The Business Development Workshop is a very informal, half-day training session aimed at ambitious owners of small businesses, and their advisors, who want to know how to:

• understand and use accounts
• save tax
• work out their growth potential
• apply E-Myth principles (by watching a video of Michael Gerber)

It is divided into four sections, led by our directors.

Session 1  Interpreting the Numbers – Pauline Williamson
Most business owners do not understand the information in their accounts, according to national research by AVN. At K&H, we want to ensure that our clients make the most of their accounts, and can access this valuable information.

We will review a set of real accounts and help you to see the problems the business will face if it makes no changes.

Session 2 Taxability – Andrew Scott
One of our missions is to help our clients to pay less tax. We take you through a process of identifying your tax strengths and weaknesses and give you tips to ensure you pay the minimum tax possible.

Session 3 Simple Stuff That Works – Andrew Gray
SSTW is an interactive, multimedia software tool that helps business owners grow their sales and profits. It features video clips of real business owners explaining how they have used a range of practical ideas and learned new skills to help them grow and develop their businesses.

Session 4 Why most small businesses don’t work and what to do about it? – Andrew Gray
This session is based on the seven-point business development process developed by Michael Gerber, author of The E-Myth Revisited.

It gives you an opportunity to step back from the day-to-day running of your business and look at the big picture. We will watch a video of Gerber sharing his views about what being in business really means, we examine your role as a business owner, and provide insights into how your business can give you more life.

The cost for each person attending is £99 plus VAT. However, K&H clients can attend for free and some free places are available to others as part of our support of the National Campaign.

To book a place on the next Business Development Workshop, email us or call 0118 923 5800.

Future dates for 2010 are:

• Wednesday 24 November

All Workshops will run from 9.30am to 1.00pm and will be held at our offices in Theale.

Gordon Lovell-Read, Chief Executive Officer, ORGMENTOR Limited

The Landscape

Much has been recorded over the past month on that old staple of British conversation, the weather. For the more philosophical among us it has been, at least, a reminder that nature is a powerful beast often out of our control.

Nature is, without doubt, our friend – many of the drugs we use to cure or alleviate afflictions come from her. Nature offers breadth of perspective – for example, although climate science is an unpredictable and complex playing field, the structure of a snowflake is simple. Surely there continues to be value in looking to nature for inspiration and guidance in our personal and business endeavours?

In particular, this article was inspired by the simplicity that nature offers in what is an otherwise stressful and complex world – coupled with being snowed in at home for days at a time during January!

So, let me start with being snowed in……..

To embellish the following analogy here are some factoids on where I live:

1. Our “plot” is a relatively “cold spot” because it is in a forest of tall pine trees that limit the amount of sun – particularly in the winter. Frozen things stay frozen!
2. Big pine trees have a habit of falling over when their tops get laden with frozen snow.
3. Getting here is via a private, unadopted lane – so there is no concept of gritting.
4. We have a traditional satellite receiving dish aerial. It stops delivering a signal when the snow reaches a certain level on the bar that connects the receiver module to the dish. (This can be corrected very easily by just knocking the snow off).
5. Due to the pine trees we cannot get any other signal on a traditional aerial – so for us it’s the “SKYway” or the highway.
6. Our satellite dish is on our chimney.
7. It is really difficult to hit a satellite dish with any kind of projectile (e.g. a tennis ball) when you are having to look skywards (no pun intended) in heavy snowfall (and when you were always the last kid left standing when your mates were picking sides for the cricket team). [Please amend 4 above to read: "In theory, this can be corrected very easily .........]

and, here are some factoids about us as a family:

1. We are big users of technology and take it all for granted – there is always something, or somebody to entertain us!
2. One of us is always somewhere, doing something, so time together is rare.
3. We eat different things, at different times, often on trays.
4. I am the only bloke in a house full of women. (This has nothing to do with the analogy or any business lesson and probably qualifies as a fact rather than a factoid!)

Now let’s get down to the story.

The Analogy

We had some snow before Christmas but it wasn’t a show-stopper. However, because of our “cold-spot” it stayed on the ground all over Christmas and into the first snowfall of January. So, we had a white Christmas on the ground at least!

The first we knew of the initial January snow was when, sitting with our trays watching Star Trek Voyager, the magic message appeared on the plasma – “no satellite signal is being received”. Like all experts, we turned it off and turned it on again – of course, with no joy. Pressing the buttons harder and faster on the Sky remote didn’t seem to work either so we suspected something was really wrong. Being the bloke in the house I was dispatched in the dark to “look at the aerial”. The next word from my mouth as I opened the front door was “ah”. We were already snowed in by any measure and it was coming down hard and fast.

Tennis balls were thrown to no avail.

“What are we going to do now?” came the cry. Suddenly, the realization that we might all have to talk to each other, or play cards, or something, stirred in the memory.

So, off we went onto the Wii. (It was, after all, only the telly that had gone off).

The trouble with Wii’s are that they need electricity, which reaches our home through the secure media of big thick wires up poles. (We have already established that pine trees fall over when laden with frozen snow .. please fill the gap in for yourself).

All, of course, was not lost. Mobile technology with wind-up emergency chargers from the Christmas stocking would save the day. We’d find something to do and go do it.

Now, pine trees are very big and 3G masts are pretty small. Although one admires the network providers for placing them sensitively (and even making the poles coloured so they blend in with the forest) one could, if being really picky at this point, ponder on sticking them where nothing can flatten them?

In the end it didn’t matter as we had 4ft of drifted snow and no way out anyway.

We laughed, we ate together (Duke of Edinburgh primus stove and you can make some great food from simple ingredients!), we sang, we talked, we played traditional games. We put “winter” clothes on (minus 8deg. with no glowing radiators gets your attention).

I think we were all disappointed when, after 5 days of being snowed in, we spent a day digging ourselves out and eventually got a scout through to Tesco.

Our life had become too complex without the time for the simple things. It was clear that we could get great joy from what really matters.

By the time (four days later) we were snowed in for the second time (by now, through the wonders of re-established internet links, our eldest was doing mock exams in the dining room) I started to ponder on what our business customers had told us they valued during the previous years and what that might tell us for 2010.

Below is the relevance of our “mini-epiphany” to our business world. It’s a reminder of what we already know, brought into reality by January’s enforced periods of reflection.

The Relevance

We all get dragged into problems, issues and complexity which doesn’t really add any value. The problem is that waste in an organization or a process never jumps up and says “Hi, I’m waste, please eradicate me!” Instead, it masquerades as value (“that’s the way we do things around here” etc). In the snow we found time we never knew we had. Let’s all remember to do what really matters in our businesses.

To help with that I have drawn on the three most popular interactions with the customers of my business, (over the difficult last year of recession and uncertainty), and offer them as key areas of focus to ensure a healthy start to the new decade.

The Snowflakes

1) Keep Finding the Four Seconds

My inspiration for working with businesses on this comes from Matthew Pinsent (of Olympic rowing fame) who, through a previous business relationship, gave me the benefit of his wisdom. Matthew tells of finishing an Olympic medal race, having won gold by a matter of centimetres with absolutely nothing left in the physical and emotional tank. Soon the challenge emerges of the next Olympics in four years time where it is clear that to win gold again you have to do the same race four seconds faster. How can you possibly do that? Four seconds is a lifetime at that level. The business parallel is when you hear “we can’t do any more, we are already at the limit!” In reality, this is waste masquerading as value again. Consultants make a fortune out of coming into companies and spotting it. It is rare that you will find four seconds in one lump. The four seconds is built up of a myriad of time chunks that you “win” with relatively small breakthroughs here and there. Often you go backwards to go forwards. Attention to detail is key and so is understanding the cause-and-effect system in your business. During the January snow experience there were many things that we just stopped doing because they were no longer a priority given the circumstances forced upon us. Our world didn’t stop!

2) Become a Powerbase Super Connector

During my selling career in large global organizations, covering extremely large complex solutions, projects and services, I learnt the art of “Powerbase Management”. I made a career out of transforming business-critical relationships to tip the balance of the associated political and influencing players. The time to make these relationships is when you don’t have to have them. For many smaller businesses FTSE class customers can be very lucrative – but, for many, bidding for large contracts without any certainty of winning is prohibitive and stifles potential growth – despite the innovation and value that might be offered. You can punch above your weight but you often have to play in a different arena. It often shocks people when I show them that FTSE clients are better payers than smaller businesses, the cost-of-sale is lower and they focus more on value than commodity. One attains this position by being networked at the highest level. Often the reason this experience is “not true” for the smaller business is that they are sucked into a relationship with corporate procurement and the associated beauty contests. For those that have the choice, it is why many avoid business with the public sector where valuable personal business relationships are so diluted by the procurement system that everything becomes a commodity. Our snow experience enabled everybody at home to reconnect. With critical exams and other key decisions facing the family during 2010 we know how to better support each other on the journey – whatever life throws at us!

3) Drive the Leading Indicators in Your World

Most businesses still judge their wellbeing on “Lagging Indicator” or “KPI”  rear-view-mirror assessments of how things are. World-class businesses map, understand and influence “Leading Indicators” – ways of behaving and doing things that, on balance, mean that the required lagging indicators will follow. Those familiar with quality systems or six-sigma quality practioners will understand this well – but smaller business without access to such specialist knowledge and resources can benefit from similar approaches. In our business we refer to the process of assuring breakthrough performance as Outcome Engineering. You wouldn’t drive to Scotland without knowing the point of the journey, a rough idea of how to get there and some consideration of the relative costs, risks and time absorbed. Yet, often, you see a business doing just that (for example: as they get embroiled in bids they have no strategy for winning). Become expert at the “cause-and-effect” dynamics in your world, understand the leading indicators that define cause and swing the associated business levers to your advantage. When you subsequently measure effect (and that remains important) you will uncover more commentary around “ah, that’s what we thought would happen” rather than “oh, look what happened”. Following our January bonding at home, we know much more about how to support each other and get the best out of each other.

The Opportunity

It’s a new decade – what’s not to look forward to?

Our aim for our clients is “get to the top of your world”.

Some people define the North Pole as the top of “the” world, others Mount Everest. Interestingly, when you get there they are both covered in snow. Therefore, q.e.d., snow is synonymous with getting to the top of the/your world and, so, snow is good for business. Look after the snowflakes and wash away the slush.

Good luck for 2010. Here’s to a hot summer (good for business as well) and, if you want to find out more about how we help clients get to the top of their worlds, our regular events around the three “snowflakes” above, or just want to make contact, you can find us at www.orgmentor.com or email me.

Gordon Lovell-Read
Chief Executive Officer
ORGMENTOR Limited

Why is this?

1. The main reason is that, as businesses shrink during the recession, so do their working capital (cash) needs. When trade picks up, so do costs and payments, but the businesses do not have the cash to pay for them yet, because of the delay getting the cash in from their customers. This is despite the fact that, on paper, the business is profitable. This is known as ‘overtrading’.

2. Businesses stop investing during recessions. As they emerge, they need to catch up with technical innovations (new IT, marketing campaigns) to be competitive. This creates another cash drain.

3. There may well be more competition, e.g. from people made redundant who set up in competition and from other countries that had less of a downturn and where labour costs are lower.

4. The tax burden (often one of the biggest costs in a business) is even greater after a recession, as the government looks to repay its (i.e. our) debts.

5. The availability of funding from banks etc. to cover the cash shortfalls is very limited, and many of us have less equity in our houses to dip into.

How can you avoid failing into these traps?

a. Planning and forecasting are crucial. Think about the cash implications of every deal that you do. If you buy in stock or services, when will you get the (cash) return on that investment?

b. If you are likely to need funding to exploit great opportunities, ask for it now while you are in a relative position of strength rather than when you are desperate. Remember, the banks would rather lend to someone who doesn’t need the money now!

c. Make sure you agree terms with customers. If necessary, demand payment up front or use direct debits to take control of the payment process.

d. Keep even tighter reins on costs than you have during the recession.

e. Keep an eye on the economic trends, i.e. what ’shape’ will the recession be? (See Pauline Williamson’s recent article on this.)

Do you have any other suggestions?

If you need help, e.g. planning and forecasting or reducing tax costs, let me know.

Andrew Gray
Chairman & Business Development Director

Stacey and her sunflowers

Stacey Delve, one of the team here at K&H, has had considerable success with her sunflowers this year in the K&H garden. But growing plants from seed doesn’t always work – you have to have the right conditions, and take the right actions.

I’d like to extend the gardening analogy to business growth using the acronym ‘PLANT’.

P for Plan

Plan what you want and how you are going to get it. It’s no good planting your sunflowers where they will get no sun. Careful financial planning can let businesses test the possible outcomes of various business decisions and identify key drivers to success.

L for ‘Look after’

Look after the seeds. It may involve watering, weeding or putting in stakes for support. Businesses are no different – they need regular maintenance. Unwanted results need removing, customers need looking after, and staff may need support.

A for Assess

Assess how you are doing against the plans. Much of the maintenance is obvious but sometimes it isn’t and it is only by having a formal checking process that you identify what is working or not. In business, the way to do this is to have formal management reports that track both financial and non-financial measures against plans. Controls and processes to ensure the reliability of the information gathered are also key.

N for New

New actions have to be taken as a result of the assessment. With sunflowers, you have to replace the original stakes with larger ones. A business may discover that a particular marketing campaign didn’t yield expected results and the next campaign needs to change to reflect the learning. Additional profits may call for extra tax planning to be done before the year end, and so on.

T for Take

Take the benefits. Eat the seeds from the sunflowers or use some of them to do even better next year. It’s the same with business profits: some will be reinvested for the future but ideally the plans will include setting aside some time for the business owner to enjoy spending on holidays, family or hobbies.

Many business owners feel able to do much of the PLANTing themselves but sometimes it helps to get in an expert to free up your time and offer the benefit of their wider, but specific, experience and skills. We at K&H offer business support through workshops and regular advice, but if you feel that you need in-house support, then you can ‘buy in’ a part-time finance director on an interim basis.

If you’re interested in finding out more about this please contact us.

Thanks to Caroline Billington of K&H partner company a-count-a-bility for her input to this article.

At K&H we are planning to grow in the next three years and, always keen to practise what we preach, we are investing in marketing in order to achieve our goals. Our investment focuses on our new website, the aim of which is to attract like-minded, ambitious owner managers – people who, like us, see opportunity in the current economic downturn.

We have encapsulated our philosophy in the phrase ’Accountants for life’. This has two meanings of course: ‘for life’ means both for the long term and for all aspects of life. In a nutshell:

“We want lifelong relationships with our clients to help them grow and develop their businesses and their lives.”

One of the key features of the new website is that it is built using Wordpress. Wordpress is a fully functional Web 2.0 platform, originally developed as a blogging application, which allows full interactivity for users, e.g. the ability to post comments on as much of the website as we want. This allows users to drive the content to a certain extent to keep it current and topical.

Please post a comment giving me feedback on these ideas and the site in general. As ever, I promise to get back to you within one working day.

Our thanks go to our client Julian Sharples of S-Group for working with us to develop the new website.

Facts from past three recessions:

• 1974-1975 recession years: “Companies which did not cut marketing expenditures experienced higher sales and net income during those two years and the two years following than those companies which cut in either or both recession years.” (ABP/Meldurm & Fewsmith 1979 study)

• 1981-1982 recession years: “Business-to-business firms that maintained or increased their marketing expenditures during the 1981-1982 recession averaged significantly higher sales growth both during the recession and for the following three years than those which eliminated or decreased marketing.” (McGraw-Hill Research’s Laboratory of Advertising Performance)

• 1990-1991 recession years: “Firms that increased their budgets and took on new people were twice as likely to pick up market share.” (Management Review research of AMA member firms)

• adopt an “abundance mentality” and give them your blessing
• see this as a direct threat to the business you have created and your financial wellbeing.

Which you choose will depend on your attitude to a large extent, but it should also depend on the nature of your business and how unique it is. Some businesses depend on one or two very specific systems (usually automated operational systems, such as websites) where the Intellectual Property (IP) rights must be protected legally. But, for the vast majority of businesses, success only comes as a result of having many diverse systems in every area of the business including marketing, finances and leadership AND having the commitment to use them consistently. In practise, it takes far more than just having a knowledge of systems to actually use them to create a great business.

To protect your business, here are some Actions to take:

1. make sure that you secure legally any IP rights that you can – especially operational systems.
2. don’t let the fear of theft stop you continuing to systemise and innovate, especially in branding and customer care, which will always be the best protection from the competition.
3. make sure to recruit the right people who will not steal your business.
4. share the rewards of your business with the team and make it their business too, so they don’t have any need to go and set up on their own.

Read more from the E-Myth blog that inspired this blog posting. Please tell me what you think about this subject. PS: If you’d like to see the Gerber video, please email us. The first two people to do so can have a free place at the next Business Development Workshop.