list of some of the common symptoms seen in an out of balance growing business whilst in transition from one Level to the next. High stress levels. Can’t relax on holiday – always checking in with office. Working from home in the evening or going back to the office after briefly seeing family. Poor or erratic cash flow. Customer complaints increasing. Seems like there’s not enough hours in day. Owner thinks (s)he does it the best – so is the one to do it! Delivery is inconsistent; leading to customers going elsewhere. Staff not motivated; they only do the minimum; won’t take responsibility or make decisions. Staff morale low. Lack of trust between owner and staff. Often not prepared to share financial performance. Owner has no time for family, putting stress on relationships. Profitability under pressure. Desire to consolidate business, as this will relieve pressure. This is not intended to be a comprehensive list. It is however a representative sample of the common symptoms experienced by business owners growing their businesses. If these pressures continue over the long term then they can have significant impact on the health of the business and the business owner. Read the list again slowly and consider how many apply in your business or indeed what other challenges you face due to growth in your business? The good news is that by Setting out the Stall to go to the next level the drivers of the business (Time, Team, Money and Delivery) will be kept in balance which will in turn reduce stress throughout the business and alleviate these symptoms. The even... read more

Business lesson on the golf course.

Let’s play a round of golf. As we are walking to the first tee we agree to play for a pound a hole. You’re to tee off first and as you get ready to play your shot, as an aside, I suggest that to make it more interesting let’s double the bet on each hole. So a pound on hole one; two pounds on hole two; four pounds on round three etc. Without thinking you agree and drive your ball straight down the fairway. Great shot! So what will the bet be on the last hole? What have you agreed to? Most people when I go through this scenario, give me a knowing smile and say ‘a lot’. Well yes, it is a lot but most are then staggered by the actual figure. Save you calculating it, the bet on the last hole is a staggering one hundred and thirty one thousand and seventy two pounds. Wow that would be some last hole! Well that is all very interesting but what is the point? Just bear with me for another moment! Let’s look at the same scenario but this time I just delay suggesting the doubling up until the fifteenth hole. What would the bet on the last hole be then? To put you out of your misery it would only be eight thousand one hundred and ninety two pounds. Still a big bet but not in the same league, in fact it is only 6% of the first case. It’s an example of how the Law of Compound can have significant impact on an outcome. It’s effect can... read more

How good are you at picking up cues?

When you invite someone into your house you assume that the visitor will respect your property, your environment. It is normal to expect everyone to live by accepted social norms and values on which your own ‘house rules’ are based. But is that always the case? Well often no! Let me give an example that highlights the error in this view. Imagine you are visiting a couple for the first time for whom it is important that outdoor shoes are not worn in the house. Let’s assume that it is not normal for you to remove your shoes on entering your own house. So how would you know their ‘house rule’. You may pick up some visual cues such as pairs of shoes lined up by the front door. You may notice they are not wearing shoes. They may offer you slippers. They may just ask you to remove your shoes. However, often none of these happen. You did not pick up the visual clues and they were too polite to ask. On leaving you may comment on the strained atmosphere you felt, but I leave it your imagination to what sort of comments they made about you when you left! What’s this to do with business? Don’t assume all your team have the same social norms and values as you. They won’t. How do they know what you expect? Unless you discuss with them they won’t know. If you think it’s just common sense, think again! Related blog.  Don’t rely on common sense You have invited them into your business so don’t be like the polite couple in... read more