Five issues business owners tackle badly

In our work with clients Azure have identified five business critical issues that business owners often avoid addressing:

  • Recognising and dealing effectively with Underperformers
  • Good quality forward looking management information
  • Weaknesses in the 'top team'
  • Dealing effectively with suppliers
  • Planning their ultimate exit strategy

See below for more details

1) Recognise and deal effectively with underperformers

Almost all businesses have personnel who, for a variety of reasons, consistently under perform:

-  We sometimes recruit badly
-  Our companies outgrow personnel appointed at an earlier stage
-  We move into markets requiring skills, knowledge and experience the individual does not have.

But under performance can also result from:

-  Poor communication of company goals and progress towards those goals
-  An inconsistent understanding of the individual's role and responsibilities
-  Inconsistent or subjective measurement of the individual's contribution to the organisation
-  Inadequate training and personal development

Many of our clients have experienced these problems. Tackling them is often difficult, particularly for people closely involved, but almost always rewarded by a smoother running, faster growing, more profitable and less stressful operation when they are tackled. Successful companies identify and deal quickly and effectively with the causes of under performance by individuals. 

2) Timely, relevant, forward looking management information

We all have accountants (internally or externally) and we all know what turnover and profit we achieved in the preceding period.

Not all business owners map out the full range of activities that are critical to the success and long term profitability of their business, from lead generation through to a satisfied client willing to provide positive feedback on their company.

Some cannot measure the most important of the above activities in such a way that problems are identified before they happen.

Fewer still provide relevant staff with easily understandable, consistent information they value and trust in time for them to take action to avoid or mitigate upcoming problems.

The key information requirements will vary from business to business, but the following apply in some way to most businesses:
-  Sales activity, what level of activity is required now to achieve target turnover for future periods?
-  Sale margins
-  Delivery or resource requirements, what are the trends; where are the peaks and troughs and how can we deal with them?
-  Input availability and costs, what effect will this have on profitability
-  Debtor activity, are clients paying us properly? 

3) Make sure your ‘top team' is up to the task

As companies grow and evolve so do the demands on the ‘top team'. Very often people volunteer or inherit roles and responsibilities based on the need at that time. But this can't be set in stone or as the company grows the management team becomes an obstacle to success rather than the driving force.

Ask yourself 3 key questions:
- Am I personally doing what I am good at?
- If I needed to hire somebody to fill a particular role would I hire the present incumbent?
- Do we have the skills at board / senior management level to drive success?

If the answer to any of the above is not a resounding ‘yes' you need to take steps to remedy the situation or your company's development may be stifled.

Equally important is to ensure your management team has a very clear view or what they need to deliver:
- Can each of your directors (and their direct reports) clearly articulate what they personally have to achieve, why it is important to the success of the company and how they will be measured?
- Can they articulate how they will do it? - do you trust them to succeed?

4) Getting all suppliers to work for you

We are busy understanding our clients' needs and building client relationships. We are marketing, selling and delivering to customers and we are managing and motivating staff.

What about suppliers?
- Are they delivering exactly what we want, when we want it?
- Do they provide a higher quality service to their other customers?
- Have we got the best price and the best payment terms?
- We notice under delivery, but are they over delivering at our expense?
- Are they financially secure?
- How can they improve their service to us?

There is often scope to negotiate better terms or a better service from suppliers - and now is a good time to do it.

5) Preparing your business for a successful sale

The sale of a business is a key way of extracting value from a business and probably the most important commercial transaction of a business owner's life. For many, planning their exit and maximising the value of the company on sale is on the back burner. In times of recession it is often ignored completely. BUT this may be the best time to act. Preparing a business for an optimum sale can take 3 years. The early stages of an upturn can be a good time to sell a business.

The Mergers and Acquisition market wiill continue to be  slow over the next 12 months but, if previous patterns are followed, will then become much more active as confidence returns and people invest for the next 5 year period.

Getting your strategy and plan in place now could be a very good move

During easier times avoiding complex or difficult issues is understandable but for many companies the next 12 - 18 months will be challenging. Avoiding critical issues could be very damaging in the short term. Addressing them pro-actively will make it more likely you will come out of recession in better shape and positioned to take advantage of an upturn.

For more information call Paul Chapman on 0207 100 123 or email paul.chapman@azurepartners.co.uk

Azure Partners work alongside progressive companies from their earliest stages through growth and maturity to preparing them for sale or flotation. We have the skills, the commercial experience and the necessary knowledge to significantly enhance the value of your business.