SME Blog

The good, the bad and the entrepreneurial

I have a lot of admiration for entrepreneurs.  It can be tough and stressful road creating a business that will grow and last.

Over the last 18 years I've worked for both small entrepreneurial businesses and large established organisations.  Small entrepreneurial businesses are one of the most exciting to be involved with despite being hugely challenging.  Fresh and innovative ideas are often brought to life in a free spirited and flexible environment. 

If you look at the table at the side you'll see typical key areas listed that are associated with an entrepreneurial business, but are they all good and are some downright bad?

The answer to the above is actually quite simple.  The truth is that it depends where the business is in its life.  For new small entrepreneurial businesses the above list is common, but as the company grows it needs to develop and change.  For example, with 3 employees the above list is just fine.  Multiple the employees by a hundred to 300 and with the above list melt down will result unless there is swift change in key areas.  Here is the rub of course.  As the business grows it needs to develop and change, but making change is a painful process and gets avoided.  However, you just cannot avoid change if you want your business to grow and there are methods to make it less painful.

   

Business growth. Luck or skill?

Fast growth SME's are not the norm.  Quite the opposite, per the FT, two thirds of starts up have gone under by year 7.  So what do the fast growth SME's have that the others don't is it luck or skill?

Luck does play its part.  Sometimes being in the right place at the right time can make a huge difference.  I've seen some of SME's biggest clients come from unlikely situations.  The odds of it happening were small, but possible.  I've also seen strong management teams being caught up in external factors just outside their control.  Even the best team can't prepare for the infinite eventualities the world can through up at it.  Sometimes it is just plain bad luck that strikes us all.

So luck plays its part for a growing business, but over the years I've become more and more convinced skill is underplayed.  What do I mean by that? I mean there is an enormous amount that the majority of SME's can do to improve their odds of growing and becoming more successful.  What this entails I'll be covering over future posts this year.

 

Basking in the warm glow

A big thank you to Accountancy Age.  I'm basking in the warm glow as for the second year running my firm, Goodman Jones, won the Accountancy Age Award for Best Use of Internet: Practice.

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....and other times things go well

Last year my firm, Goodman Jones, won the 2006 Accountancy Age Award for Best Use of Internet by a Practice.  We've also recently been short listed for 2007. 

Accountancy Age has a strong online presence, but from a personal point of view I like informal comment.  It's therefore refreshing that their Editor On Chief, Damian Wild, reveals his thoughts through his blog.  If you're in the profession it's certainly worth a read.

I'll be at the Accountancy Age Awards on 14 November.  Last year in turned into a bit of a bloggers convention with a chance to finally put faces to names.  I'm hoping to see some more new faces this year.

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Sometimes things just go wrong

Even with the best will in the world sometimes things just go wrong.  The other day I tried to log into a Ning social network and it was down.  Instead of being annoyed I looked at the picture (below) and smiled.  We are all human after all, except perhaps for Ning's technicians.  The technicans did a wonderful job and the site was up and running again in no time.

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The family business

BusinessWeek have produced another of their informative slide shows, this time on the family business.  It gives a brief insight into 6 American family businesses.

One quote caught my eye from the Fernandez-Montes family:

“When my parents came to the U.S., they thought if they worked hard for a big company, they would be treated well, have a pension, and live the American Dream,”

“But my cousins and I see ourselves being safer and more secure when we’re the captains at the helm.”

It is not a given that running a family business will be safer. However, the captain at the helm does indeed set his own course. For a family business the ship may be quite small compared to some, but it is likely to be more agile.  If you are captain at the helm then there is the possibility to explore new waters which can be enormously satisfying and enriching.

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MYOB and 21st century business thinking

MYOB are fascinating example of a business thinking in the 21^st century rather than the last. MYOB are traditionally seen as a provider of business software with strong sector strength in the accounting profession. In the accounting profession they occupy a position of trust. Their name and their products are extremely well known.

Technology has done a great deal to remove geographical restrictions with routine tasks being outsourced away from the UK where costs are far lower. The benefit to the company outsourcing should be reduced cost, the ability to deal with peaks and the ability to specialise in higher level areas. For this to work you need to trust the provider that they can deliver and provide work of high enough quality. MYOB have obviously given this some serious thought because they now not only supply business software they also provide an outsourcing service to their clients.

In short they have:

I recently met MYOB's David Clough who is leading the charge. David is very knowledgeable and a quick preview indicates that much thought and time has been given to making the service work well for their clients.

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Accountancy Age Awards

My firm, Goodman Jones, has just been nominated for an award for best use of internet.  I'm not arrogant enough to think the award is in the bag, but at GJ I've had some good natured teasing about acceptance speeches.  We've thought of some daft ones and here are our current favourites:

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1. Gwyneth Paltrow approach - downpour of tears and emotion about love of accountancy;

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2. Rock Band approach – can’t be with you tonight as they are currently on audit just outside the M25 circle;

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3. Marlon Brando approach – decline the award and send a native American Indian in our place (to protest against the SOX);

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4. Goodman Jones Rocks!

:

Any more suggestions gratefully received.   

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Philip Woodgate

Recruitment and the SME competitive edge

In today’s competitive business environment it’s not only customers that SME’s are competing for it’s also employees.   Successful growing SME’s rarely contain mediocre people. As Stuart Jones would say “People are not your most important asset.  The right people are.”

Companies large and small are in the market for good people.  To assist in recruitment of these people SME’s can use their competitive edge.

Move faster

Ambitious, bright people do not stay on the market long.  With SME’s there are no panels and committees, no chains of command.  They can move fast to secure the right people.  An offer to an employee can be on the table whilst a large company is still in the blocks.

Flexibility

Flexibility is a key SME advantage when it comes to attracting customers. If flexibility gives competitive edge to attract business then the same approach can be used to attract good people.  A flexible work environment is a benefit to employees.  Therefore consider part time home working for workers with big commutes or having core hours sandwiched between flexible hours at the beginning and end of the day.

(Tip: If SME’s have a competitive advantage in flexibility then look for the same flexibility in your future employees.) 

Growth and development

SME’s are often great places for ambitious bright people. In large companies the controlling top management is hidden behind the chain of command.  In SME’s the controlling management are normally on the ground.  The difference is enormous for the ambitious bright person.  In a SME the key decision makers quickly notice the abilities of the ambitious bright person. 

In a SME ambitious bright people will always be valued highly and are likely to get more responsibility and a better chance to grow and develop.  The size of a SME means that the individual is part of a team rather than a machine, not a small cog in some large workings.  They can be a significant contributor to the business and can expect to be rewarded as such. 

I got the inspiration for this post from an article on BusinessWeek called Small Business Secrets to Hiring.  It's worth a look if you want further thoughts on this area.

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You're hired!

Why a job ad from my firm?  I'll come clean it's my department, it's expanding and we need someone to join the team.  I'm not above using any alternative means I can find.

We are a firm of approximately eighty people and of that number ten of us are Business Systems and/or IT specialists.  If you think you fit the bill then I would be delighted to hear from you.  If you know someone else that does then please ask them to read this ad.  Oh, one other thing we're a friendly bunch.

Many thanks.  Normal service will resume shortly :)

xxxxx

xxxxx

xxxxxxxx

xxxxx

Manager – Accounting Systems and Services department with heavy emphasis on IT

We are a medium-sized practice of Chartered Accountants situated in the West End of London.  You will be a qualified accountant with a minimum of 3 years post qualification experience in an industrial / commercial environment, with a strong emphasis in accounting systems and computer technology. 

This role has two aspects:

• Managing the ‘team’ engaged in day-to-day bookkeeping, VAT, management accounts and budgeting for a wide portfolio of clients; and
• The implementation of accounting packages – from the initial potential client facing stage to the conversion, installation and configuration of the system, and the training of clients and staff.

You will be very computer literate and have good technical accounting knowledge.  You will possess strong communication skills, have the ability to manage others and to work independently.  Strong practical experience of accounting systems and Excel is essential.  Knowledge of Crystal Reports an advantage.

We will offer the right person a very good salary and the chance to work in an organisation where there is no barrier to your success.

Please email CV and covering letter, including current salary details, to philip.woodgate@goodmanjones.com quoting ref: phw/gpb/blg

All applications will be dealt with in the strictest of confidence.

For further information about Goodman Jones, please visit our website at www.goodmanjones.com

Let's imagine I'm a Kiwi

Let's imagine I'm a kiwi (I know I've got a fish theme, but just bear with me it works better with a bird). Unfortunately, I only have one leg due to a nasty incident with a trap.

I've been falling down the pecking order and I need help.  I've arranged to meet three advisors to see if they can help me.

Advisor One

The first advisor doesn't notice that I have a missing leg. Although to be fair I've learnt to hop around on the good leg quite well. We talk about bird feed and whether it can help in some way.

Advisor Two

The second advisor notices that I have a missing leg and complements me on how well I cope.  He mentions that there is nothing that can be done and we talk about methods to consolidate my position in the pecking order.

Advisor Three

The third advisor notices that I have a missing leg, but thinks there must be something that can be done.  Two weeks later he returns with an innovative artificial kiwi leg and I'm walking around like all the other birds.

With my new advisor I'm kicking up a storm and moving up to the top of the pecking order.  In fact we've done so well a BBC crew come out to film me and my advisor.

Moral of this story

Get an advisor that can solve your problems and don't be surprised if they are ahead of the competition in their thinking and approach.

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Innovation & the SME

Increasingly, SME success is not coming from being the cheapest, but being distinct from the competitors.   This is the message coming from an article on innovation in BusinessWeek. 

To be distinct requires innovation.  One way to find innovative ideas is to get ideas and feedback from all the employees, particularly those on the front lines.

So here is an idea - set up a password protected blog.  Give your staff the password and let them post comments to the blog for any ideas they may have.  If the idea doesn't work for the company then explain why.  If it does then USE IT.

Philip Woodgate

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After the large company

There is quite a buzz about SME's at the moment.  We've got the emerging second generation internet technologies helping SME's,  we've some rather excited bloggers and we've got large companies trying hard to get the SME market.  Still it's in the depths of the internet you often find the most interesting things.

I found this article by John Harrison CEO of Maxsi.  Maxsi is a company based in the North East of England and has been very successful it selling it's website analaysis products to large companies.

John Harrison gives some very good practical tips on winning business from a large company whilst taking on a large competitor as follows:

1. Be confident in your abilities to take on a large competitor (especially true in the case of presentations and meetings).

2. Be flexible (it's the area that most large companies struggle with - especially when added with being adaptive and giving a personal touch).

3. Reduce the large company's risk of taking you (the SME) on as a supplier (e.g. short term contracts, pay as you go (Salesforce.com's method), trial periods etc...)

4. Build up a track record of selling to large companies.

Congratulations when you win that large company contact, but just make sure that you get paid on time.

Philip Woodgate

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The Next Step

There comes a point that if a new SME is to grow it requires new ways of operating and thinking.  This can be a defining moment for the SME and it will determine whether it will grow into something larger or remain a smaller, perhaps specialist business.

To help deal with the issues faced I have given an example of a common question I get asked and my response.

I am currently running a small engineering company, turnover is currently ½ million but pleased to say that it's increasing rapidly now.  What are the problems that you expect we will encounter and how should I deal with them?

Accounting

I am sure you have previously been in day to day control, probably personally have been involved in the banking, invoicing etc .  This means that you know how the company is performing without relying on a formal accounts system.

As the company grows these tasks will be naturally delegated and you as the owner of the business will find yourself becoming detached from the everyday detail  - this can be a danger point for losing control.

It is vital that a proper management accounting information system is set up now, with the potential for growth so that key information can be available to you without the need for you ploughing through the detail.  You probably need to consider upgrading your accounting system.

People

This leads on to the other major area, which are senior employees.  You are probably at the moment either doing the accounting yourself or have a bookkeeper.  To be able to develop the management accounting system should consider collaborating with your firm of accountants using the new breed of online accounting systems or employing an in-house accountant or .

This will also be the case with other key areas of your business.  Of course you can’t employ managers in all areas at once!  It is as important to choose who you need as choosing the exact person.  This becomes an area of self-analysis  - you need to identify not merely what you like or dislike doing, but what are your skills that are key to the business.  If you are currently running the production and also doing the marketing but you know that the reason for past growth has been your marketing effort then that is the area you need to concentrate on, so your first senior employee will need to be on the production side.

Choosing these people is a danger area.  Do not fall into the trap of promoting someone internally merely because they are there an you would like to keep them – the important aspect is have they the skill set you need! Other traps are employing relatives and friends merely because they need the job – this will at the best be an overhead burden and can be disastrous!

Cash

The orders are flooding in, turnover is up, your accounts show that you are trading profitably – what can go wrong? The problem area is cash or more specifically the lack of cash!  This is technically called overtrading and can become a major problem.

Firstly planning in advance should stop this being a surprise.  If cash flows and budget projections are done as a management information tool (rather than a mere exercise for the bank) then the cash requirements of the increased turnover should be clearly identified.  This is the stage in growth where the use of invoice discounting could be useful.  This used to be thought of as a lender of last resort but now that we are in a lower interest regime it should be considered earlier rather than later – it is always easier to negotiate from a position of strength.

Conclusion

The key to successfully managing this stage of growth is to step back from the day to day and plan. To grow as a business requires new ways of operating and thinking.

Jane Bates