How do growth companies survive in complex times?

Australia’s small and medium-sized growth enterprises face ongoing and increased stress in these challenging times. Business owners have to make difficult decisions constantly and demands come at you from every angle, all day long.

Successful entrepreneurs know, however, that there are enduring key principles that improve a company’s prospects for growth and continuing profits and make it stand out from the crowd.

“At Bibby Financial Services we are constantly interacting with entrepreneurs and fast moving companies. Fast movers are the growth engine of our economy, and this is a key reason why we continue to support the sector, says Greg Hardiman.

“We have observed time and again that staying calm in difficult situations and applying the following disciplines are key when a business is trying to get ahead of the competition.”

Disciplines for success

Cash flow is the lifeblood of a business. Cash flow can be the first casualty in a downturn. In tight times fast movers develop conservative cash flow budgets and ensure they get paid more quickly. They are diligent in collecting what they’re owed. Effective accounts receivable collection frees up cash and can reduce reliance on credit.

Always challenge certainty, especially your own. When entrepreneurs think they’re right, they also think to ask what is missing and search for improvement. Excellence is an unrelenting quest and striving for it is the surest route to enduring satisfaction. The best leaders and fast movers are forever challenging their comfort zone.

Emotions are contagious and feelings are infectious. The best leaders inspire. They are optimistic and ensure employees are just as inspired to succeed in their roles.

Understand basic finance principles. Fast movers ensure financial information and accounts are timely and critical documents are maintained and delivered on a set day every month.

Clearly communicate a business’ point of difference. Clear communication of a company’s point of difference and strategic direction to its customers is imperative. Fast movers view downturns as an opportunity to stand out from the crowd; they continue to tell the market what they do best and remain visible.

Delight customers. Fast movers make frequent customer contact, great service and rewarding loyalty a priority. Fast movers ensure customers are left in no doubt of their importance to the business.
Work smarter, not harder. The best fast movers don’t let running their business run them into the ground. They continually invest in time-saving systems, software and products to free up valuable working hours.

Form great relationships. Strong relationships with mentors, financiers, bankers, suppliers, clients and partners significantly help a business. These relationships endure in good times, when the business is running well and cashflow is well-maintained, and in tough times, when cash flow is tight.

Meaning isn’t something to discover, it’s something to create. Entrepreneurs derive meaning from finding a way to express their unique skills and passion in the service and products they deliver. Figuring out how best to contribute is a lifelong challenge, to be taken one step at a time.

Take responsibility. In a fast moving company no one is left in any doubt as to who takes responsibility for the key decisions. Right or wrong, the buck stops with the leader.

Greg Hardiman

Bibby Financial Services is one of the world’s largest independent providers of debtor finance spanning Australia, Asia, Europe and North America. Debtor finance is designed to improve business cash flow and support business growth by releasing cash tied up in unpaid invoices. Unlike other funding arrangements, no real estate security is required, making it more accessible for small and medium-sized business owners. For more information on Bibby Financial Services please visit www.bibby.com.au

The Capital Connection

I have been a member of LinkedIn the global professional networking hub that is accessed by millions of professionals. There are various interest groups on the site and members are able to ‘Follow’ people whom they believe have some value to add through their various missives. I don’t make a habit of ‘Following” anyone, or at least I haven’t until recently when I came across a guy named Hal Spice. Hal is a renowned investment adviser, Private Equity Investment Manager and founder of a company Aquao3 focused on providing mobile ‘clean drinking water’ for impoverished nations.

Now you might be asking what any of this has to do with my current topic. Well one of the main issues that is vexing my clients today is that of access to capital for business growth. Traditional banks on the one hand are making much of their eagerness to lend yet on the other making it very difficult and in some case nearly impossible for customers to meet the banks lending criteria under the ‘new world order’. So what does a small business owner do when they need more capital for growth?

The need for more investment should not come as a surprise to you the business owner or and probably especially your Bank. Not probably but most surely, because Bankers are by nature fragile given some the customers they have to deal with and ‘shell shock’ is not well managed if you lob in a surprise financial grenade! In previous letters, I mentioned the need to keep your Banker informed on an ongoing basis, however in the current environment and I that think for some time to come, you will need to consider other avenues to finance you business. These options include, Invoice discounting or Factoring, micro-financiers, Fund Managers specializing in Small Business opportunities (very challenging) and High Net-Worth individuals know as Angel Investors. In order to make this Capital Connection you need to prepare and this is where we at Thesmallbusinesstoolbox.com and Hal Spice come together. In addition to our programmes and templates for strategy, marketing, sales and finance plans and Hal is kindly providing readers with access to great templates to Create Killer Presentations, What Investors Want to See in a Business Plan, 21 Golden Rules to Secure Funding and more. If you would like to access Hal’s templates and lessons they are available FREE via his blog www.halspice.com or if you registered on linkedin visit Hal at www.linkedin.com/in/halspice . The importance of being ‘investor ready’ is vital take it not just from me but Hal.

For now you every ready capital coach,

Neville@thesmallbusinesstoolbox.com

Cashflow still key to small business survival

Managing cash flow is one of the greatest challenges faced by rapidly growing businesses and without proper management, poor cash flow can stunt, or even end a business’s growth before it’s reached its potential.

 

When a small business is growing rapidly there is often a need to pay out money constantly, to buy more stock, hire new staff, open new premises or buy new equipment. Even with profitable sales, investments can take time to pay off, resulting in a cash flow crisis. The trick is to feed a business the money it needs to grow, without starving it of working capital. And a great way of doing this is through a debtor finance loan.

 

Cashflow is still the key to small business survival.  You may be trading profitably in the sense that you are “making a profit”, but unless your cashflow is under control, you are operating at risk.

 

The fundamental gap between when you invoice and when you get paid is the make or break of many businesses.  Cashflow and working capital levels are driven by transactions, so the devil is in understanding the detail.

 

Tips to improving cash flow

• Issue invoices in a timely manner. The average invoice payment period has nearly doubled from 30 days up to 53 days in 2010, therefore it is important that invoices are issued punctually so that they can be paid on time. This ensures that debtors have sufficient time to pay the outstanding invoice and assures businesses will maintain positive cash flow.
• Improve your payment terms with invoices.  Remind customers of your payment terms.  Send out reminder notices, email & call customers when a payment is overdue.  Don’t’ let payment terms deteriorate. Push for the most optimal payment terms.
• Offer payment plans – customers whose businesses are struggling may not be able to pay all of their outstanding invoices when they come due. Offering payment plans not only increases the likelihood of collecting the total amount due, but also can generate goodwill with the customer.  Some key ways to improve cash inflows is to have clear agreements with clients and make sure invoicing is completed on time and any disputes are resolved quickly. Move to more proactive management of customer debt.
• Have an organised system for archiving and paperwork.  Create a system for outgoing invoices, purchase invoices and a cashbook to ensure all information is documented correctly. Growing a business is reliant on being organised.
• Perform all the necessary checks to ensure the business is limiting its exposure to bad debts. Develop a credit policy. Take the time to write out a clear and concise credit policy that applies to all customers and clients.
• Watch your stock – clearly identifying which stock lines are selling and when they’re selling. Ensure that the right quantities of the correct stock lines are purchased – this could not only prove very profitable but also considerably improve cash flow. Challenge inventory parameters e.g. safety stock levels, minimum order quantities & re-order points

 

It’s not as simple as just finding any business loan for a certain dollar amount; it’s about finding the best working capital facility to match the businesses need.

There are many working capital solutions out there.  Perhaps Debtor Finance may help. A debtor finance provider pays up to 80% of outstanding invoices usually within 24 hours and one of the advantages of a debtor finance facility is that no property security is required.

 

However, the message is clear. A focus on the fundamentals of cash flow is critical regardless of the stage of the economic cycle.

 

Greg Hardiman

State Manager

Bibby Financial Services Australia Pty Ltd

gregh@bibby.com.au

 

Bibby Financial Services is one of the world’s largest independent providers of debtor finance spanning Australia, Asia, Europe and North America.

 

 

 

Plan the Action! Action the Plan!

I do get frustrated at things not happening quickly enough for my liking.  My frustrations tend to build up while I am waiting for things to happen.  You know what it is like, you finish a specific activity, and then you have to wait around for someone to either do the next bit or come back to you with an answer.  You can sit there waiting for a long time or at least that is how it feels to me.  Well, I simply don’t do it.  So what do we do about this never-ending cycle of hurry up and wait?  The truth is that there is not a lot you can do about the need to wait for others to complete their side of the job, so don’t make it an excuse.  If business is not going that well or at the pace you would like take ACTION NOW!

If I had a dollar for every time a client told me, “So and so has not responded yet so we can’t move on and we are just waiting for a few more responses before we make the next move”, I would be a millionaire.  Sitting around waiting for things to happen is so debilitating.  You certainly need to keep the pressure on people to ensure you can close the deal.  On the other hand, if you sit around waiting for their response you will begin to doubt their commitment or your product or ability.  Have someone in your office be responsible for making those “How are you going?” calls.  You don’t need to do it yourself.  You need to get back to your action list and keep on actioning! In fact, if you don’t have a good periodic action list i.e. daily, weekly, monthly, quarterly etc you will find that waiting for people to come back to you becomes a convenient excuse for doing nothing.

It is not difficult to set up a simple 90 day action plan using a excel spreadsheet.  Set out your weekly monthly and quarterly goals.  There are 13 weeks and don forget there are 7 days (not five) in week.  I find it best to reverse the order, so I set my goal or goals for the quarter and then work back to my weekly goals and then to the daily actions I am going to need to take to reach my goals.  Commit to this action list and do not deviate.  Distractions will arise each week so you will need to be completely disciplined. Stick to your guns here.  Give a copy of your action to someone who know cares about your success and will make you accountable each week for meeting you objectives.  Set up a convenient time to discuss each weeks achievements and the week ahead.  Discuss both your success and importantly your failures.  Why have you not undertaken certain activities or followed another course other than the one you committed?  Be rational and listen to yourself as you respond, you will sometimes hear the guy with the excuse trying to get out.  Don’t let him.  As much as we hate to admit to it without an organized actionable list few of us would achieve very much at all.  “Better offers” are presented every day you just have to learn to say NO. Do this religiously for 30 to 60 days and you will astonish yourself at what you can achieve in a day, a week and a month.

Until next time

Your, back to the list and into action, business coach

Neville@thesmallbusinesstoolbox.com

If I just had more time!

Probably the most frequent response I hear from business owners is that there is just not enough time for them to do all that needs to done.  This is completely understandable if these owners, who are in the majority by the way, are working in their business rather than on their business. I recently met Jack a business owner for more than 20 years.  His wife had just returned from a trip overseas after attending her father’s funeral.  “I should have been with her but I just can leave the business unattended,” he told me.  “Why couldn’t you do that Jack?”  I asked.  “Well there is simply so much going on I have to be here.  I wouldn’t be able to respond in time if I was away.”  On another occasion, I was playing golf with a business owner.  As we walked the course, our frustration built as he was continually taking calls from the office.  I asked him “can’t someone else do that for you.”  “No.  I need to make sure we deliver on time.”  Well I had had enough!  “If you can’t turn your phone off for the rest of the round we are just going to move on without you.”  He got the message, even if it was begrudgingly.  You see these people are working in their businesses not on them.  In both cases, they had management who they were not prepared to make accountable for the day-to day operations of the business.  If they did, they would have had time to do what a good entrepreneur does and that is work on the next stage/phase of business growth or planning for their ultimate exit from the business.

Working on your business requires that you develop the discipline to do the planning required.  “I don’t have the time” I hear you say, again.  Yes you do.  It is really that you choose not to.  If building your business is your priority then make the right choice.  Start working on your business today.  Don’t wait.  Step back and try to look from outside in or take a ‘helicopter’ view.  Review your company’s vision or mission statement.  If you haven’t stated a purpose for your business develop one.  Then, look at your current business strategy.  Don’t hold back.  How can we improve, what management do you need to realise the opportunities and so on.  Take this right through to marketing and selling of your business, products and services and then into the financial aspects.  Get your team involved.  They are in the ‘front line’ every day.  You will be surprised at what great ideas for improvement they have but never thought to tell you about. (May be you haven’t asked).

There are some great tools available at www.thesmallbusinesstoolbox.com that will help you build and achieve your dream.  Giving yourself time to work on your business is not a luxury it is a necessity.

 

Until next time

 

Your, sitting back and thinking about it, business coach

Neville@thesmallbusinesstoolbox.com