Business Management – what the government can teach us

Most elected politicians have no experience of business management and the few that have didn’t get it managing small and medium enterprises.

So what can government teach us about business management? Plenty!

Take recruitment for example. If you’ve not enough work to fully occupy all your staff, stop recruiting. Don’t be like our government and keep allowing people in; especially if they’ve no useful skills.

What about discipline? Make sure that all your employees have a copy of your handbook, in which you clearly set out the terms and conditions of employment in your business, including the process for dismissing troublemakers. This way you’ll avoid having any Abu Hamza situations.

Government can teach us much about product development. In particular the fact familiar to most engineers that there comes a time when a design has to be “frozen”. Failure to do so gives rise to situations familiar to the Ministry of Defence, where huge budget overruns and late delivery are commonplace – not to mention having aircraft carriers but no planes to land on them.

Continuous Professional Development! Follow the example of government who appoint Ministers with no previous experience of managing the function for which they are to be responsible. Wait until they’ve made a few costly errors, and then move them on to another post where they have no previous experience. In the real world it’s just about acceptable to move new graduates/trainees that way to give them exposure to the different aspects of your business; just as long as you can stand the cost.

Public Relations is an area where governments of all shades have much to teach us. First, let every Tom Dick and Harriet leak to the media. That way you’ll get lots of opportunity to speak to the media to make clear that what they’ve heard isn’t (necessarily) company policy. If you have a new product to launch, make sure that you leak it to the media months before the launch so that by the time of the launch everyone is heartily sick and tired of hearing about it and your competitors have had time to prepare their knocking copy.

If you’ve not developed a new product or service for years, give your old ones a new name and re-launch them with a new colour or logo. That’ll fool everyone!

Most important of all, just as the members of successive governments have had no experience of running businesses, be absolutely certain to have a board that has no idea whatever of what your company does.

Value

I was amused to read today that the value of Rebecca Addlington’s Olympic Bronze medal is less than three pounds or “less than the price of a sandwich”. The writer makes the mistake of basing value on the cost of the metals used in striking Olympic medals.

The true value of any item is in reality a function of a number of factors, as is the value of any business.

Olympic Games are held every four years and at any meeting there are a finite number of medals awarded. For any event there’s just one Gold, one Silver and one Bronze medal. So, here’s an item that can only be won, and can’t be bought – unless the winner chooses to sell.

I’m not suggesting that she would want to part with something that symbolises the culmination of twelve years of dedication and hard work, but if Rebecca chose to sell she could significantly increase the value of her Bronze medal by putting it into a collection along with the two Gold medals she won in Beijing four years ago. Value and rarity are usually strongly linked.

The value of a trophy in many ways parallels the value of a business. A business that has a track record of dedication to quality of its products and services, improving performance year on year, and operating in a niche market will attract a significant premium if it were to be sold.

Rebecca won her Bronze with a time that was faster than that which won her a Gold four years ago. The competition has got better, just as business competitors can up their game. There’s always been a need to be aware of competition, but perhaps never more so than in the present economic climate and with the rapid advances in technology.

And of course no athlete, not even those like Rebecca who do individual sports, would achieve much without a team around them. With athletes that team comprises fitness trainers, coaches, dieticians, physiotherapists, sports psychologists. Successful business owners surround themselves with experts in finance, marketing, sales, customer service, operations, and the market value of the business reflects the strength of that team and the processes that link their efforts.

Business Management – what can Amir Khan teach us?

The link between business management and sport is usually confined to “team building” exercises and a few former sportsmen becoming inspirational speakers.

I suggest that business managers could learn much from the examples set by sport and sportsmen. Amir has joined a growing list of British boxers, for example Herol “Bomber” Graham and Frank Bruno, who could hit hard but never learned how to protect their glass chins. Boxing used to be called The Art of Self-Defence, and whilst there’s strong evidence that attack is the best form of defence, the boxers who have stayed top of their game have the all-round attributes of attack, defence, superb physical fitness and mental toughness.

Business management needs all those attributes too. Successful businesses need to be lean and mean, quick to attack opportunities, work hard to strengthen their weaknesses, and business managers need the mental toughness to deal with the difficulties that stand in the way of achieving long-term goals.

Managers need to work on developing businesses with all-round strengths and a basis of robust systems. Once they have these in place they should be prepared to take quantifiable risks.

Look at the performance of the England team in Euro 2102. The defensive system could hardly be faulted, but we didn’t have a forward able to hit a barn door with a banjo. We didn’t have all-round strength, so we failed.

One final thought on the subject. We all like to have confidence in the people we’re buying from, so it’s important that businesses have marketing that makes justifiable claims and customer service that can fully support those claims. Think here of the many British sprinters who, having made the podium in some minor events, seem more interested in adopting weird hair styles and wearing bling than in training for success at major events.

Contrast Michael Johnson. Four Olympic Gold medals and eight World Championship Golds. Now there’s a man who deserves to wear golden running shoes! Talent, perseverance, and his success as a coach and as an articulate commentator prove that he was smart enough to plan for the future.

Are you sitting comfortably?

Then it’s almost certain that your company’s value and its chances of survival are reducing. It’s a fact of life for most businesses that if you think you’re standing still you’re really going backwards.

Too often I meet owners who have operated in their comfort zone for years, only to find that when they think about selling up and retiring the value of their business is much less than they had hoped.

It’s been really refreshing in recent weeks to work with the owners of two quite different businesses, both at or beyond “retirement age” but wanting advice about preparing their businesses for sale in two or three years time and, more importantly, being prepared to act on it.

I can’t think of a business that’s immune to the passage of time. Consider what happened to the British motorcycle industry in the 1960s; think about the way that Nokia have lost ground in the mobile phone sector in recent times.

I was fortunate to be a development manager in the printing industry in the 1980s and 90s and to have the opportunities to take commercial advantage of advances that at the time were revolutionary but which today we take for granted – digital origination, laser and ink jet printing, UV curing inks. Whilst some, not least the four print unions, would have preferred to stay with paste up and hot metal type, we embraced the advances and achieved massive growth.

In 11 years of providing help and advice to companies across the B2B community I’ve worked with many who have equally taken advantage of advances in technology, and I’ve helped them to gain maximum commercial benefit.

My training as a scientist taught me how to solve product and process problems, my experience as a managing director taught me the value of applying technical advances to increase profits. Today I get a buzz from putting all that experience to use to help owners grow their businesses and achieve maximum profits.

For more see my website or email me.

Business Growth

Business growth is the aim of all business owners. Over the years I’ve found that the methods that owners use to achieve growth range from wishing and hoping, to having a full blown business growth strategy.

Since the credit crunch of 2008 few owners of small businesses have had much time to think about strategy. For most the priority has been survival. Yet history teaches us that times of difficulty  in the world economy are exactly the times when a business growth strategy can deliver great results for companies.

The trick is to have a strategy that accurately reflects the reality of the market(s) in which the business operates, and the tactics to deliver the strategy on the ground. For some there’s a need to recognise that their products and services have been overtaken by competitors with better products.

In those cases only radical action will avoid declining performance. In the case of manufacturing companies achieving business growth may mean a need to invest in new equipment, and this in turn may mean attracting finance. In other cases the supply of complementary products, perhaps through a strategic alliance may be a better way forward.

In any event the company will need to have a business growth plan that clearly demonstrates that the owner(s) understand the marketplace and have the expertise within the business to achieve the planned results.

If a company’s products and/or services are well suited to the marketplace, business growth can often be achieved by using different routes to market. This in turn may mean the owner(s) coming to terms with the need to use expert help.

In almost all cases the changes in the way the company works will involve the recruitment of people with different skills. Sometimes this is best achieved by recruiting full time employees, alternatively it may be best to use interim managers or to simply outsource the requisite functions.

Genuine business growth is only ever achieved by owners who are prepared to step back and take a cold hard look at their business, recognise their own strengths and weaknesses, and plan accordingly.

Increasing your Business Profits

Business profits can, broadly speaking, only be increased by sell more and reduce costs.
 
Many years ago a millionaire and inspirational speaker called John Fenton wrote a book called “How to Double your Profits”. In it he suggested twenty areas of a business where the directors could take action to either increase sales or reduce costs, the cumulative effect being to double profit.
 
Do the sums; if you can find twenty things that you can improve in a small way then by getting an average 3.5% improvement in each and the result is double profit.
 
So here are some suggestions as to how you could increase your business profits. Just how hard would it be to:
Sell 3.5% more of your current products or services to existing customers
Increase your customer database by 3.5%
Reduce your material costs by 3.5%
Reduce your wage bill by 3.5%
Increase your selling prices by 3.5%
Reduce your indirect costs by 3.5%
Get your sales people to make 3.5% more calls per month
 
OK it’s a theoretical exercise. But achieving those 7 improvements would increase your business profits by 23%. And the list goes on.
 
Not easy in the current economic climate, but all the more reason to set your mind to it. In the past I managed to achieve better than 20% per annum increase in business profits during a recession by using just that kind of approach.
 
Sometimes you have to think outside the box but if you’re not increasing your business profits and improving cash flow your business is going backwards.

What do businesses do when seeking business advice?

That was the question asked in a survey by the University of Nottingham – Barometer Project.

Following the demise of face-to-face business advice that used to be offered by Business Link, the survey asked a panel of business owners where they now sought business advice.

The results showed that just over one-quarter (28 per cent) of respondents use an accountant, one-fifth go to colleagues (21 per cent), smaller proportions use business advisers/consultants (15 per cent) and trade organizations (8 per cent). Just over one-tenth reported that they used nobody in particular (12 per cent).

Now according to my maths that’s a total of 84% and the report doesn’t tell us what happened with the remaining 16%.

Based on more than 10 years of providing business advice to owners of small and medium businesses I’m amazed that 72% of owners claim they actually ask for advice! And at the risk of upsetting accountants I’m even more surprised that more than a quarter of people surveyed say they see their accountant as the primary source of business advice.

There are some very good accountants but relatively few have the knowledge or experience of running a business that’s needed to advise on anything other than the financial aspects of a business. And anyone who has run a business knows that, important as good financial control is, there’s a whole lot more to growing a successful business.

The advice I give is based on practical, hands-on experience of running successful small businesses, and I deal with issues outside my own knowledge by referring to associates I know and trust.

As a former Development Manager, and having spent the last 8 years helping owners to sell their businesses, I get a buzz from helping younger owners to grow their businesses and helping the more mature owners to prepare their businesses for sale.

For more about the University of Nottingham – Barometer Project, please see www.ukbb.ac