Business Process Improvement

Growth Requires Change

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Businesses need to change if they want to grow. Change can be proactive or reactive, but without it everything stays the same and growth is impossible.

Many organizations have found to their detriment that it’s unwise to fail to anticipate changes in the external environment and suffer the consequences. Change has to be carefully planned and implemented with strict controls on both its extent and the pace at which it takes place.

First let’s look at changes that can happen to a business. These might take place over an extended period of time, often so slowly that management is unaware of the extent of the changes until it has been confronted with the unpleasant financial results.

  • Team morale decreases and productivity declines
  • Customers depart and sales decrease
  • Costs rise and profitability suffers

Each of these change paths can happen gradually and unless management regularly monitors key business metrics and ratios they can cause an unpleasant awakening to reality. Isn’t it much better to plan positive changes to an organization and benefit from the outcomes?

Think instead of your business experiencing these kinds of change:

  • Team morale is improved by a program that creates greater job satisfaction and productivity increases
  • A customer relationship management system generates increased turnover and word-of-mouth brings in new customers
  • Active management of costs and better purchasing policies reduce expenses and improve profitability

Plan and implement positive change

Where the first set of changes happened to a business and would be detrimental to growth, the second set of changes are the kind that are planned and create growth. Planning and implanting positive change is an essential element of management.

Yet change for its own sake can be a mistake. It’s important that when considering making changes to an organization the effects are fully identified and carefully analysed.

Discuss the proposed changes with two important groups of stakeholders – your customers and team members. The first group has to accept the changes or your sales will decrease; the second group has to accept them or they won’t happen in the manner you intend.

Betty Krecji of the Purdue University Department of Consumer and Family Sciences says that how one views change is dependent on many things:

The number of changes occurring at once – individuals can only handle so much change. The greater the number of changes occurring simultaneously, the more likely it is that they will be viewed negatively.

The pace at which change is occurring – the faster the changes come, the more difficulty we have in adjusting to them and the more likely we are to view change as loss.
The amount of control in times of change – the greater the involvement individuals have in making change, the greater their sense of control. The greater the sense of control, the more likely the change will be viewed as an opportunity.

Remember the human element

Communicate the planned changes internally before they happen. Change should never take place suddenly or unexpectedly; to do it this way is to invite rejection. All team members need to know what’s going to happen and why it’s a good idea.

Business owners often ignore the human element of change because they believe it can be created through giving orders. Positive and lasting organizational change isn’t like that; it’s ‘owned’ by the team and they get behind it to make it happen.

Don’t expect change to go as quickly or as smoothly as you’ve planned. No matter how much planning has gone into the process there will always be unforeseen forces that impact the success of the change effort.

Harvard Business School’s Todd Jick conducted a study that identified these problems that were experienced by a majority of firms implementing change:

  • change took more time than allocated
  • unforeseen problems surfaced
  • coordination of implementation activities was ineffective
  • competing crises distracted attention
  • insufficient capabilities and skills of those involved in the implementation
  • inadequate training was given
  • uncontrollable external factors had a major adverse impact (eg. Competitive, government, economic)
  • inadequate support for change
  • failure to define expectations and goals clearly
  • failure to involve all those who will be affected by change

Change for the right reasons and done the right way can be a powerful growth stimulant for any organization. Done badly, change can become a business disaster. Consider change carefully, analyse it as critically as possible, and implement it only after you’ve gained the support of stakeholders.

HR Consulting

A New Look At Your Workforce

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The implications of what has been termed the ‘skills shortage’ need to be understood by every business owner. The ways we hire, train, remunerate and manage people will have to change, and so will the way we run our businesses.
Most countries have an aging workforce and a declining birth rate. What we call ‘baby boomers’ – a significant percentage of the workforce, are reaching the end of their working lives and are already beginning to retire. At the same time the declining birth rate means that fewer workers will be available to replace those who leave the workforce.
The Australian government identifies the following as the primary reasons for the growing worries about a shortage of skills:
the technology used in an industry changes
new technologies emerge
old industries move into different regions with a different skills base
job seekers’ interests in industries and occupations change.
A skills shortage does not necessarily mean that there are plenty of jobs for anyone interested in that area of work. Often there is only a demand for experienced workers with highly-specialised skills. The demand might only exist for a relatively short period of time; it might not be possible to train people to fill these positions before the demand falls once more.
But overall it means that it’s probably going to be harder to find skilled people for the jobs in your business. You’re going to have to pay more to get them and you’ll have to spend more to ensure they have the skills you need and to retain them. You’ll also have to make changes to the business itself.
The generations after the ‘baby boomers’, now called generations ‘X’ and ‘Y’ in the media, have entirely different attitudes towards work than their predecessors. They’re not as financially-driven and demand much more from their employers than just a regular pay-cheque and the occasional pat on the back.
Younger people want to choose not only the type of work they do but also to work for an ‘employer of choice’. They want to be part of an organization that reflects their own personal values and gives them opportunities to grow and develop in their work. Their skill sets are different from trades-trained workers of past generations and they have little interest in doing the same thing day after day.
How to keep the people you have
Research shows that an increasing value is being given by employees to their relationships with their employers. It is up to the employer to develop and nurture this relationship, as well as to keep it positive. The key requirement is that the employee feels they can trust their employer and that they are respected for their contributions to the organization.
This places unexpected demands on employers used to simply paying for what they get. In the future they’ll also have to create a workplace where their people feel good about where they are and what they do; they’ll have to share information about the business and offer forms of remuneration that motivate employees and reward them for the part they play in the organization’s growth and achievements.
Managers will have to be worthy of respect from their subordinates and not just lead by decree. They will have to improve their own skills to motivate and retain skilled workers, or risk losing them to employers perceived as being more desirable and progressive.
How to recruit good people
As skilled workers depart businesses around the world employers will have to change their recruiting practices from the prevailing use of third-party resources – recruiting firms and contractors. The days of employers being able to dictate terms of employment to get around industrial legislation are truly numbered.
Employers will have to take more responsibility for finding the right people for every position. They will have to exercise greater care in defining skills requirements and provide for more flexibility in job structuring and reporting relationships so these can be adapted to suit the people recruited.
To get the right people employers will have to be able to clearly articulate their organization’s values and project these into their business practices and their products. They will have to become more attractive to the decreasing pool of talent as well as differentiate themselves above their competitors.
How to be a better employer organization
According to a number of studies conducted to identify the characteristics employer organizations will need to have – or develop, these are some of the most important:
A system in place for gaining feedback from employees
Excellent communications with employees about the business and about their own performance
A willingness to develop employees’ skills, even if not directly related to their current position
Ethical and honest behaviour at all levels of the organization
A clearly articulated vision for the business
Work that is interesting and presents employees with challenges enabling them to grow
Managers and supervisors with demonstrable talent and abilities that create respect and trust
So, not only is it going to be harder to keep the people you have working with you; it’s also going to be harder to get new people to join your organization. Your future success or failure could well depend on your policies of recruitment and staff development and on how you respond to the challenges of restructuring your workplace.
Business Strategy Consulting

A Balanced Business

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A Balanced Business

Wednesday, 26 August 2009 15:16 | Written by Dave Boulter

Small Business Week starts in early September and I have been asked to speak to a group of business owners at breakfast. Luckily, mornings are my best time so the 7:00am start is okay.

At this meeting I am going to explore what it takes to run a balanced business. What do I mean by that?

The simplest way to think about it is to picture a diamond like below. In each corner we have Customers, Finance, Employees and Operations. Now imagine that the line joining the corners is elastic. If you spend a lot of your time concentrating on the financials of your business you could see that the “elastic” is stretched further in that direction. That puts pressure on the other parts of your business.

Practically speaking, you could have the best Profit & Loss and Balance Sheet by cutting back on staff levels, training for staff, capital expenditure on business systems and process design. But, is it possible that maybe your customers could suffer with Service and your staff may look for other opportunities and in the long run you are less efficient because your processes and systems let you down? When you look at the P&L in 6 months time, it may not be so good.

Conversely, you could focus a lot of energy on staff. They could be the best rewarded people and be really well trained. But, they may not be customer focused and may be less effective because your systems and processes dont allow them to succeed.

I think you get the idea. Obviously we have limited time and money and as such focus on a particular aspect of the business moves things along. But, long term focus should be in a balanced way.

Balanced Business-200

HR Consulting

Team motivation

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What is team motivation?
Motivated team members enjoy coming into work and work hard, yet always have time for a laugh. Team motivation is a combination of workplace culture, organizational strategy and management style.
The benefits for employers are increased productivity, reduced absenteeism and turnover, and higher profits.
So why don’t all employers do it? Because they don’t know how to do it, don’t make time for it, or mistakenly think it gets in the way of real work.
It is essential to strike the right balance in motivating a workforce. In order to be effective, motivational strategies must be incorporated into a company’s business goals and its philosophy.
A motivated workforce is driven by strong leadership and a committed management.
Creating and sustaining motivation requires open communication, honesty and respect.
This approach includes developing a culture that encourages team members to participate in organizational activities and share in workplace success.
Essentially, motivation is about bonding with the people who report to you.
This includes making an effort to know them, listening to them and valuing them for their particular contributions and potential. If this is done, they are more likely to help you in meeting the challenges faced by your business.
Benefits of motivating your team
Much research has been undertaken to identify both the visible and invisible benefits of a highly motivated team.
• The findings show that teams who love their work and their workplace typically:
• look forward to coming to work
• actively and consciously contribute to the business
• get more done and have more ideas
• focus their energy on the positives rather than the negatives
• reinforce the organizational culture
• treat clients, co-workers and vendors with more respect
• weather the \”tough times\” with you
• serve as positive ambassadors for your business.
It is easy to see how these can benefit your business.
Apart from creating a harmonious day-to-day working environment, a highly motivated workforce can deliver financial gains through lower team turnover and recruitment costs, more satisfied clients and a more productive workforce.
This is why many large companies constantly monitor team morale. A happy company is a productive one – and more profitable!
How to motivate your team
While many businesses look to incentives or bonus plans to motivate their team, such plans only provide short-term superficial incentives, which fail to provide true motivation.
Research has repeatedly found that the prime team motivators are achievement, recognition, the work itself, responsibility, advancement, and growth.
In other words, although adequate salaries, incentive pay and bonus plans can avoid dissatisfaction, they do not lead to either job satisfaction or high motivation.
The best way to motivate your team is to recognize that people are motivated by their own individual goals, values and desires.
Get to know people and understand their needs, then give them project assignments in which they can become motivated by satisfying their needs.
People are motivated more by feelings and sensitivities than they are by facts and logic. It is common for people to quit high-paying jobs because they don\’t feel appreciated, don\’t feel challenged, or don\’t like the work environment.
Tips for motivating team members
There is no single set of activities that act as a magic formula for creating a highly motivated team.
However certain concepts and practices have proven to be winning combinations if used properly and sincerely. The seven best tips to improving team motivation are:
1. Give your team something to cheer about
Create and communicate an honest vision and mission for your business. Studies show that most people want to believe that there is some purpose and meaning to their work. If your team understand the purpose and direction of your business, and their role in making the desired outcomes happen, they might gain the sense of purpose and contribution that they seek.
2. Encourage team members to grow
Training, professional development, opportunities to try new skills or apply old skills in new ways and cross-training are mutually beneficial business tools. The organization deepens its \”bank of knowledge and know-how\” and the morale among the team soars.
3. Hear their voices
Welcome and provide venues for team feedback and participation and take appropriate action to consider and respond to their comments. When people don’t feel heard, or they have the perception that their ideas aren’t valued or at least acknowledged, morale will suffer.
4. Be consistent
Consistency breeds trust. Policies, roles, expectations, inspired leadership and effective communication are many of the areas that require consistency in order to achieve a high level of team motivation in your business.
5. Communicate
Keep team members informed and build their understanding of what is happening in the business, and why.
6. Reward and recognize
Arguably one of the most powerful ways to increase team motivation is to recognize and reward actions and behaviours that are outstanding or in line with the vision and mission of your business.
7. Remember, it’s not all work
Because the majority of your team will spend most of their waking time each day at work it is important to recognize the social aspect of employment. Morning teas, lunches, and celebrating birthdays can be fitted into the regular routines. Out-of-hours social activities are another way in which you can create a stronger sense of teamwork and a more motivated team. And don’t forget to celebrate your successes! At some level every team member performing a job enables the organization to achieve its wins. It is important to celebrate those moments as a group.
Business Process Improvement

Brainstorming Your Way To Innovation

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Marketing wisdom has it that to develop products with good sales potential you need to first appreciate your customer’s needs and then build a product that answers those needs. Customer needs analysis is the process of unearthing information about just what it is customers would really value in a product. The activities most commonly associated with this process are running customer surveys or focus groups and undertaking market research.
One group that sometimes gets left out of the loop is the company’s employees yet these people, particularly those facing customers, aggregate a huge amount of knowledge about what customers think of a product and about how customers actually use them. A brainstorming session with employees can be a very profitable source of ideas for product innovations that will answer to real needs customers have discussed with them.
Trouble is, traditional brainstorming sessions based on throwing up any and all suggestions for consideration often create more hot air than good ideas. In the real world of business not all ideas are good ideas. One reason is that many blue sky ideas are simply not feasible given the practical constraints imposed by the business’ capabilities. A brainstorming session that ends up with several hundred ideas on the butchers paper may be considered successful in terms of quantity but there’s no guarantee of any quality. Searching through this grab bag of ideas, how can you determine which of them really do address an unmet customer need?
A lot more useful ideas are likely to come up if the thinking is focused in some way so as to keep it within the zone of what customers need. One way to create this sort of focus is to work to a set of preplanned questions that work off your employee’s knowledge of actual customer needs (or behaviour) rather than to ask for off-the-top-of-the-head thoughts. A set of good questions will restrain thinking to sensible product modifications, or even new versions of a product, that could represent valuable innovations.
Business Roadmap have experienced facilitators who have helped many organisations run effective workshops – give us a call to see how we can help you.
There’s no such thing as THE list of right questions to ask and you’ll want to develop your own related to your individual business, its capabilities and its area of operations. However, some generic examples will give you an idea of how this approach works and provide a start for your next brainstorming session.
What modifications have customers asked us about? Customers will often discuss the features of a product that would be just right for them. If it would be just right for a group of customers, then it could be worth developing.
Are some customers using our product in a way or for a purpose we never expected or intended them to? For example, iPods are being used as flight data recorders in light aircraft.
Do any customers invest significantly in modifying your product to get it to do just what they want it to? The most zealous windsurfers who get new boards first and modify them, the most advanced builders experimenting with new materials like stressed-skin panels often suggest or even create useful innovations that manufacturers subsequently adopt.
What minor modifications do customers regularly make to the product? Do left-handers have to modify it to suit their handedness?
Is there one modification that would open this product up to a new customer segment such as providing instructions in another language or in braille or developing a ‘green’ version?
Do customers report a consistent difficulty with using a product? Employees are often well situated to hear about, or even anticipate, customer problems with a product.
Using known unmet needs to guide brainstorming removes the unrestrained speculation that leads to impractical suggestions to meet unproven customer needs. Rather, it allows for creative suggestions on how to devise valued solutions that meet real needs. This approach can be a powerful way of coming up with new ideas ranging from minor product modifications to an entirely new product.
At Business Roadmap, we have many years experience in facilitating practical and productive workshops to unlock ideas of management, employees and customers. To find out how we can help you unlock the innovation within your business, give us a call.
Quality management consultants

Every Company Needs the Protection of a Policy & Procedures Manual

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A comprehensive policy and procedures manual clarifies employee expectations about your business policies and communicates corporate standards of action and behaviour. The manual can also protect your company from possible legal action and exposure to employee fraud.
Every business needs a document that clearly details your rules, your regulations and how things should be done. This is especially true of one-owner businesses where the owner can be on vacation or ill and someone else has to fill in for the duration.
To help you get started on a policy and procedures manual for your business, here are a few topics that should be included. By no means is this a complete list but if you can work through these you’ll have gained experience and made a good start.
Position descriptions – outline the role of each employee and what they are there to do. This must include a statement of their levels of responsibility and their authorities for decision-making and expenditures.
Personnel policies – give details of your policies on employment, working hours, remuneration, vacations, sick leave, and retirement. Cover areas like entitlement to bonuses or salary increases so that employees know exactly what they have to do and aren’t in doubt about their working conditions.
Organization chart – this should show at a glance who reports to whom and where they fit into the overall structure of the company. For the purposes of this chart the position is the key identifier. Each box should be labeled predominantly by position with the incumbent’s name below it in smaller type.
Credit policy – what are your credit terms? How long do you wait for payment? What are your requirements for opening a new account? How do you chase debtors whose account exceed your terms?
Purchasing policies – Who in your company has the authority to spend its money for business purposes? What are their expenditure limits? This section must also state what paperwork is required for making a purchase, how many competitive prices should be obtained, and what records must be kept for all transactions.
Misconduct – How can you discipline an employee unless you’ve already made it clear what your expectations are for their behaviour? You can’t! There’s a legal minefield awaiting the employer who hasn’t made the company’s policy clear to all its employees. This policy must address issues of honesty (theft), issues of performance (persistent lateness), and sexual misconduct.
Occupational Health & Safety – It’s best to relate this section to the appropriate state and federal legislation that applies to your business. Employees need to be given clear guidelines as to what constitutes safe behaviour on the job, from where safety equipment must be used to lifting procedures related to their work.
Internet and emails – An increasing amount of time at work is being spent visiting websites and sending and receiving emails. When it’s all for business, fine, but if the websites or emails are inappropriate it can be very costly. Having firm policies in place helps prevent problems.
Stationery & forms guide – Every business has its own ‘look’, including styles for letters and other pieces of correspondence. These are part of company procedures and need to be summarized in the manual so that all team members have a reference source to follow.
There are many other subjects your manual should cover. Start with the most basic areas outlined above and add others that you determine are needed. Be aware that changes will be needed to keep your manual up to date.
Most company policy and procedures manuals simply state what to do in certain circumstances, but more often than not they don’t state a reason for having a policy in the first place, nor for having the particular policy they have.
A typical policy might be: “All incoming correspondence will be acknowledged within three working days” but won’t say why acknowledgement is required nor why the three-day limit has been set.
If the reasons for policies are given as accompanying elements to the statements of policy it will provide valuable information and prevent misunderstandings if later on the policy is questioned or examined.
With regard to the above policy, the rationale could be stated as: “This will prevent urgent matters from being delayed while a letter is written and sent.” A policy review might note that the majority of external correspondence is now received via email and acknowledgement can be made as a simple reply to an email received.
Regardless of the size of your business, the policy and procedures manual is an essential management tool. It is an expression of the owner’s wishes as to how that business should be run, and a source of advice on how things should be done. It tells everybody where they fit into the overall structure and who they go to for decisions.
Whatever time it takes to prepare your company’s manual is worth it. It should be required reading of all employees, particularly new ones, and regularly reviewed to ensure it stays up to date.
Quality management consultants

Choose a Supplier the Way You’re Chosen

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Choosing a supplier for the things you need to stay in business is an important process and one that should be approached methodically. If a supplier lets you down you may let your clients down and that can lead to really big problems.
The next time you have to find a source of goods or services for your business here are some questions you should ask about each candidate:
1. How dependable are they? Ask for references if you’re unfamiliar with the business and see how reliable they’ve been when meeting their obligations to other customers.
2. What’s their value proposition? This goes far beyond price because you’d expect to pay a premium price for premium service. In fact, don’t make it about price at all and go for the best package of every aspect of their offering.
3. Do they have a true service mentality? You want to be sure their focus is on you, the customer, and not on simply doing an adequate job so they can get paid.
4. Are they good at communicating with customers? There’s nothing worse than to be waiting for something you really need and not being able to find out where it is or when it’s arriving. Many businesses now enable customers to track shipments via the internet and this might be the best kind of supplier for you.
5. Will they be there next week, and next year? Look at their company’s history. How good have they been at paying their bills over the past three years? What financial shape are they in? Many good offers of price are made in hope and desperation.
6. What’s their ‘fit’ with your business? If you’re going to be just a little customer of a very big business there’s no prize for guessing that you’re not the most important person on the list if any problems occur. Sometimes dealing with the ‘big end of town’ can be a real problem for smaller enterprises.
Now that we’ve covered the questions you should ask, how do you go about drawing up a short list of candidates to ask them of?
Start by asking other businesspeople who require the same goods or service who they deal with and what they think of them. If you’re not asking about a specific supplier but instead surveying the market you’ll discover more possibilities.
It’s easy to do a quick check on the Internet to see who is active in your area, although it’s wise to investigate any claims made on a website. You might find some names to add to your list that you haven’t previously encountered.
Now prepare a written brief that states precisely what you want. The goods or services, how frequently you need them, and the volume you expect to require over the coming year. On your brief include any questions about quantity discounts or methods of delivery – everything that relates to the prospective supplier meeting your needs.
Don’t expect the whole process to be done by email or fax. Take the trouble to actually visit potential suppliers and discuss your requirements with a manager who can answer your questions. Get the ‘feel’ of the place and the people.
Assemble the responses you’ve received and make your evaluation based on everything you’ve learned – recommendations from other customers, their response to your written brief, and your own impressions of the business.
And don’t forget to personally inspect the goods or how the service is provided. Don’t just take someone’s word for it that everything’s as it’s claimed to be.
Look over this process and imagine somebody using it to check you out as a supplier to their business. It’s tough to come out on top of a results-driven selection process, but that’s just what you want of someone you’re depending on to keep you in business.
Business Strategy Consulting

What’s Your IP?

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IP is intellectual property, and a surprising number of small businesses have it but don’t really know what to do with it. More important, many smaller businesses that have IP don’t protect it, and that can mean it’s going to be taken away by a competitor and used against you.
Intellectual property is the result of your intellectual effort, inventions, research and development or creativity. IP can include everything from patents and trademarks to the way you conduct your business. You may have a special way of manufacturing a product or a method for selling your services. Whatever it is, if it’s yours you should find a way to keep it out of the hands of other firms unless they pay you for it.
Broadly speaking, anything that fits into the following categories is IP and needs some form of protection:
Patents – these protect inventions such as new or improved products and processes
Registered trademarks – these protect a graphic representation that distinguishes your goods and services from those of your competitors
Registered designs – these protect the shape or appearance of your goods but not their function
Copyrights – these protect artistic and literary works, computer programs and engineering drawings
‘IP rights’ (IPR’s) is a term that refers to a set of laws associated with providing exclusivity and ownership of innovations. These are the laws that apply to patents, registered trademarks, registered designs and copyrights, as well as other more specialized forms of IP protection.
IPR’s are legally enforceable rights, which provide ownership of a particular idea, product or service. IPR’s benefit the IP creator or the IP owner by restricting competitive market forces for a period of time. This can be seen as a reward for innovation – it provides the time and opportunity to decide how to exploit the IP creation.
IPR’s are the same as an asset that can be owned, sold, licensed or even bequeathed. Having the ability to assign or license those rights gives you maximum flexibility in exploiting the IP opportunities you have. It’s the basis for franchises as well as licensing agreements that permit a product developed in one country to be manufactured and sold in another.
Protect it or lose it
Unfortunately, if you don’t develop strategies to protect your IP you could be in danger of losing your exclusive rights to it. Even if you develop something that’s your own idea you still need to formally protect it before you can consider it yours and yours alone.
Let’s say you develop a new kind of paperclip that you’re sure will make you rich. You begin manufacturing it and marketing it but don’t bother to have it patented. A big company sees it and after finding out it isn’t protected by patenting the invention. What happens then?
Since it’s been patented by somebody else you have no rights to manufacture it. They can even sue you for patent infringement. Manufacturers in other countries can make it there and you have no redress. It doesn’t sound fair but that’s the way the system works.
What you might think of as a trade secret may be a patentable process. If someone else obtains a patent for it you might have to pay them just to keep doing something you’ve been doing for years. Of course, you might have the choice of either paying license fees or going to court, but patent litigation is horrifically expensive.
Each country has its own IP legislation
IP protection in each country is granted according to the laws and conventions of that country, so make sure you get advice from someone who knows your local rules and regulations.
Thankfully there are international agreements in place for patents and trademarks, which make it easier to seek protection of your IP in other countries, but you can’t take anything for granted; some countries are extremely poor in their enforcement of IPR’s for overseas companies.
To avoid the minefields and exploit the opportunities every business needs to identify and analyse the IP it has. This means conducting a thorough analysis of its business methods, its products, manufacturing and selling techniques and anything else that the business has developed since inception including software.
There are many ways to profit from your IP. You can sell it to another business or license other businesses to use it. But unless you protect it you could lose it.
Business Strategy Consulting

4 Ds That Can Destroy Your Business

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Heart attack, car accident, illness, a resignation, family dispute. Most of these are unanticipated, but by no means unusual or uncommon events, fall under ‘The 4Ds’ – Death, Divorce, Disability or Departure. The occurrence of any one of them can instantly throw a business into disarray.
Unpleasant though they are to consider, when one of them befalls the owner of a business that doesn’t have a plan in place for dealing with the fallout, then the result can be more than unpleasant – it can be catastrophic. Disorganisation, loss of business opportunities, loss of customer or market share and a decrease in employee morale and productivity are the least of the repercussions.
Family or partner discord, heirs left unprovided for and the demise of the business are real possibilities as well.
When Kenneth Wilson, the owner of Wilson Products Inc. died unexpectedly his three daughters found themselves in charge of his US$12 million aircraft parts business. While all three had grown up around the company they had never been trained to take on the management of the business and no other arrangements to cover a hiatus in personal management by their father had been arranged either. The business was completely vulnerable and, with the aerospace industry also going through rapid change, the business floundered. By 2005 it had to file for bankruptcy. With US$20 million in orders on the books for work through to 2010, the Wilson’s couldn’t find a buyer, and the company’s assets were auctioned.
Where management knowledge about how the business works is restricted to one person the death of that person leaves the business rudderless. Continuity of management can be maintained only if there has been a long term plan for training up family into their eventual managerial responsibilities or using a board of advisors that has had a long term association with the business and can steer it until more permanent arrangements are made.
Death can leave heirs financially unprotected. Will business partners pay the owner’s heirs the value of their interest in the business? Maybe. But not in the case of Terri Gettman. When her father died without any written plan outlining what was to happen to his minority stake in a paper making machinery manufacturing business, it was an opportunity for the other partners to cut the family out of the business without due recompense.
Rarely do you see divorce listed as a cause of business bankruptcy, but with nearly half of all marriages ending in divorce, in circumstances that frequently turn ugly, subsequent litigation has destroyed many privately held businesses. In the absence of any type of divorce planning, such as a buy-sell agreement, all assets may be legally required to be divided 50-50. To come up with the cash to pay their divorce settlement owners have had to sell their business. That may not be the worst part of the story. In a court enforced sale the owner may have to accept a discount price. In one case, with offers from two potential buyers to choose between, the owner was forced to accept the lower bid because it was for cash on the spot. The judge agreed with his ex-wife and her lawyer, who argued that it wasn’t fair for her to have to accept whatever financial risk might be attached to the higher bid because, unfortunately, it had provisions for an extended payout.
Disability and departure are equally problematic for the survival of a business that hasn’t developed a contingency plan to handle them. Partners can decide to leave for a number of reasons. They may decide to leave for another opportunity or simply to take life easier. But the same issues remain. Who is going to do the work? What is owed the leaving partner? Where is the money coming from? Both disability and departure can bring huge financial and emotional pressures in their train.
Planning for the 4Ds
Emotionally charged as it may be to contemplate the 4Ds, planning for them should be an integral part of overall business and personal financial planning for business owners.
The last thing you want to happen is to be forced to sell your business in a hurry because of unforeseen circumstances or to leave the business in a dire position when you die. Failing to consider unpleasant circumstances or to plan for dealing with their consequences is a sure way to put the future of the business and the welfare of the family stakeholders at risk. An estate plan, a buy-sell agreement, a succession plan, a pre-nuptial agreement can each feed into an overall transition plan that protects the business and its dependents in the eventuality of one of the 4Ds occurring to the owner.
The key to avoiding difficult situations arising from the 4Ds is to start succession planning as early as possible, revisiting the plans on a regular basis and dealing with ownership and management issues separately.
Marketing Consulting

Your Market May Not Be Where You Think It Is…..

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Wednesday, 22 July 2009 16:01 | Written by Wayne Moloney

Recently I was engaged by a Philippine based software development company, ToolTwist, to help them define a marketing strategy for a new website management application they had developed.
Their product is a software tool used by corporations to create sophisticated websites with Amazon-like functionality. While their product is truly exceptional in many ways, and has a strong customer following, they were trying to work out how to get more bang for their marketing buck.
The first step for the guys at ToolTwist was to clearly understand their potential market. You see, the solution this great application provided was not easily fitted into any specific vertical market, and looking at it horizontally made defining and targeting the best opportunities extremely difficult. Various other products, with larger marketing budgets, claim to provide similar benefits, so carving out a niche market is essential for Tooltwist.

Over a few days we “workshopped” ideas. We looked at why they had their initial success, what was it that the client REALLY bought, who made the decision and why. Ultimately it was determined that of the many benefits of their product, the one that was truly unique was not related to the technology, but to how it provided a better working environment between the marketing and IT staff AND delivered more potential sales to their customers.
The service provided a great solution to enable organisations to coordinate marketing and technical departments, forming a combined team to create and manage websites. Such an overlap in responsibility is traditionally a weak link in most organizations, but Tooltwist’s unique approach allows technical teams to concentrate on technical tasks, while marketing people have the freedom to create thousands of web pages, without any technical expertise. Put simply, website design is now in the hands of the people with the best understanding of what customers want.
So for ToolTwist, their primary competitive advantage was not just the ability to dramatically improve the efficiency with which their clients can make changes to their websites, but how the product can link responsibility and authority across departments and provide the right tools to the right people. This has proven a real winner when presenting the product to executive management of their now identified target market.
So, when looking for your competitive advantage, go beyond the obvious – it may not always be where you think it is.