Business assessment – your business partner will be able to assess the current state of your business free of sentiment. Feedback may well include some harsh realities but better to know and resolve than to ignore!

Objective strategist – as well as helping to formulate the optimum strategy, your business partner will provide objective opinions balanced by practicality and commercial reality

Interpretation – many results are presented to business owners without interpretation. A strong business partner will interpret your results and identify critical trends for you leaving you to focus on future courses of action.

Accountability – whilst you may be loathe to admit it, many owners welcome having some accountability for their actions by being answerable to a business partner. This ensures that the difficult phone call is made, time is spent productively, and focus remains on the key objectives. You will not lose any control but you will need to explain your actions!

Frank advice – lots of money can be saved by being told some home truths. Naturally you are likely to consider that your service is very good and the customer must buy – but the real thing that matters is what the customer thinks! Being objective, concepts such as pricing, packaging, marketing, personnel can be discussed openly

Unmuddled thinking – your business partner not only brings broad business experience to the table but also a clear head that is free of all the objections as to why something cannot happen!

Sounding board – by no means least, your business partner will listen to you and give honest and constructive feedback to your thoughts. Even if you do not like what you may hear, at least you will hear it before you lose any money! More constructively, it is hoped that your initial idea will be enhanced and developed into something practical.

What other services can you expect from your business partner?

Review of existing methodologies – no matter how good your processes may be it is likely that inefficiencies and non-productive practices have evolved. Benefit from an objective appraisal with recommendations

Issues / opportunities – many owners invest (in people or otherwise) to resolve problems. However there is much greater potential in considering opportunities that are not being exploited. A fresh perspective may well stimulate the success you crave!

Improved reporting systems – many reporting systems become entrenched and repetitive. Whilst this may help to identify long-term trends it is more likely to result in number-blindness and lack of recognition. By identifying the key measures for the business with you, reporting can be refreshed and presented in a more stimulating way without denying you the key facts!

Succinct meaningful results – many financial results are generated in ‘accounting’ format without consideration of the key drivers for your business. Reports should be succinct, focussed and revealing. They should also be accompanied by an interpretation and proposals for future action.

Human resource evaluation – better the devil we know….! Whilst knowledge and loyalty are great qualities, complacency can be expensive. When did you last perform an objective review of the performance of your team and set them challenging but achievable targets? Is each member motivated to deliver and do they share the same goals as yourself?

Tax efficiencies – what tax advice do you receive? Do you optimise the tax efficiency of payments to yourself, your spouse and your staff? Are you fully aware of tax benefits that you are entitled to receive? With corporation tax likely to exceed 20% of your profits, some simple tax planning can be much more productive and less traumatic than developing a new product range! …and then there are potential savings for vat, capital gains tax, personal tax etc.

Who should you engage?

Commercial experience – so much of running a successful business revolves around similar issues. The experience of having been ‘round the block’ and so the ability to foresee (and so avoid) problems should not be underestimated.

Additional skills – people tend to recruit people they like and can easily relate to. However if you surround yourself with a team of like-minded individuals then ideas will be cloned. It is far more productive to work with a team with complementary skills and ideas (albeit common ambition) where one can aggregate ‘the best of breeds’ and subject thoughts to rigorous scrutiny.

Alternative perspective – the most inspirational ideas are likely to emanate from someone with a different perspective to you (albeit you may well turn them around and make them your own ideas!). The new perspective makes it less likely that you will have considered these ideas before.

Trustworthy – although you retain control and so make all the significant decisions, it is critical that you trust your business partner and believe that you are working towards the same goals. Many of the benefits above stem from a fresh relationship. Whilst trust must be earned, it is vital that any concerns are mitigated.

Reputable – You should always obtain testimonials to discover what previous users have experienced.

What terms are available

You are in control and so you can negotiate terms that suit you. The following ideas may be helpful.

No win – no fee – your business partner comes to you as an expert who will improve the results of your business. Therefore he should accept his share of the risk if his advice does not deliver. This means that all parties are motivated to achieve similar results through uniformity of effort.

Guaranteed extra profits – if additional profits are not delivered then you should not need to pay. Your decision is then made much easier because there will not be a net cost. Your business partner should be able to ascertain for himself whether there is scope to improve results (although very few businesses are so good that they fail this test!).

Flexible timing as desired – you know your work style, availability etc. Negotiate time commitments that are convenient, do not incur significant overhead (unless exceeded by results!), are not obtrusive to you and yet can realistically make a difference. Consider perhaps starting with one day a week and then relaxing that over time – alternatively consider increasing if you want your partner to become more involved in executing change.

Face-to-face and unlimited phonecalls – there is ample scope for research behind the scenes, but a great part of the value of your business partner comes from meeting with him and being challenged, focussed and directed. You should always strive to make yourself available for scheduled meetings although the flexibility of additional unlimited phone-calls enables you to benefit when it suits you.

You get what you pay for – as with so many things ‘cheapest’ is seldom ‘best’. Quality service often comes at a price but by negotiating risk share, you will be assured of results. Your decision should be based on the maximum risk free net gain to your business.

What to do now

I hope you have enjoyed reading how a business partner could help you and your business.

Contact Nigel Grant NOW at NigelGrant@MoreProfitForYou.co.uk by email or phone 07801624865 to arrange your FREE initial consultation without obligation.

As the personal tax year end (April 5) approaches, now is a great time to do some tax planning.

Opportunities exist to help you:

-      fully utilise your annual personal allowance;

-      defer or accelerate payments into the most beneficial tax year;

-      optimise use of the basic rate tax band;

-      minimise suffering the highest marginal tax rates (typically when total income is around £100,000);

-      benefit from lower tax rates on dividend receipts;

-      manage tax payments on account;

-      utilise your annual allowance against Capital Gains

…and your business can save tax too

It is possible that the business could pay you more and save tax as a consequence – and the business need not suffer any cashflow disadvantage!

Whilst there are a few simple guidelines that often apply, each case is different and factors beyond tax may influence any decision. Therefore you should obtain professional advice before acting.

In this context it means a colleague who can give objective and honest opinions to you about your business. There is no loss of control, reduced shareholding or diminished rights.

What are the benefits?

Objectivity – All too often you can be too close to your business to see the wood from the trees. A business partner can identify the core strengths, weaknesses and opportunities for your business because he will assess you as any potential customer will – through fresh eyes.

New Perspective – By assessing your business from a fresh perspective, all important first impressions are formed – these are what a potential customer will base their decision on. The facts of how you operate and deliver are less important at this stage than the perception of how you operate.

Challenge – A business partner will be able to challenge you in a friendly environment. Whilst potential customers may simply walk away, your partner will ask you probing questions and enable you to rehearse quality responses.

Sounding Board – you can voice your ideas and receive an immediate reaction without incurring the expense of research, customer surveys or otherwise. It is more than likely that your ideas will be enhanced through discussion as well as risks identified which can then be mitigated.

New ideas – Your business partner will generate new ideas and discuss their suitability with you. Many of these may be misplaced but if a few worthwhile seeds are sown these could transform your business!

What are the disadvantages?

Simply none! You retain full control of the business so nothing will happen without your full approval. Even the cost of your partner can be negotiated so that any risk is shared and you only pay a share of improved success!

How do I choose the right partner?

To realise the benefits above it is important that you identify someone whom you can work well with. That means you must trust them and value their opinions.

In most recruitment situations people gravitate towards similar minded candidates – this can be a serious mistake. You will benefit most from engaging someone with alternative views to your own – albeit someone who shares the same ultimate objectives. Ideally you will engage a variety of applicants so that many perspectives are involved (eg. sales, finance, IT, HR, marketing etc) but this is likely to prove to be impractical.

An ideal candidate is possibly a commercially experienced Finance Director. He will have a broad range of experience that includes involvement with all the disciplines above. Not least his approach may well be diametrically opposed to yours – and hopefully you will meet in the middle!

A good Finance Director is far more than an accountant. As well as protecting finances, satisfying legal obligations, maintaining controls and striving for efficiency he will also be a strategist (read Part-time Finance Director’s role for a fuller description).

This is one from a series of articles written by Nigel Grant to help businesses increase their profits and achieve their potential. For a free initial discussion to see how you can achieve the potential for your business, contact Nigel Grant of More Profit For You Ltd on 07801624865 or NigelGrant@MoreProfitForYou.co.uk

The actual performance and competency of a Finance Director is dependent on the individual selected but this article assumes that a strong candidate has been appointed suitable for a business of turnover up to £20 million.

There are a wide variety of different qualifications which have different entry requirements and demand differing levels of expertise. As in all fields of life the qualifications do not guarantee good performance but may provide some comfort as to credibility.

Bookkeeper

A bookkeeper primarily does what the name suggests and ‘keeps the books’ through to trial balance. The books are an accepted term for the accounting records of a business which were historically entered into manual ledgers (books of account). Today most records are maintained on computer but the terminology survives. Good bookkeepers may also produce management accounts. Generally bookkeepers will also be responsible for processing payroll runs (unless this is outsourced).

Accountant

The accountant will often perform the role of bookkeeper and then produce a set of accounts in customised formats (often with comparison to previous periods and/or budgets). Management accounts are for internal purposes only (although the bank may require copies) and are generated monthly (maybe quarterly for small businesses although this is not recommended). These are operational reports that, if well designed, should highlight any good/bad performance issues and prompt decision making. Financial accounts are a requirement of the Companies Act 2006 and must be filed at Companies House (the level of detail required varies with the size of company). The accountant will typically also be responsible for ensuring the business has adequate controls in place to prevent cash losses, uninvoiced sales, misrecorded/omitted transactions etc..

Finance Director

The Finance Director is likely to have commercial experience of acting as an accountant so all the above should be well within his compass. However that is really where his role begins. He should be able to interpret the accounts and identify trends, warning signs and opportunities therein. He should be able to present the management accounts in a way that highlights these issues but primarily he needs to make management aware of any issues.

An accountant will prepare the accounts. A Finance Director will interpret performance, highlight issues for resolution and contribute to the strategy to deliver results.

The Finance Director is responsible for ensuring that all legal obligations are met on time (to avoid unnecessary penalties) and that the company’s assets are adequately protected. This includes maintaining appropriate insurance cover, satisfying property covenants, filing timely returns to Companies House and HMRC (payroll, vat, corporation tax), data protection registration etc.. The Finance Director will need to develop relationships with key stakeholders including bankers, insurers, auditors (if any), investors, suppliers, tax authorities, landlord.

Not surprisingly one of the key relationships for a Finance Director is with the bank. Banks do not like surprises. Building a relationship of trust and confidence is fundamental. Not least the opportunity to borrow is closely linked to the strength of this relationship and the credibility of the results produced. Whilst banks have a bad name for not lending money, this is often due to lack of confidence and the perceived risk to the bank.

Strategist

An equally important part of the Finance Director’s role is to serve as strategist. The Finance Director should have extensive commercial experience of evaluating different options and selecting the optimum course of action bearing in mind risk and reward. Although Finance Directors are reputed to be risk averse, a quality Finance Director will assess the risk, whilst taking reasonable steps to mitigate it, to obtain desired performance.

The Finance Director should, as part of the management team, be authorised to reject weak or high risk projects. Enthusiasm to pursue the project may unite the other members, but the Finance Director must emerge as the sound voice of reason! There is a delicate balancing act to ensure that progress is not impeded unreasonably whilst the assets and future of the business are secure.

The Finance Director should provide an alternative perspective to the decision making process whilst still seeking to achieve the common objective. He should be a critical business partner who can bring his broad range of skills to bear. He brings one perspective, but he still requires the alternative perspectives of the rest of the team to thrive!

This is one from a series of articles written by Nigel Grant to help businesses increase their profits and achieve their potential. For a free initial discussion to see how you can achieve the potential for your business, contact Nigel Grant of More Profit For You Ltd on 07801624865 or NigelGrant@MoreProfitForYou.co.uk

There are many important benefits that derive from a quality plan which include:

• considered approach
• risk mitigation
• benchmarking
• collective responsibility
• clear communication

Considered approach

A business plan should be the result of a collective brainstorming amongst all key contributors who assess the current position, consider all the options available and determine a course to follow. Ideally this will start with blue-sky thinking and then reined back as necessary to comply with perceived constraints, each of which can then be scrutinised and evaluated.

Risk mitigation

An important part of compiling any plan is to assess the level of risk that the owners are willing to accept. A high risk strategy may yield enormous results if successful but could be disastrous, whilst a low risk strategy is much safer but may never yield what is achievable. You should identify the potential risks and quantify the impact of these. Some of these risks will be beyond your control, eg. a general strike, but this does not prevent you from estimating what the impact on the business might be if that event were to occur. Having assessed the major risks, you must then identify ways of mitigating your exposure to them and minimising any negative impact. Once you are aware of how much risk you are taking, you can determine whether that is acceptable to you or not. This will determine whether you should pursue the plan or seek an alternative strategy. By seeking to mitigate the risks, the plan of action will be enhanced. Always remember Murphy’s law: things will go wrong which you are unable to predict!

Benchmarking

In building the plan and establishing targets, you now have some valuable benchmarks against which to measure performance. Measures like sales and profit are unlikely to be appropriate; Sales are only relevant if there is good control over related costs; Profit is unlikely to be quantifiable on a real time basis and so corrective action cannot be taken quickly enough. Key Performance Indicators (‘KPIs’) are measures selected for your business that are critical to performance, easy to measure quickly and regularly, under the control of a business area and remedial action can be taken if results are not attractive. It is unlikely that any KPI can be viewed in isolation but its variance from the benchmark can be investigated and its understanding should prompt corrective action. For example high sales sounds like a good thing, but … it may result from underpricing … and/or may cause stock shortages. It is only when it is understood why there is a variance that one can conclude whether it is good or not. Remember that the variation may result from poor planning and setting the wrong benchmarks so you should not even be content when you are spot on!

Collective responsibility

To help optimise performance it is important that all key personnel sign up to the business plan and are able to voice any concerns. Simply including key personnel in the process and providing the opportunity for them to participate is likely to be highly motivational and teambuilding. It is also likely to elicit ideas that may not have been considered. Decisions taken do not need to be democratic but if any key holders do not commit to the plan then it is almost certain that they will not deliver it. Often the plan is written from one perspective by the business owner and then imposed on the business.

Clear communication

Having done so many things correctly and stimulated the team, the next phase is to ensure that the plan is communicated clearly and accurately to all those affected by it. It is important to convey the objective, the strategy, the risks, the obstacles and create an energy that the whole team is enthused about and supports. By achieving that you are well on the way to accomplishing the goal.

The written plan need not be an extensive tome – indeed the bulkier it is the less likely it is to be used and reviewed. It is perfectly acceptable to produce a succinct document (perhaps 10 pages) which summarises the plan and refers to more detailed analysis if required. Whilst this may contain some confidential information it should be available for inspection by relevant parties.

As a minimum, the written plan should include:

• definition of the business objective(s)
• summary of the market (geography, size, share, major competitors, SWOT analysis (strengths, weaknesses, opportunities and threats), risk policy etc)
• summary of the marketing plan (how to attract new customers, how to increase sales to existing customers, pricing policy, advertising media, key products/services etc)
• human resources plan (recruitment plan, training, development, incentive schemes, pay policy)
• financial summary – headline figures (eg. turnover, gross margin, net profit, headcount, cash balance, prime key performance indicators)
• Financial forecasts (monthly/quarterly key figures including profit and loss account, balance sheet, cash flow forecast, sensitivity analysis)
• Brief biographies of the key personnel

It is fundamental that key personnel are kept aware of how the business is actually performing and are able to understand why any variations from the plan have occurred. The sooner corrective action is taken (whether to revise the plan or change performance) the less damage will be inflicted on the business. Note that the plan was a plan at a particular point in time; it should be amended to reflect changes in circumstances (eg. technology advances, new competitor, acquisitions, market conditions etc) so that it continues to be viewed as being achievable. As soon as the goals are thought to be unattainable the energy levels will drop and focus will be lost.

It is more than probable that the business will digress from the set path whilst on the journey and so the plan should be reassessed and updated at frequent intervals. If you were to divert away from your SatNav’s recommended route, it would not force you back onto the original route, but show you the optimal route given where you are now and where you want to be!

With a well considered and well presented business plan you will have strengthened your team, set higher and more reachable targets and will make a great impression on your bank manager! You will have a great story to tell which will in itself inspire existing and potential stakeholders.

This is one from a series of articles written by Nigel Grant to help owner-managers increase their profits and achieve their potential. For a free initial discussion to see how you can achieve the potential for your business, contact Nigel Grant of More Profit For You Ltd on 07801624865 or NigelGrant@MoreProfitForYou.co.uk