Fluid Business Magazine Spring 2019

FLUID BUSINESS THE MAGAZINE FOR BUSINESS OWNERS SPRING 2019

UNCERTAIN TIMES SETTING OUT THE STALL WHY YOU'VE GOT TO KNOW WHAT YOU WANT

SCALE OR SAVE

KEEP TALKING

SHOULD YOU GROW OR SAVE FOR A RAINY DAY?

WHY ITS IMPERATIVE TO KEEP YOUR TEAM UPDATED

AUTUMN 2018

THE UNCERTAIN TIMES ISSUE 04

11

The Fluid Book Club Literary inspiration from the Fluid Business

06 09

What needs to happen to ensure you get the best result when selling your business

Coaches

05

Always Be Ready to Sell Your Business

13

Coaches Q&A

Setting Out the Stall

The coaches share their expert knowledge by

Change is needed if growth is going to

answering our question of the issue!

happen

Communicating to your Team

15

The Helicopter View

Are you inspiring your team during periods of

How looking at your business from a different view

uncertainty?

can bring great results

18

Scale up or Save?

Why it's vital to have a plan for both scaling

Surprising Stats A fun look at business related numbers

up and scaling down

Welcome from...

NATALIE HARIRAM

Managing Director, Fluid Business Group

Welcome!

We recently updated our website

These are indeed uncertain times -

with a new look, new blog and new

at the time of going to print Brexit

online learning centre - make sure

had been delayed until 31st

you check it out at

October so dragging out the

fluidbusiness.co.uk

uncertainty for a while longer.

We had a great time at the

Fingers crossed the outcome is

Business Excellence Forum &

positive but in the meantime all we

Awards on 3rd April. This was

can do is focus on our business plans and keep moving forward.

another inspirational event with Sir Clive Woodward as guest speaker.

We're already thinking about next

One of the biggest challenges can

year - with Dame Kelly Holmes and

be knowing when to grow your

Sir Bob Geldof already lined up it's

business or when to shore up -

sure to be another inspirational

Peter Boolkah looks at this subject

event.

on P.9

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The Fluid Business Book Club Looking for some literary inspiration?

This issues top picks from the coaches

Ray

Winners Take All Anand Giridharadas

Andy

Peter

The Goal Eliyahu Goldratt

How To Write Copy That Sells Ray Edwards

Interesting look at the societal changes that

Easy to read 'Novel' style book

A step by step guide on how to write

could impact all our businesses in the future.

showing how to implement 'Lean'

copy that sells without being 'salesy'.

Is the recent 'gilets jaunes' movement in

processes in a business

A must for anyone who needs to

France a clear outcome of the complex

bring in cash.

changes covered in the book?

The 5 Temptations of a CEO Patrick Lencioni

Atomic Habits James Clear

Winning Sir Clive Woodward

The best of Patrick Lencioni's brilliant

Fascinating insight into how to make

Sir Clive Woodward and his team

series of book written as fables. Easy

habits and break the cycle of bad

mounted a campaign of vast

to read with a powerful message.

ones

change, great learning, team

Worthwhile reading or rereading all of

building and clear vision to achieve

his books which include his best

their aim. See how the ideas can be

selling 5 Dysfunctions of a Team.

applied to your team

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Coaches Q&A What's one thing that prevents a business from growing?

Ray Moore - Founder & Managing Coach The owner!

Many business owners keep asking themselves the same questions over and over again. In order to grow you must be prepared to ask yourself (and your team) different questions. After all; If you always do what you've always done, you'll always get what you've always got.

Peter Boolkah - Business Coach The owner!

Businesses can't grow if they don't have a strong leader. You need to have a plan, build the right team, listen (to your customers & your team) and hold yourself and your staff accountable.

Most of all you have to take action. It's no good having a plan if you don't do something with it.

I define it as Leadership or Leadersh*t

Andy Sleet - Business Coach The owner!

I often see owners who are too busy doing the 'day to day' work of delivering their product or service rather than spending time focussing on building their business.

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FBMÂ Spring 2019

Communicating to your Team Why it's important in times like these

by Andy Sleet

A crucial element of Leadership is communication.

My need therefore is to work somewhere where I

I feel this is important all the time, however even

have faith that my future is secure because the

more so in uncertain times because we all like to

business is secure.

have faith in our Leader, to feel that they are in control and have a plan.

There are many reasons why business owners feel the need to play their cards close to their chest

As a Leader of a team(s) reading this article,

when it comes to letting employees know what

perhaps we should ask ourselves the question 'Why

the plans are. However, we need to be aware

is it that the people we employ, work for us? They

what effect this has on our team.

turn up each day, do their job and help the business make money, but what's in it for them?

Now suppose I work for a company that keeps its plans to itself and doesn't let the employees

We've conducted research with many employees

know what is happening - how can I make a

on this subject and the answer invariably always

judgement as to whether the company will

comes back to security. Let me explain........ As an

survive and my security will be preserved? Â This

employee I have to live my life and rely on my

could make me feel very vulnerable and as a

salary coming in each month to enable me to pay

result, I may well not have my full attention on the

my bills and keep my family safe. Â

job in hand. This then in turn could equate to employees not performing at their best resulting in a poorer business performance.

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There are also many additional benefits to good communication to your team

3) Allows them to determine whether their 'why' aligns with the company

As much as it's our job to make sure that we 1) Individuals can use their initiative

only have on board our business people that fit our values and desire to take the business

Imagine that you have a plot of land and you are going to build your dream house on it.

It's 8.00am one bright morning and you assemble all the key trades on site; Electricians, Plumbers, Bricklayers, Ground Workers, Carpenters, Plasterers, Roofers etc.

where we want it to go, it's equally important that our team members know where the business is going so they can determine for themselves that they are working for the right company for them. If team members share the values and there is a win-win for the company and the individual, then we have a common

They all stand there expectantly, ready to use

purpose for us all to get behind.

their skills to help construct this fabulous building, the only issue is there are no plans, in fact the only plan that exists is the one in your head.

But there are also some potential pitfalls with good communication

Now you're not one for public speaking so you

1) The plan is communicated but then not

take the Ground workers to one side and start

followed. Integrity is key!

telling them what you want them to do but what are all the other trades doing whilst this

I have seen so many examples where

is happening? If there was a written plan that

information has been communicated with

had been communicated to all the teams then

respect to the plan, values, direction, what

all the different trades can start making plans,

management will do etc. and then nothing

ordering materials, negotiating with each

ever changes, or rather there are no visible

other as to the best way to proceed.

signs that anything is happening. If the senior team in a business is not congruent with what

All too often we see team members standing

they say all integrity is undermined and

there patiently waiting for the boss to deliver

confidence is lost.

the next instruction as they do not know what needs to be done next!

2) Progress updates are not given

2) Team members are more likely to stay in

It's no good communicating something once

position

and then never following up. Remember, the greatest motivator to individuals is feedback

Most people like to be busy (if not we should

on results.

question why we still employ them). If they don't know the plan and what their specific

3) Miscommunication. Honesty is vital

role in that plan is we tend to find that they will often make it up on their own.

Make sure that what is communicated is

Anyone who has ever witnessed under fives

actually what the plan is. If, as in point 1

play football will know what I'm saying - it's

above, you are found not to be telling the truth

amazing watching all the players follow the

trust will be lost forever.

ball all around the pitch.

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What happens if I don't have a plan?

My suggestion to you is to make sure you get a plan. If you're struggling to know what to do, get some help from either your senior team or from outside.

Remember, no plan = under fives football.

We must make time for this activity as a priority in a business.

What happens if the outlook is bad?

Once again, my opinion is that honesty is the best policy. If the outlook is not that good, be honest and tell the team. Sit them down and ask for their ideas on what everyone can do to turn the situation around.

Remember that they want a win-win outcome too and you'll be surprised at what they may come up with to help their own security.

I'd be really pleased to hear from any readers as to their experience in these matters. What have been the 'goods' and the 'bads' with respect to team communications?

If you have any comments please send them to hello@fluidbusiness.co.uk and we may well publish your feedback in the next issue of this magazine.

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FBM Spring 2019

Scale Up or Save?

How to decide if you should grow your business or save for the future

by Peter Boolkah

There has been a lot of upheaval in recent months with many changes to our political and industrial landscape.

As the conversation with my client progressed I explored the reasons for them considering their options. Their business is performing really well, growing at 30% per annum. They generate over

There’s a multitude of different opinions out there

£10m in turnover so the business is good but they

about what the future of British business might look

are concerned that in order to maintain growth

like and as a result I want offer my thoughts on

they need to invest in more machinery and, most

whether now is a good time for businesses to scale

importantly, in more people. Due to the nature of

up or should they prepare for another recession?

their business it will be impossible to scale beyond a certain size without increasing their

The idea for this article came about following a

workforce.

conversation with a client when they posed this exact question. I was taken aback for a second,

If we go back to the theory that the last

thinking to myself “what do you mean by scaling

recession finished about ten years ago we could

down? What do you mean about recession?” But

assume there is about another five years before

when I thought about it it’s a perfectly sensible

the next recession may hit. That’s five years of

question. History has taught us that recessions

opportunity that as a business, if you spend all

generally come in ten to fifteen year cycles. If we

that time and money in your marketing engine, in

agree that the end of the last recession was

your sales engine, why would you want to not

around 2009, and we’re now in 2019, then it’s

take the full benefit? The message here is

roughly ten years since the last recession. It'd be fair to say if we take history as an example,

Don't cut your growth plan short

perhaps we've got more good years behind us that we have in front.

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Let’s take the idea further and imagine the UK

One of the biggest causes of business failure

economy as four seasons – we’re now in late

during the last recession was owners not having

summer or autumn. Autumn, as any farmer

a scale down strategy in place.

knows, is all about the harvest. And if anything, this is a time where you can really make your

Many companies were carrying very heavy costs

money.

with lots of infrastructure and they didn’t consider that the recession might not be short

So my suggestion to my client - you've got to

lived. Unfortunately, it was a global recession,

keep scaling up, you've got to continue.

the worst we've seen in nearly a hundred years.

There are many companies out there that will

As a result there was widespread devastation

start to scale down as soon as the idea of a

with many great businesses removed from the

recession becomes a possibility thus potentially

marketplace. We saw the loss of many

losing out on some of the best years to make

household brands that perhaps we've been used

money. If you’ve planned properly and it suits

to growing up with for 60 or 70 years and

your business structure keep scaling it and then

because they couldn't, or didn’t, react to the

get yourself ready for when winter does come.

situation they died.

I also have clients that are positively looking

So what I would say to all entrepreneurs - your

forward to another recession. And the reason

scale up strategy is totally crucial and your

being? They spend a lot of time saving cash

scale down strategy, a Plan B, is an absolute

and one of their strategies for hyper-growth is

must, because when things start to go the other

to go on an acquisition spree during a

way, you've got to be ready and prepared to

recession.

make the difficult choices and make them quickly. The last thing you want is to find

And as sad as it is, my client's strategy is

yourself in a situation whereby any capital

actually around getting businesses out of

reserves you have are eaten up in a panic bid.

administration because they know that they can buy them at a really good price, add them

If reading this has prompted you to consider

to their system and really take a bigger share

putting in place or updating your scale up and

of the market.

scale down plans and you’d like some help get in touch and let us see how we can help you.

This particular client has developed this

Always remember that change is important and

strategy to ensure they can continue to grow

that unless we grow and learn, we're not going

and scale during a recession, hopefully

to be ready for what the future throws at us.

protecting their future against tough times and providing options during a period when many firms have few or none.

On the flip side there are many industry sectors where it is vital to have a scale down strategy. One of the biggest that comes to mind is the construction industry.

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And therefore, failing to learn is learning to fail.

Always Be Ready To Sell Your Business

Ray Moore looks at the considerations you should make in order to get the most from the sale of your business Take a moment to consider this question.

Quick Reality Check In reality, 75% of businesses advertised for sale

Is your business ready to sell?

never go through to completion.

Perhaps, when the business owner is the glue that

Today, could you sell your business for above your

holds everything together, it is not surprising that

industries average valuation for cash on

few purchasers are prepared to buy the current

completion without any earn-out?

owners job.

Most SME business owners never consider this question.

Finishing the business to maximise the value is crucial to will give the owner the flexibility of

So often, with their nose to the grindstone, they

maintaining their lifestyle supported by long-term

hope that the business will be their pension when

sustainable cash flow from either sale or

that time arrives. This results in an unrealistic

management succession.

valuation for the company based on what will maintain the lifestyle they have enjoyed while

Take a hard look at your business as a buyer

working in the business.

Viewed from the outside, as a potential purchaser, Selling is not seen to be relevant while building

would you NOW pay that above average valuation

the business and only needs to be thought about

for cash on completion without an earn-out for

when it's time to exit.

your business.

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Most businesses need two to three years to

Checklist

prepare for sale.

Don’t forget or underestimate the resources needed to complete due diligence and the sale process.

Here are the main areas to consider The valuation will be impacted by

The due diligence process will take the owners eye off the ball for at least six months which

1) Over-dependence on one factor.

can have a significant impact on the future of the business if the deal falls through.

Review key customer relationships based on personal relationship with no formal

The following is a brief checklist of key areas to be reviewed regularly, not as a one-off exercise.

Please don’t delay in working towards finishing your business and getting it ready for sale.

The great news is that a regular review is good housekeeping that will pay you back time and time again in profits and cash flow as well as that top dollar valuation.

contract.

Review key supplier relationships based on personal relationship with no formal contract.

Review key product life and/ or ageing manufacturing process to ensure longevity.

Review the employment contract of key employees.

Review stability and control of your route to

Always be ready to sell your business It just makes sense!

market (e.g. important in light of Amazon’s recent changes in suppliers contracts.)

2) Lack of structure and control Review Strategic plan regularly and planning

Here is a brief list of often neglected areas that will get you on the way to finishing your business.

process.

Review the cohesiveness of the team. Is it an All-Star Team or a Team of All-Stars (our blog post helps with this!).

Review systems and processes to ensure they are up to date and followed.

Ensure good financial reporting with rising profitability trend and tight cash control.

Regular asset audit and verification.

3) Contracts and certification Review the validity of critical contracts and certificates.

Renegotiate onerous supplier contracts Understand obligations under contracts, e.g. full repairing and insuring leases Ensure conditions of sale are reviewed and implemented.

Review payment terms Note: This checklist is by way of an example and is not intended to be a full list

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Setting Out The Stall

It's time to recognise that change is needed to bring about growth Taken from 'Can your business step up to the growth challenge?'

by Ray Moore Change doesn’t happen overnight and thank

and applicable to the business today and relevant

goodness for that, because if it did your business

in going forward.

would never cope.

A belief is something that we hold to be true The one thing I can’t stress enough about growing

and all of our beliefs put together form a major

your business is the simple fact that it’s going to

part of the filter through which we view the world

take some hard work from you, the owner.

around us. However, when held up to the light, we can find many of our beliefs to be flawed. The

‘Setting out the Stall’ is where you’re going to be

interesting thing about our beliefs is that, because

putting in that hard work – reviewing everything you

we take them as ‘truths’, we unwittingly find and

have done in your business to date, recognising

accept any evidence that backs them up and easily

that change is needed to bring about growth and

dismiss or ignore anything that presents a

planning for those changes long before they

contradiction. It’s a bit of a self-fulfilling prophecy.

happen or make any kind of impact on the health of your business.

When we are setting out the stall we must be prepared to challenge and change our corporate

Managing the change and bringing in the resources

beliefs. That means looking at the beliefs of the

you need before the TRANSITION period (not during

business owner and those of the whole company.

or after) is the absolute key to balanced growth.

They will all make an impact on the TRANSITION. To become more aware of our beliefs and

Setting out the stall to go to the next level starts

challenge them at all levels, the mantra must be

by questioning all the beliefs we have about our

this:

business, checking those beliefs are both true

IS IT BASED ON OPINION OR FACT? 13|

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As an enterprise grows from Level 0 and the first

owner and the type of industry they are operating

few employees are recruited, things start to go off

in.

balance. The business owner is working

Take note of this right now. If your intention

exceptionally long hours. They are constantly

is not to go to Level 3 then the best advice I can

struggling to keep customers happy whilst juggling

give is plan to keep the number of your employees

cash flow and ensuring their employees are fully

at less than thirty, continue to work hard within

occupied. This imbalance continues until their reach

your business and enjoy your current lifestyle.

the first plateau – Level 1.

Practical steps for setting out your stall to get to Level 3.

The business owner has now replaced or improved on the income they formerly had in employment and, on average, they are employing their own small team of up to about ten people.

In a perfect world, now is the time for the owner to ready the business for the next period of growth... to set out the stall for Level 2. The reality is that, once again, the process here is far more intuitive and reactive than planned and proactive.

Even if you’re not yet at Level 2 but are ultimately aiming for L.3 I still want you to do this!

Review your End in Mind Be very clear and honest with yourself about what you want to achieve and why you want to achieve it. The ‘why’ is just as important as the ‘how’ you are going to achieve your goal so please take the time to understand it.

Through sheer hard work and perseverance, the business has made it to Level 2 – a new plateau.

The business is running smoothly at a comfortable size where the owner knows everyone and can keep their finger on the pulse. They can relax a little and be content as it’s been worth all the stress and strain. They can even take a well-earned fortnight’s

Address the Foundations You now need to look back at everything you have put in place and address all the shortcomings that will force your business out of balance if left to themselves. Here are some of the questions you need to think about now:

holiday and when they return the business is still there.

Financial & Management Information What financial structures are in place to support

The reality of the Levels is that it is relatively

the business?

easy to get to a Level 2 enterprise. The secret is stamina, hard work and determination.

Delivery What level of service do your customers and the

Having reached Level 2 the business owner now has to make the biggest decision of their working life, whether they have the desire and

future market you are aiming to supply expect as a minimum? Again, what are the facts rather than the opinions?

willpower to take their business to Level 3 or not.

Marketing

It’s a decision that has to be based on their longterm goal and a real acknowledgement of the implications the TRANSITION could have on the

What drives your customers to buy a product or service from your business as opposed to any one of your competitors?

business.

Time

The hardest TRANSITION period to Level 3 will typically start to occur when the number of

How far ahead are you actually preparing for... a month, six months, a year?

employees has grown up to between thirty and fifty, depending on the skills of the business

Team Do you employ anyone who knows more about a

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particular area of your business than you do?

Time to take the helicopter view of your business?

Isn’t it easy to get caught up in the everyday

Acceptance.

stuff that just sucks all your energy and time. As

Looking out of the windows all you can see are

a business owner if you get too close to the

the other cars all around you, to the front, the side

coalface too often you can quickly lose focus

and behind you. Everyone else is in the same

on what’s really important. This can be easily

predicament so you turn off the engine and resign

done when you're operating in a period of

yourself to waiting for the blockage to clear. You

economic or market uncertainty.

are at the mercy of factors outside of your control.

Who in your business has the time and the ability to step back from the business, to truly see what

Make things happen.

is going on? Who is the best person to do this?

Frustrated, you get out of the car, immediately

In an ideal world, it's you the business owner.

feeling better for being active. You look around

Easily said but often not so easily done!

and eventually stumble across the cause of the hold up.

So how often do you take a view of your business challenges from 1,000 feet?

The traffic has ground to a halt at a crossroads a few miles up the road. Seeing the problem, you

Let me explain what I mean.

enlist a small band of willing helpers and you start

Imagine you are on a car journey across a busy

to direct the traffic and get things moving albeit

city from one side to the other. You set off and

slowly as the traffic is still heavy.

all is well but soon you get stuck in an unexpected traffic jam. The good old sat nav

Now you are stuck doing the job of the traffic

has let you down, yet again!

lights and will be there for some time to come.

So what can you do?

Find out what is going on.

Here are three possible options.

This is when you jump into your helicopter and go to 1,000 feet so that you can look down on the problem.

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Now you can see that, yes, the road you are travelling along is blocked at the cross roads ahead but the heavy traffic is caused by broken down lorries on both feeder roads to the junction.

Clear the lorries and you will be soon on your way.

So what is the moral of my little story?

Well, most owners don’t want to just sit in the car and do nothing, it’s so frustrating. The temptation is to get out there and get busy so that you're doing something - anything! It’s tempting to react to, say, a sales dip by getting everyone running around like headless chickens. They may look busy but are they being productive? In the end it may have the same impact as just waiting in the car for the traffic to clear.

By taking time to look down on the business you allow yourself the time and view to set the right priorities and align your resources to properly clear your route getting you to your destination quicker, fitter and less stressed.

Is it time to take that helicopter ride & view your business from a different perspective?

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FBM Spring 2019

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FBM Spring 2019

Surprising Stats A fun look at numbers in business

99%

of UK businesses are small or medium sized

5.4 million are micro businesses

2017: 382k births 32k vs. prior year Biggest fall since 2001

60% of UK employment is through small and medium sized businesses of businesses in the UK are in the services industry

74%

35% of SME's are in London and the South East New business births (000s)

Births vs Deaths as % of all businesses

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FBMÂ Spring 2019

of SME's are majority led by women

Source: Enterprise Research Centre State of Small Business Britain Report 2018., House of Commons Briefing Paper 06152, 12 December 2018

5.7 million UK businesses

Ray Moore

STAY FOCUSED YET FLEXIBLE GEORGE'S PURSUIT ACROSS THE PERILOUS OCEAN A tale of a business adventure from start up to financial freedom

and fluidbusiness.co.uk