Call us
0800 088 7367

Archive for the ‘Business planning’ Category

The power of a checklist

Would you get on a plane if the pilot didn’t go through the pre-flight checklist? Would you be happy for a surgeon to operate on you without using the checklist recommended by the World Health Organisation?

I didn’t think so – most people on the receiving end of an important service would prefer the person delivering the service to use checklists.

Checklists are very powerful. A simple five step hygiene checklist was tested in an Intensive Care Unit in 2001. The results were amazing – after 12 months the 10 day infection rate was down from 11% to 0% and after 15 months it had prevented 43 infections, 8 deaths and saved £1.3m in post infection costs.

Checklist is something every small business can use to grow and get a competitive advantage but it’s not to implement easy.
Many people (especially experienced) don’t like checklists because they don’t think they need them and/or they don’t like feeling controlled.

Here are some strategies to help implement checklists in your business.

– Share your company’s non-financial purpose so your team buy into your vision. Link the use of the checklist to the outcome you want to create in the world

– Explain that it’s not about the checklist; it’s about the culture of discipline and teamwork

– Remind yourself and your team that the most intelligent well trained people in the world, like surgeons and pilots, use checklists

– Start with key systems and grow the number of checklists

– Get your team to build the checklist

– Celebrate the impact of checklists

– Explain the cost of not using systems and how this impacts everyone financially and non-financially

– Make sure systems are available at the right time in the right place

If you’d like to find out more we recommend reading The Checklist Manifesto by Atul Gawande.

Free Profit Improvement Software

Every business needs to think and act strategically, including Sackmans.

One of my target markets is start-ups and small businesses that want to grow. I feel this segment of the market deserved a separate brand, so I have created Ten Accountants. The names suggest “perfect” as in the Dudley Moore film.

I know there is no such thing as perfect but I think it’s a worthwhile direction.

I’m working with other accountants on this and our aim is to create the perfect business development system; a guaranteed way to launch a successful small business.

One of the things we are doing is building business management software. This will help you manage the business, projects and people – including yourself. This software (if sold separately) would start at £50 plus a month for three users. But, the value is far more that £600 – what would 20% or 30% growth every years be worth other the next 5-10 years?

That software will be available in a few months. In the meantime you can use Profit Improver. This is a system that will help you figure out how to improve your profits. You can look at the impact of relatively small improvement to your key drivers over the next five years.

If you are interested in a service which is more focussed on business development and growth then maybe Ten Accountants would suit you better than Sackmans.

We use Xero Accounting software with all clients because of the budgeting feature. This allows you to set and report against targets.

Get in touch if you’d like to know more.

 

 

Secrets of business success

Over the years I’ve been researching what makes some businesses really successful and what makes others average or worse fail.

On the face of it it’s fairly simple – sell something for more than it costs. The truth is that it is easy when you’re your own. The problems seem to start when you start working with other people, employees and sub-contractors.

What I think a business needs is an effective people management system. And, from looking into this I believe this starts with the way you recruit. You need to attract the right type of people to work with you.

But, before you can do this you need to think REALLY carefully about who you are. Questions like these can help:

• What do you want to achieve?
• What do you care about?
• How do you expect people to behave?
• What do you stand for?
• What won’t you stand for?

In business speak these are your vision, values and purpose.

Once you have these in place I suggest you focus on something called “engagement”. This is about people having a positive attitude to work and willingly giving their best.

To do this effectively I think you need a few things:

• A compelling business plan so everyone know where there business is going and why
• Clear position agreements so people know their role in the plan
• Support for people to help them perform to the best of their ability
• A culture where people can provide feedback to the business
• Accountability and transparency in all aspects of the business
• Frequent communication so everyone knows what is going on

If you would like to explore engagement to improve business performance let me know and I will set up a On Track session.

Management development is vital for success

As part of our commitment to help our clients be successful, Sackmans keep up to date with the latest research on what makes businesses successful.

Unfortunately, we have not found a magic wand but we have established a few key principles that we believe guarantees success. The first principle is that business growth comes after personal growth of the business owner. One core skill is business management.

To highlight the importance of management training, an article published by the Chartered Management Institute (CMI) revealed that bad management accounts for 56% of business failures.

The problem is an attitude of under-investment by small businesses as they are half as likely to invest in management training compared to big businesses. However, investing in management training can pay off – the example given in the CMI article was a house building business in Northern Ireland.

David Law of WL Law saw an opportunity for growth by land acquisition. But the company didn’t have the resources to buy land and the banks were not interested in lending.

They repositioned the business brought in an equity partner which has brought the business back to profitability.

Here are the five steps to making your business a success

  • Focus
  • Communicate
  • Calibrate
  • Delegate
  • De-risk

 

Sackmans can support and help you with your development, especially with calibrating because that’s about measuring and analysing. The key is to test your business ideas by using data to find the best way forward.

Using financial and non-financial key performance indicators is a key element of Improving the Numbers. If you’d like to invest in the management of your business get in touch

.

 

 

 

Make or break?

Xero have released the “Make or Break” report on what makes the difference between entrepreneurs who succeed a fail.

It’s based on 2,000 business owners in the US and UK and the results provide insights and ideas on how you can create a more successful business.

Six out of ten entrepreneurs believe family time is crucial to being effective. This includes keeping evenings and weekends free. However, just 28% turn off their phone and laptop off out of normal business hours.

Five out of ten invest in technology and strategic initiatives. And, 50% of successful business spend money on marketing campaigns (social media, advertising, PR), compared to 20% of those whose business failed.

Interestingly, when it comes to financial software – 58% of businesses that survive use software whereas only 14% of failures do.

Business survival rates are boosted with Xero. 88% of Xero customers operating after five years, compared to an industry average of just 41%.

Another interesting insight was the use of professional advisers – 33% of successful entrepreneurs sought outside help compared to just 14% of owners who had to close.

This is why we recommend all businesses consider using their accountant to help them  increase the chance of success. To support this Sackmans offers “Improving the Numbers” as a service option. This is a business planning and budgeting service for business owners who want to maximise their results.

A start-ups relationship with their accountant is important for survival. The Xero research supports our approach – 42% of survivors describe that relationship with their accountant as “excellent,” compared to 27% of those whose company failed.

A better 2016

As we approach the end of the year, it’s time to reflect and plan for the next year. One way of doing this is to create a budget.

There are different approaches to budgeting – here’s one that you can use based on Profit First principle. Normally, you start with sales take off costs and you’re left with profit.

When you put profit first and add costs you know what sales you need to hit. Once you know this you can create a sales plan to do this using:

  • Number of customers
  • Price
  • Quantity
  • Frequency of purchase

 

For example, if you are a hairdresser you could look at ways of:

  • Winning new customers
  • Charging higher prices
  • Encouraging customers to buy more
  • Getting people to come back earlier

 

Each strategy can be broken down an analysed. For example, winning new customers could be done by encouraging referrals. Charging higher prices can be done by creating premium experiences. Sales training can help sell more and rebook quicker.

Start with profit and give yourself some sales and marketing targets and you may find your 2016 results will be better than 2015.

Stay safe online

The Xero Website had a good article about being safe online to protect yourself, your customers and employees.

The three things we can all do are:

  • Have a good password strategy
  • Be aware of phishing emails
  • Keep anti-malware up-to-date
  • Keep your operating system and application software patched and up-to-date

 

A good password strategy means:

  • Not sharing a password (even with friends)
  • Always using complex passwords
  • Changing passwords at least once a month
  • Use different passwords for different applications
  • A complex password is a long password made up of numbers, letters and special characters ($,#,%,&, etc). The longer your password the better because it is harder to guess.

 

A phishing email looks like it comes from a trusted source and tries to trick you into providing passwords and other important data. Look out for:

  • Incorrect spelling or grammar
  • Different URLs
  • Requests for personal information
  • The email calls for urgent action.
  • The email says sounds too good to be true
  • The email doesn’t use your name

We hope this helps you stay safe online.

Do one in three business need to change strategy?

All businesses should take time to think about the big picture – this is called Strategic Planning.

At Sackmans we recommend you do a full strategic plan every five years because things change so quickly. If you have not done one for a while, now could be a good time.

According to a study by researchers at Oxford University and Deloitte, just over a third of current jobs in the UK are at high risk of computerisation over the following 20 years.

The researchers based the work on nine key skills required to perform it; social perceptiveness, negotiation, persuasion, assisting and caring for others, originality, fine arts, finger dexterity, manual dexterity and the need to work in a cramped work space.

This is bad news for employees, but especially for business owners.

If you are under 45 years old and you plan on earning money for 20+ years (or want to sell up as part of your retirement) you may need to radically change your business strategy and diversify.

The BBC has created an online application to help you see if you are likely to be affected. To use it click here.

Most common measurements

A business owner or manager needs information to manage a business – this information is reported in numbers. These are the most common measurements.

Sales verses target
Most businesses set financial targets for the year ahead and track their progress. The forecast starts with sales and are linked to marketing spend and sales people. This way you can see what’s working and what’s not, so you to make decisions on all sorted of thing including marketing tactics, training, funding, recruitment and equipment.

But, unless your business is very predictable the forecast and targets are just your best guess which is why we recommend monthly or at least quarterly reviews.

A combination of Google Docs and Xero.com budgeting feature can be used. Or, you can use systems like LivePlan.com which make planning and budgeting very easy.

Growth
You can track growth in terms of number of customers, sales and/or average spend month-by-month or by comparing quarters or years.

Once again, accounting systems like Xero.com enable you to track these numbers.

Profit Margin
Profit is not always the priority – it depends on your stage of business. If you are a new start you may decide to make a loss so you can maximize growth and market share.  The more mature the market is, the more important it is to return a profit as a reward for early losses. You can track gross and/or net profit margin.

You’ll need to make some accounting adjustments to your bookkeeping to have accurate figure which is why we recommend preparing management accounts.

Net Promoter Score
One of the most well know ways to track customer satisfaction is called the Net Promoter Score (NPS).  It is very simple – just starts by asking customer “On a scale of zero to ten, how likely are you to recommend us to someone else?” You then apply a formula to calculate your NPS score.

According to research from leading management consultancy Bain and Co, the higher your NPS score the higher your growth will be compared to other companies in your sector.

Scores can be collected with scorecards or email surveys.

Employee Engagement
Just like the NPS – businesses with high employee engagement experience higher growth rates, and higher staff productivity.

There are systems you can use to help you such as https://www.officevibe.com/.

Be careful with goals

Setting goals is common business advice. Hundreds of studies have demonstrated that setting goals can improve results.

However, a Harvard report has identified five potential negative side-effects of goals, if they are not well thought through. These are:

  • Unethical behaviors
  • Unanticipated behaviors
  • Neglected areas
  • Reduced teamwork
  • Reduced motivation.

 

To help you set goals which achieve the results you want, without any negative side effects, here are 10 questions to think about when setting goals.

Question 1 – Are goals too specific?
Narrow goals can blind people to important aspects of a problem.

When setting goals, make sure that goals are comprehensive and include all of the critical components for firm success – for example quality as well as quantity.

Question 2 – Are the goals too challenging?
The key is to provide the resources and training to enable employees to reach goals.

Question 3 – Who is going to set the goals?
People are naturally more committed to goals they help to set. But, be careful to ensure that people are not tempted to set easy to reach goals.

Question 4 – Is the timeframe appropriate?
Be sure that short-term efforts to reach a goal do not harm investment in long-term objectives.

Question 5 – How could the goals effect risk taking?
Be sure to think about what are acceptable levels of risk.

Question 6 – How could the goals encourage unethical behavior?
You may need to include safeguards to ensure ethical behavior while attaining goals.

Question 7 – Can goals be tailored for individuals but still fair?
Make sure goals are perceived as fair because employee perceptions of whether rewards fairly match effort and performance can be one of the best predictors of commitment and motivation.

Question 8 – How will goals influence organizational culture?
Think about the culture you are trying to create. Consider setting team-based goals as well as or instead of individual goals.

Question 9 – Are goals reducing motivation for the work?
Assess employees motivation and appreciate that goals can reduce motivation for the work because employees can be focused on the rewards for achieving goals  .

Question 10 – What is the ultimate goals
Think about the organization and what type of goal is most appropriate? In complex, changing environments learning goals may be more effective.