Actions define you and your business
It is said that your businesses a reflection of you, and that is certainly the case for business owners.
If you purchased an existing business, then that business reflects what you saw as an opportunity, and it took your action in purchasing it to make it yours.
If you have built your business from scratch, then it is a culmination of many actions over the course of time.
If you are only a part owner, one key action that had to occur was that you had to agree to share ownership. This could have been by merger, acquisition of part interest, or sale of part interest.
To develop your business further, it will be the actions you take that determine the future.
You may think it is your strategies which matter most. I disagree. The best strategy in the world today is nothing without action.
So do you know where you want to be in 12 months, 2 years and 5 years? Do you know where you want your business to be?
And more importantly, if you know that, have you identified the actions required to take you and your business from where you are to that desired future?
Do that, and the reflection noted above will be brighter and much more attractive to you!
This is just one of the ways we work with our clients to help them grow their business and bring a brighter future to the fore. For more information, you can subscribe to our newsletter, or email me today at adam@mbrgroup.com.au
Do you want a brighter future?
KEY PERFORMANCE ACTIONS
If you want to grow your business, you need to know its Key Performance Actions
What are Key Performance Actions?
They are those key actions taken in your business today that impact performance from the way your phone is answered,* to the way your products and services are delivered. These actions of today will impact the performance of tomorrow.
But what about KPI’S everyone talks about?
Key Performance Indicators are measures of past performance, a logging reflection of past actions. Valuable from a review and analysis perspective, and intelligence useful for understanding the Key Performance Actions, but in themselves they measure rather than drive performance.
Do you know what your Key Performance Actions are, and, more importantly does your team understand them?
If not, you have a fantastic opportunity to take advantage of our Key Performance Actions model.
At MBR Group we are determined to help business owners drive performance, not just measure it.
If you would like to know more, subscribe to our e-newsletter from our home page or email me today at adam@mbrgroup.com.au
Your business in 2011, There Has Never Been a Better Time
As the new year rolled around, there is a fair chance that you all turned your mind to the opportunities the new year offered. A fresh start? An operational re-boot? A new market? More Profit? More Cash?
With the new year 3 weeks old, now is a great time to ask what actions have you taken to bring those opportunities toward reality?
If you have let those 3 weeks slip by (or have been enjoying holidays), have you got an action plan in place?
The best decisions in the world are simply dreams without action!
We have already been working with our business clients on their action plans, all designed to improve their business results even more.
If you want to turn your decisions and dreams into actions and results, we can help you!
And if you know what you want in your business, but are not sure how to get there, we can help with that too.
Please don’t let 2011 be the year of missed opportunity. Contact our office today for a complimentary 60 minute YOUR BUSINESS DREAMS & GOALS meeting.
You can call our office on (03) 9385-7700 or email me direct on adam@mbrgroup.com.au start.
So now is the time for action, NOW..
Are you financially well organised?
Most of us would like to be able to answer a confident yes, but most also wonder exactly what that means.
Complete this simple questionnaire to see how you rate, and receive our complimentary report to identify opportunities.
All you need to do is click here
Go on, find out the real answer…
Paid Parental Leave – Team Members
We are proud to announce the second installment in our Paid Parental Leave webinar series. 8pm today our team members session to follow up on this afternoons business owner session. Find out how to use this scheme to benefit your family. Complimentary session, so register now: http://eepurl.com/bT8WH
Paid Parental Leave Webinar
We are proud to announce our Paid Parental Leave webinar series. 12pm today our business owners session starts things rolling. Find out how to use this scheme to benefit your business. Complimentary session, so register now: http://eepurl.com/bT8V9
Don’t blame the bank!
In the post “GFC” world, the banks credit departments have changed (read tightened) how they review business funding.
The checklist below highlights the issues business owners need to be aware of.
At MBR Group, we work with our clients to maximise their funding opportunities. If you would like to discuss how we can help you, call us today on (03) 9385 7700.
In the meantime, we trust you find the checklist thought provoking and important if you have OR want business finance.
Forecasting checklist
Detailed below are some prompts to assist businesses in meeting bank needs when preparing a forecast. A good forecast will present a conservative and yet exciting view into the future for a bank and also demonstrating the strength of management. Always provide detail assumptions.
Structure
Banks will prefer the forecast to be a 3way – ie Profit and Loss, Balance Sheet and Cash Flow Forecast.
Banks want 3 Forecasts
Best case scenario shows how the business will fund high revenue growth
Actual case is the performance that you will be measured against so this needs to be conservative
Worst case demonstrates to the bank that even if the unexpected occurs that the business will cope
Provide a summary page which details the bank the difference between last year and this year
Revenue
When banks review revenue they are looking to be convinced that the business is expecting a level of sales that relates to their historical performance. They will always discount your expressions to stress test the assumptions so your worst case scenario should consider performance with approx 10% less sales than your likely scenario.
Is the business expecting revenue growth in the next 12 months?
- If yes, ensure that the growth rate is realistic – banks are suspicious of aggressive growth targets
- If no, then explanation needs to convince a bank not to worry and show the strategic intent
How are environmental impacts accounted for – ie commodity market fluctuations, global supply and demand and regulatory changes?
In light of FX risk exposure (ie hedging strategies) what is the worst case scenarios?
Are there any Competitor or Substitute threats that may impact on price?
If revenue growth is simply last year plus a percentage, what are you doing to achieve this? Eg 5% increase = 2 sales per day per staff member, backed by new sales training imitative
COGS (Cost of Goods Sold)
Banks want to see continuous improvement in Gross Profit (ie COGs Reduction) as a percentage of Sale income however strategies to achieve this must be detailed to be believable (ie remove sales agent and purchase directly from manufacturer or purchase packaging machine to reduce outsourcing costs)
How will external factors influence costs?
How are FX impacts on purchasing being controlled?
What strategies are in place to maintain or improve Gross Margin?
Present COGs / Gross Margin as a percentage of sales to identify movements.
Operating Expenses
Variation from previous year actuals need to be detailed in the assumptions as the past year is seen as achievable.
What percentage of Operating Expenses are fixed vs Variable?
How will fixed costs be impacted by increased sales volume
Separate Depreciation and Interest costs to allow the bank to identify EBIT and EBITDA
Interest costs take into account expected rate increases and any increase in loan facilities
Working Capital
Banks use working capital management as a key indicator of management ability, as well as being an imperative for establishing debt servicing capacity. Negative trends for Debtors, Inventory and Payables, measured in Days, will indicate to the bank that the management are not skill financial managers.
Does the forecast demonstrate positive cash flow (ie management of cash, inventory, debtors and payables to reduce debt)?
Does Working Capital % exceed Gross Margin % – if not, then is this harming availability of cash?
Capital Expenditure
The business needs to demonstrate how it will fund capital investment without adversely impacting the business’ ability to service its principal and interest commitments.
What CAPEX investment is required in the ensuing period – ie shop refits, cars, premises?
Does the cash flow forecast include all capital expenditure required to maintain and grow revenue?
Is CAPEX to be financed or paid in cash? If financed, then include new facilities in the Balance Sheet.
Other Balance Sheet/Cash Flow Forecast considerations
Does the cash balance remain within the limits of existing facilities (overdraft, debtor finance)?
Do loan facility balances show scheduled principal reductions?
Is the business demonstrating that it will meet loan covenants set by the bank?
- If not then explanation need to provide the lender with comfort when this will occur and why they should be worried
Does the balance sheet display a positive Current Ratio – ie Current Assets / Current Liabilities is >1?
Is the equity balance greater than 50% of the Debt Insurance? If not then what are the plans to get to this?
Overall Analysis
Does the forecast sufficiently balance conservatism with presentation of an exciting future?
Does the forecast demonstrate that the business will meet all banking covenants?
Does the forecast balance with Accounts previously produced (especially Equity Balances)?
One Simple Tool to Help You Grow and Improve Your Business
What would you think if I told you as a business owner that there is one simple tool that used properly will help you grow and improve your business?
And what if I told you that this tool can do that by helping you focus on what’s important in your business by motivating you to take action to drive the performance improvement of your business?
This tool will act as a foundation for the performance reporting and management of your business.
This tool will help you to fund the operations and the growth of your business, and this tool can help you identify opportunities to invest.
So it sounds like a pretty special tool. And yet time and again I hear from business owners:
“Why do I need a cash flow budget? I know where my cash is. I know what I’m going to do with it when it comes in.”
So let’s explore in a little more detail those key features of cash flow budget that can help business owners to grow and improve their business.
Firstly, we focus. The cash flow budget can help business owners focus on the game of business, what’s really important in their business.
Because a cash flow budget provides a foundation for the performance reporting for business owners from a key performance indicator perspective, identifying priorities and monitoring general operational management, cash flow budgets can be a real cornerstone on which to base operational strategies.
A cash flow budget can motivate business owners in a way that may not otherwise be obvious, because a cash flow budget can communicate and quantify the positive outcomes from taking a particular course of action in a way that business owners understand.
So the motivation for business owners by seeing what that result can be, will help drive them to grow and improve their business.
A cash flow budget can also be used to help fund the business growth aspirations of business owners, because it can be used as a key leverage tool when visiting financiers or exploring other ways of funding.
Not only that, it identifies where the needs are from a funding perspective. So if there is going to be cash shortfalls at any particular period in time during the year, a business owner by having an up-to-date cash flow budget will know in advance of when that is going to happen and then can plan and prepare and address the funding requirements as appropriate.
A cash flow budget is a great way of managing the risks in a business because it maps out when a particular cash risk might occur to the business. And again, that is a case of knowing in advance, being able to plan for it, and being able to take action to address the issue before it becomes mission critical or a true risk for the business.
The other really powerful way that every business owner can use a cash flow budget is as a means of identifying opportunities to invest surplus cash flow that a business will have from time to time during the year, either inside or outside of the business.
So if there’s going to be surplus cash flow in particular periods during the year, the business owner can see that and can plan to invest in property, in additional equipment for the business, or even in a personal share portfolio.
Whatever that investment may be, by identifying it up front and tagging it for investment use minimizes the risk of wastage of the cash surpluses being soaked up into day-to-day operations or unnecessary costs within the business.
So why would a business owner want a cash flow budget?
If as a business owner you are truly committed to growing and improving your business, hopefully what I have pointed out here explains why a cash flow budget is a vital cornerstone of your business improvement strategy.
Now at MBR Group, we love working with our clients to develop their cash flow budgets, and then use that as a basis for developing their business improvement plans.
And one of the things that we at MBR Group love doing is getting out with our clients and showing them how this can impact on their business.
So, if you’d like us to come and visit you at your business to explain how a cash flow budget can help your business growth plans, get on the phone now, call (03) 9385 7700 and book an appointment with me or one of our other business improvement specialists to come and spend some time, quality time with you, identifying the opportunities for you to grow and improve your business.
Our “Cashflow Snapshot Session” is normally valued at $497, but will be complimentary for the first five businesses to call our office and quote “cashflow blog”, so call now!
3 reasons why your business should be ready for sale today
1. Price. You never know when you may get an offer. In this “information age” investors have more access than ever to information about businesses, including yours. This information may mean your business becomes a target. And if that becomes the case, you want to be placed to maximize the return to you.
2. Systems. If your business relies on you to operate, then the price someone else will be willing to pay will reflect that reliance. However, if your business operates based on well implemented systems, then a buyer will appreciate that the business can run without you, or them. Of course, this also means that you become free from the day to day deliverables of your business (working IN) and are able to focus on Business Improvement Strategies (working ON) which drive performance and business value.
3. Finance. By positioning your business so that it can be sold for maximum price any day, dictates the information you have available to provide to a buyer, or your financier, will be complete and verifiable. What this means to you is that should you identify an opportunity or need that will benefit from increased funding, the quality of information you have on hand will facilitate the funding.
So you may have no intention or desire to sell your business today, but there are (at least) 3 great reasons for you to have your business ready for sale at all times.
If your business is not ready for sale today, and you would like to work towards that goal, email adam@mbrgroup.com.au with your name, email address and phone number with the subject “sale ready” and I will email you our free 15 point checklist to get you on the way.
3 Keys to business improvement
Do you know the activities that grow and improve your business?
No matter what industry or industries your business operates in, there will be key activities which lead to improving business outcomes.
Those outcomes could be sales, profit, margin, productivity, customer numbers, return rates, staff turnover rates, or any number of other outcomes.
If you want to target improvement in one of these, there are 3 keys:
1. Identify the outcome you want to impact.
2. Identify the activities which lead to an improved outcome.
3. Put a system in place to ensure the appropriate activity levels are achieved.
Of course having appropriate measurement metrics in place so that you have sufficient information available to achieve steps 1 and 2 will make the process simpler.
If you are operating your business, looking for improvements, but without appropriate measures of performance, then your ability to achieve improved outcomes is reduced.
If you would like more information in relation to these performance measures, simply subscribe to our enewsletter by clicking here