Tag: Financial Control

When you take the time to organise your business, you not only improve its functionality, you can also save time and money, increase productivity and optimise profitability.

As I have discussed in the previous blogs of this series, a disorganised business can become a self-destructive machine and its own greatest hurdle to success.

In week one, we identified whether or not a business was problematic; last week we explored the repercussions of these issues.

Today, we look at solutions.

Let me begin by stating that to effectively organise your business it takes time and effort; it is a process that simply can’t happen overnight. 

However, by setting aside the few hours it will take, you will save yourself time exponentially, creating a far more efficient business that continues to steadily improve week over week.

You will now know whether or not your business is healthy, you will understand the problems and the implications they have. Now, let’s organise your business in five easy steps:

How to Organise Your Business & Make it More Presentable

Step 1 – Re-Clarify Your ‘Why’ (60 Minutes and 1-2 glasses of red wine)

This concept isn’t new but it is often misunderstood. 

We have a tendency to think that ‘why’ we want to grow our business and make it more profitable is self-evident – but it isn’t! Why you need your business to be more profitable will be different to another business owner or manager, depending on business type, current size and personal perspective. In fact, this ‘why’ is so different from person to person that after 25-plus years of trying anticipate a person’s ‘why’, I’ve officially stopped trying to guess because I’m wrong 98 percent of the time! 

The reason you want to be clear on your ‘why’ is because that is where your greatest strength lies. You need sustained energy and tenacity to grow a consistently highly-profitable company. Show me a flat company and I’ll show you a leader who has lost their ‘why’. When you are thinking through your ‘why’ remember that you will likely be far more passionate about doing something for someone other than yourself, so watch for that thread when clarifying your ‘why’. 

Assign an absolute maximum of 60 minutes to completing this task. Revisit your Vision Statement for where you want your company to go and why. Do the same for your Mission Statement, which is basically how you intend to use your product or service to get to your vision target. Finally, identify the three to seven qualities you most like in people you work with, which will reflect your company’s Core Values. 

A quick hack on core values is to utilise Patrick Lencioni’s work. He identified that the qualities of Humble, Hungry and Smart are consistently found in great team players. You can see his descriptive and informative video on this here. Over time you can use more descriptive words, but in all likelihood they will be derivatives of those three core values. 

Step 2 – Identify Your Top 5 Company Performance Numbers (60 Minutes)

Don’t over think this. Imagine you are cut off from communications with anyone at your company but you can receive five numbers each week to monitor and organise your business. What would those five numbers be? Typically, it will include a number defining ‘new opportunities’ our leads, a number about your sales pipeline, and a number representing actual closed sales. Often a number on recognised revenue may be included, but that depends on your type of business. Finally, a number explaining customer satisfaction or employee safety may be added – again, depending on business type.

As you are seeing, these are not the typical Profit and Loss numbers your accountant may more readily submit to you. Although your profit and loss statistics are important, they are often non-specific to your company’s functionality and don’t help you understand how your business is performing now – not to mention how it will likely be performing over the next few months. Your five numbers should provide a snapshot of the current health of your business and a sense of where things are headed. 

Next, you need to figure out how you will obtain and review these five numbers each week. This may take some work but it will prove incredibly valuable in the longer term.

Step 3 – Begin Having Real Weekly Meetings Focused on Company Performance (60-90 minutes per week but should replace any existing management-type meetings)

You are now ready to have a real weekly company performance meeting with your key people. Schedule a weekly meeting of about 60-90 minutes where the agenda is consistent and focused on three things:

1. 1. Reviewing the Top Five performance numbers and identifying any issues
   2. Sharing any relevant customer or employee headlines to keep key players informed
   3. Identifying, discussing and resolving for any identified problems (or opportunities) the company is facing. 

• Then monitor the execution of those identified tasks to ensure that they are effectively implemented until completion.

Over time, this meeting will change how your company operates and highlight the effectiveness of individual team members. Within a month your team will begin to experience a shift in accountability and focus without the need for new strategies. 

Step 4 – Implement a Quarterly Day-Long Meeting (6-8 Hours each quarter)

After about a month of these regular weekly meetings you will be ready to develop greater clarity for the company and team. In a day-long meeting, begin by identifying a set of 12-month goals. This should include financial numbers as an objective success measurement, but also highlight company improvement goals in the areas of:

• • Team development
  • Key process improvements
  • Specific technology enhancements.

From here, identify what specific improvements you need to achieve over the 90 days in order to be on track to accomplish the 12-month targets. 

Step 5 – Update Your Company’s Structure (3-4 hours)

Most companies’ organisational charts begin with people and are completed with people in mind. When you feel established in your new processes, the next big opportunity is to think about your company from the lens of, “What will it take to get paid by customers while remaining compliant with regulators?” This task will result in clarity of the specific ‘Seats’ or roles a company requires to operate most efficiently. It is important to understand that when you have a small number of employees you can easily have more seats than team members. In this case you need to assign multiple seats to a single person.

Each seat is defined by three things:

1. 1. What it generates or provides
   2. What its core activities include
   3. What key performance numbers it provides and adheres to (eg: how you quantify whether the seat is delivering on its tasks)

This can be thought of as an Accountability Chart rather than Organisational Chart. The key benefits are that you will optimise the company’s structure according to the work required rather than the people in the organisation. Additionally, the clarity of what is expected from each seat will assist staff in understanding and managing their obligations and role requirements.

After identifying the required seats for your company, you can begin assigning people from your team into these well-defined positions. You will often find it will be easy to place most of your team members nicely into the seats outlined. 

There may well be a couple that will not be perfectly suited to a specific seat. These people will require additional thought and discussion to determine whether they are actually appropriate for your company. The goal is to always try to find a seat and set of activities a staff member can be successful at or that aligns with their specific skillset. The good news is whether you can find a fit or not, both you and your team will have more clarity on the skills you need for a specific seat.

With these five steps implemented, you will be well on your way to enjoying a healthier, more predictable and profitable business, freeing you up to focus upon the continued improvement of your company, reducing your stress, overtime and additional tasks.

We hope this Five-Step strategy provides you the structure and direction you need to better organise your business, making it more attractive to your potential clients, investors, bankers, or future employees. 

Life is too short to get stuck within a hectic company so, as always, enjoy the process!

Company organisation can easily slip away from you.

Poorly implemented or maintained systems, changing staff members and lazy shortcuts can all add up to creating major issues within your business. Even when not an issue in and of itself, poor company organisation can be problematic when you are presenting your business to potential investors, or when introducing new staff members.

One of the issues is that if you have longstanding company organisation issues, they are often overlooked, ignored or adopted by new team members as ‘the norm’, so the insipid issues are left to fester indefinitely.

In part two of my new three-part guide, we will investigate the numerous problems that a disorganised company may have. These issues detail where your company may be falling short of its potential, but also provide red flags that can help you avoid significant repercussions.

The Problems Disorganised Companies Have:

They say the first step in solving a problem it is acknowledging you have a problem. If, after last week’s blog, you are now feeling your business is a bit out of shape, it often helps to further clarify why you may want to tighten up certain areas, systems or processes. This requires becoming more clear on the problems associated with an ‘out of shape’ business. 

It is likely obvious to you that the costs and problems stemming from a disorganised business are numerous. For the sake of keeping this article as brief as possible while attempting to create as much value for you as possible, we will identify some of the more interesting problems that come when trying to run a disorganised company.

Higher Operational Costs

When the same mistakes are repeated, more people are required to complete a set amount of work. If technology or systems aren’t fully utilised, it leads to confusion, increased operational costs, inferior productivity and fewer results.

Lower Accountability

When there isn’t agreement on what is specifically expected from an employee, it is difficult to hold them accountable for specific results. When this lack of clarity persists for an extended period the employee often defines a self-prescribed comfortable job description that is not optimal for the company.

More Difficulty Managing Cash 

To forecast your cashflow accurately you need accurate financial data. In order to achieve this you need people following the correct processes and disciplines to enter and reconcile the data correctly. This is rarely the case with disorderly companies.

When these financial management activities don’t occur correctly or consistently the financial data quickly degrades to the point where it is not trusted or utilised. The end result is that cashflow and profitability are monitored by gut instinct, which is nearly always wrong, especially as the company grows and the figures increase.

Lower Profitability

Gross profit requires consistent monitoring and communication. Disorganised companies often disregard current Gross Profit numbers, making it impossible to identify and fix issues as they arise in sales or production processes. 

Unfit companies often don’t know how much money they are actually making until viewing their annual financial reports. This is not an ideal way to optimise a company’s profitability.

Greater Risk

Not surprisingly, when you are paying more than necessary to maintain a functional company, there isn’t clarity on how the company is performing. This includes diminished risk assessments, poor financial management and a greater potential for problems that can put the business at risk.

At this point, it is likely becoming apparent that the cost of sustaining poor company organisation is significant. Now let’s turn our attention to working through what’s required to have a tight business – one you are happy present to potential clients, investors or employees.

Next week, we will investigate what goes into creating a well-organised company, but for now it is important to address what you are likely thinking:

“Of course I’d like to have a more organised company; I simply can’t afford the time and potential cost of getting my business to that point!” 

So let’s address that first.

Abraham Lincoln famously said, “If I only had an hour to chop down a tree, I would spend the first 45 minutes sharpening my axe.” The classic mistake most entrepreneurs make is taking a ‘Ready-Fire-Aim’ approach to activities within their business. This creates a significant waste of time, money and energy that is impossible tough calculate. Getting your company organised, fit and healthy doesn’t and shouldn’t happen overnight – but with efficient and well-executed planning it can progress smoothly and steadily for resounding and noticeable results.

When I’m invited into companies to improve profitability and/or productivity, nine times out of ten we begin by removing activities or processes that aren’t producing the desired results. And when then adding more effective activities, we take a ‘measure twice cut once’ approach ensuring we are only adding productive strategies rather than reactive, unclear, or poorly-executed activities. 

Much of this clarity comes from having a defined framework with which to manage your company. What is the management framework you are using for your company? If you can’t name it, it likely doesn’t exist. If this is the case, it’s likely because you’ve never attended a course or training that describes a practical and applicable management framework. It’s somewhat ironic that we don’t receive an operating manual for the vehicle that is supposed to protect our business’s and family’s future.

Regardless of whether you have a business operating system, you can always refine your company organisation so it will run more profitably and display better potential to buyers, investors, bankers and key employees. 

Next week, I will share a method to do so that can be both efficient and affordable to any business.

If you’re in any doubt as to your company’s health or how to begin creating a business operating system, explore my website further, or book a FREE 60-minute consultation today.

When is the last time you wished you could improve your business organisation? Many business owners tell me they recently felt that way when they wanted to look into some potential bank financing. Others comment on how they didn’t feel comfortable having a discussion with a potential buyer or investor because they didn’t want to reveal the disorder lingering beneath the surface of their business. 

Beyond the often trivial or fleeting feeling of a little embarrassment that can come from thinking about sharing your company details with an outsider, there are often real costs that are associated with having an out-of-shape and dysfunctional company. 

In my new three-part guide, I will take you through the stages of improving your business organisation, first by identifying what a disorganised company looks like, and then delving into the problems this may instigate, before presenting a collection of solutions towards creating a business profile you can truly be proud of.

This week, we begin with identifying the warning signs that may suggest a lack of organisation within your business. 

What a Disorganised Company Looks Like

But before we explore some of the challenges created by not having an organised business next week, it will likely help to clarify what creates that lingering feeling of disorganisation within a company. 

Describing a disorganised or ‘out of shape’ company can be done by breaking out the three component parts of any business – its people, its processes and its technology. 

The People Within a Messy Business

If a team is unfocussed, despondent or poorly informed on a company’s structure and functionality, it can cause some reluctance, even embarrassment when presented to prospective employees, investors or clients. Team members will likely be unclear on the company’s direction, what the company stands for, or what its competitive advantage is.

The team members of a disorganised company frequently don’t come across as passionate or motivated in what they do or how their input contributes to the rest of the team and business at large. They will frequently display a myopic focus on what is relevant to them, without much appreciation for the greater vision. 

There can also be perceptible cliques within the organisation that create a certain polarisation or dissociation with the company or team as a whole. This may not be recognisable at a level of a potential investor, but if a key potential employee spends much time talking with various team members the cracks in the team quickly begin to appear.

Processes within an Out of Shape Business

A disorganised company lacks the clarity to perform consistently. This is partly due to not having clearly defined processes, but also by not having the discipline to train new team members consistently, thereby instilling strong habits that endure over time.

Common symptoms of companies with insufficient processes are:

1. 1. Low profitability due to inefficiency and elevated labour costs
   2. Difficulty in training staff to be productive quickly
   3. Repeating mistakes already experienced by the company
   4. Low levels of accountability by team members when things go wrong 
   5. Difficulty in delegating tasks and activities away from the strongest team members.

Technology within a Disorganised Business

Messy companies often have numerous Band-Aid fixes or partial technology solutions. These partial technology solutions lead to a lack of trust in the data and knowledge that resides within the various systems. This then generates a number of bad habits that lead to ineffective reporting and numerous direct and indirect costs to the company and the company’s owners.

Some bad habits are:

1. 1. Creating manual work-arounds for otherwise automated or centralised processes that result in information being stored in multiple locations
   2. Not using certain functionality within existing applications through laziness or a lack of education 
   3. Duplicating information and maintaining it in spreadsheets rather than in the native application. This is frequently seen in Cloud-based accounting software
   4. Using one’s ‘gut’ rather than actual company performance information because the data isn’t accurate. Leaders tend to use ‘gut instinct’ rather than information when they don’t trust their data. This is how most businesses financially fail. Leaders then try to estimate cashflow requirements rather than turn to validated data and take the appropriate actions.

If any of this sounds remotely familiar, it could be that your business organisation is distinctly lacking in some areas. The issues may be minimal and the solutions simple, but by acknowledging the underlying issue and further analysing your company processes, you can increase efficiency, promote morale and avoid potential loss to and even failure of your business.

If you are unsure of your business’s health status or are uncertain about how to take the next step, you can find a simple company self-audit on my website, or feel free to book a 60-minute business coaching session with me today.

And, as always, enjoy the process!