As the recovery begins, it's a sobering thought that because they have become reconditioned by a common ‘batten-down-the-hatches’ approach to recession, few companies are likely to be engineered for growth. The repercussions could be fatal.
The danger is no longer 'boom and bust' - but ‘boom and rust’. Proactive organisations will grow, but more pedestrian businesses risk stumbling into terminal decline. There is the real possibility that if business owners/managers remain in a risk-averse mindset, they will preside over organisational paralysis that not only prevents growth, but also allows competitors to seize market share.
After five years of surviving it's an understandable response, but it leads to an uncomfortable truth – many UK businesses have forgotten how to grow.
So, as the 'green shoots' of recovery begin to take root, what should businesses be doing to reinvigorate themselves and create a platform for growth? Experience suggests that many will be doing the very thing they should most avoid – focus solely on profit.
The alternative approach will send chills down the spines of accountants the world over, no doubt, and it may appear to defy common business logic, but the best advice for business owners seeking growth through the upturn is don't just focus on profit.
There are tried-and-tested ways to keep your business small and stressful and the most common is to obsess about profit as the markets recover and hold on too tightly to the P&L. This approach will prevent you from creating the headspace required to innovate and grow. You may well stay profitable, but you'll also stay small.
In the longer-term, the most successful businesses will facilitate a fundamental shift from a focus on profit to a focus on 'multiple'. They'll look at the long-term value of their business and switch attention from the P&L to the balance sheet. And crucially, they'll shift their focus from income to assets. After all, income follows assets.
As well as traditional 'balance sheet' assets, there are ‘intangible assets’. And the key to long-term growth - and driving the value and multiple in a business - is to focus on the intangibles.
Intangible assets generally boil down to culture, talent and systems. They're the people and processes that drive equity value and combine to form your intellectual property. The challenge is to structure your business culturally and organisationally so that it drives value, grows sustainable revenue streams and supports your long-term ambitions. Creating and building upon the right cultural platform to empower staff to deliver these common objectives - leaving senior management free to plan for tomorrow - is critical.
The economic upturn should present a clear catalyst for growth - but business owners must not allow their desire for short-term profit to dictate caution about long-term planning and investment. Now is not the time for 'logical' product innovation and extension based on understanding today's marketplace – taking baby steps will only keep you small. Today's green shoots represent the ‘teenage years’ - and to exploit them, businesses need bold innovations if they are to capture whole new markets and appetites.
To progress, owners should consider pursuing an asset-based strategy. The challenge is to understand the ‘rocket juice’ in your business – the core intellectual property that powers your current product and channel. Once you identify it, you'll be well placed to innovate into radical new product areas and channels that are more lucrative and less competitive.
The most successful companies at this point in the economic cycle will always be outwardly-focused - and they will look for partners that can help stretch and stimulate their thinking. Business coaching can provide an independent perspective on how companies can invigorate their core intangible assets to drive value, increase their multiple and stimulate sustainable growth.
The most common way to keep your business small and stressful is to focus obsessively on profit. But there are also innovative ways to engineer growth and the best is to concentrate on intangible assets, and to work with a partner that can help to revitalise your company and create new platforms for growth. After years of austerity, UK businesses may well have forgotten how to grow, but they need to get their memory back - and quick.
Blog supplied by John Rosling, CEO of business growth consultancy Shirlaws (UK) Ltd.
Running your own business can be exciting, draining, liberating, stressful and satisfying – all at the same time. Doing it without outside investment can be a risky proposition, but with risk comes reward. While some people might view having a small budget as a disadvantage when starting a business, in my experience it proved highly beneficial in the long run.
I started market analysis consultancy White Space with my business partner Nick using just our individual hard-earned savings and no investor support or bank loans. We’ve now been running for eight years, rent a large office in central Oxford and work for more than 70 of the world’s most recognisable companies. There are many positives to funding your own business, and here I’m going to share some of my experiences and provide practical tips on how to overcome any disadvantages.
As a business owner, you’ll be under constant pressure to make decisions that are critical to the growth and direction of your business. Make sure you are clear about your overall strategic direction by applying the following principles:
Self-funding your business will cause you to reassess and prioritise your personal expenses. In the early stages, you will be surviving off very little, without the comfort of a steady income. Many financial survival tips are obvious, such as ‘save money wherever you can’. Here are three that are less obvious, but just as important:
Despite wanting to conserve your cash without any major capital outlays, there comes a time when a business needs to accelerate. A steady growth model is far more scalable and allows you to fully test the market before expanding further. You are also much less likely to fall victim to the cycle of ‘boom and bust’.
The right time for growth is when your business is in the middle of a successful period, with a few strong months just gone and a couple more forecast to follow. Be aware that expansion will eventually require additional resources to succeed, including labour, equipment, finances and more micro-management.
My experience has shown that the old adage – ‘revenue and staff numbers for show, profit for dough’ – still rings true. It can be exciting to feel like you are expanding, but never take your eye off the bottom line. For the vast majority of start-ups that are not expecting to be the next Twitter, this is the only true measure of success.
Self-funding your business can provide many advantages, from enormous personal satisfaction to being able to take a greater share of the spoils when your business succeeds. Making sure you have the right business proposition, the passion to make it happen and being realistic about what you can and can’t achieve are key to a successful and scalable business start-up model.
Blog supplied by John Bee, managing director of Oxford-based market analysis consultancy White Space.
There’s no denying that as a working population we are experiencing the throes of a revolution – and a flexible one at that. The concept of flexible working is one that is rapidly emerging, resulting in the adaptation of the traditional workspace as we knew it.
Rapidly advancing technologies are making it easier than ever for professionals to work remotely, on the move and reduce the need for a business to run its operations entirely under one roof 9-5, seven days a week.
The number of employers offering work-from-home options increased from just 13% in 2006 to 59% in 2011, according to the CBI/Harvey Nash Employment Trends Survey 2011. Indeed, its most recent survey in 2012 also spoke of the flexibility of the UK’s labour market, believing its freedom has made the country a good location for sizeable international projects.
Flexible working has psychological, financial and business benefits and these all result in heightened productivity and efficiency. Finding the right work-life balance is something we all strive for and can be one of the biggest challenges any entrepreneur faces when starting a business. Flexible working hours, whether that means working alternative hours or at different locations, may help to strike this balance.
One of the many reasons entrepreneurs start their own business is because they feel stressed and restricted by conventional working hours, particularly if they have young family commitments. The ability to work outside the office and keep your fingers on the pulse is a positive for both employees and employers.
Small-business owners concerned about the bottom line are also welcoming flexible working because it is proven to be good for businesses, too.
The Department for Work and Pensions produced a report on the effects of flexible working on employees and employers and it found a marked reduction in costs as a result of fewer people missing work or leaving their positions. Similarly, 58% of small-business owners recorded notable increases in productivity within their workforce.
Flexible working has made business increasingly global. Firms can entertain the idea of spreading their net further than ever before by travelling overseas for client pitches and meetings without the fear of taking their eye off the ball back at headquarters, with email, apps and the cloud improving connectivity in ways we could never have imagined just a couple of decades ago.
The growth of business hubs and fewer business owners demanding central office locations, combined with the continued use of smartphone and tablet devices means professionals can increasingly take responsibility for finding their own work-life balance.
Guest blog supplied by Generator, one of Europe’s fastest-growing hostel accommodation chains, with eight locations across the continent.
Choosing the right telephone number for your business is vital because it says a great deal about you. But if you don’t know your 01s, 02s, and 03s from your 0800s and 084s or the potential costs to you and your callers, it can be a minefield. Here’s a guide that should help you choose correctly.
Telephone numbers are more than just a means of customers and prospects getting in touch with you, key as that is to a thriving enterprise. They also reveal something about your business.
If you provide only a mobile (07) number, people may think your business is small. Choose a geographical number (beginning with 01 or 02) and you appear to be tied to a specific area, which, of course, is fine if you wish to operate on a local or regional basis, but not ideal if you have ambitions to trade nationally.
Provide a number that begins with 084 or 087 and callers may fear the call will cost them too much following the recent bad press about them being used for helplines at premium rates.
Opt for an 09 number and people will know you are looking to make serious money from the call, perhaps, quite rightly, for a cause or a competition – or maybe they’ll just think you’re greedy!
First impressions count. The customer or prospect may not make the call – and perhaps you just lost a new client or maybe an existing customer went elsewhere.
Yes, playing the numbers game when it comes to choosing a phone prefix for your business or organisation can be daunting, but for smaller businesses, 03 could be your lucky number.
So why is 03 so good? While it may not suit every business, 03 has the following advantages:
Public awareness of 03 numbers is limited. There’s no doubt the government needs to do more to promote the benefits of an 03 number for callers and business owners, especially in the wake of recent legislation banning the use of 084 and 087 numbers for consumer helplines.
Blog supplied by Lindzey Evans, Client Support Manager for Penelope, the virtual phone system for start ups and emerging businesses.
With little or no daylight outside of work, it’s perhaps easy to understand why people’s morale descends into the abyss during winter.
As some employees suffer a bout of the winter blues, small businesses can breathe a sigh of relief when they begin to realise that very little budget is needed to boost staff morale.
In fact, contrary to popular beliefs, money isn’t the best motivator. Praise and flexibility are far more influential than bonuses and pay.
A high proportion of small businesses will suffer a drop in staff numbers this winter, whether that’s caused by a spike in sickness-related absences or an influx of last-minute holiday requests. Combine the two, and your other employees could be facing a crippling workload.
A watertight sickness absence policy and holiday request policy offer the best preventative measures to manage the risk of a limited workforce.
It’s also crucial not to forget those who are left behind, with recognition for their achievements helping to reinforce morale.
Adopting a flexible approach also helps to keep morale high. Take severe weather for example. Offering your employees the chance to work from home helps to reduce absences and prevent the business from grinding to a halt. In such an event, it’s crucial that you have a robust flexible working policy in place.
A dysfunctional team can have a devastating impact on productivity, which is why good communication within the workplace is vital.
Be sure to keep your employees up-to-date of any business news. However, do remember that this is a two-way street, as your employees should be able to approach you with any work-related issues.
A well-engaged workforce will ultimately deliver increased productivity and performance, therefore it’s crucial to recognise and meet the needs of your staff.
Remember that even the smallest gesture can make a big impact, such as enabling staff to leave early once targets have been met or even treating them to lunch.
At the end of the day, it’s up to you as the employer to motivate your workforce and prevent a dip in staff morale.
Blog supplied by Helen Pedder, head of HR for ClearSky HR.
I ask every audience I talk in front of one key question: “What’s the most important thing to measure if you want to find out how well your business is doing?”
And, without fail, people always come back to me with the wrong answer! They call out ‘sales’ or ‘turnover’ or ‘profit’, but they hardly ever mention the right and probably only answer that really matters – ‘cash’.
In reality, it’s impossible to carrying on trading if you run out of cash.
In the current economic chaos there are plenty of casualties, the weak and vulnerable businesses will go bust. More worrying is the profitable businesses that go to the wall because they run out of cash.
So, how do you keep your head above water? In basic terms, sell something people want; make sure the difference between what you buy it for and what you sell it for is big enough; find a way to get people to buy from you, take massive action. And, of course, make sure you collect all the money you are owed:
As a self-confessed serial entrepreneur I hate the detail and intricacy of putting cash-flow processes in place, but you can’t afford not to.