There have been many recent reports in the media about different employers that are considering the option of downsizing their business in order to secure the long term viability of the business.

The process of downsizing a business normally focuses on the legal, economical and financial aspects of the business. It is bad enough to receive the news that a company is planning to downsize. Hence the business will have to go through a process of restructuring and change. It is a totally different ball game if you are the person that has to make most or all of the important decisions. Naturally the tough decisions about what to reduce, what to eliminate altogether and who to lay off are far from easy. Even so they are decisions that must be made.

The Process

The legal implications of downsizing are often difficult to work out, who should get what redundancy package and who or who does not have employment rights can be a minefield. The economic aspects of downsizing mean that some of the work that will be undertaken during the process falls within the remit of being management related tasks. Keeping your eye on the financial side of the business is an accounting task. Ultimately the bottom line resonates around what the business can or cannot afford financially. Needless to say it pays dividends to have a good set of financial records that can be referred to for guidance.

Who can help?

No doubt if you are the owner of the business then you may well find the whole process traumatising to say the least. It is difficult sometimes to separate the tasks in hand from the emotional side of the business. At times like this it pays enormously to have a good accountant to help and guide you through the process. Impartial advice, professional knowledge and moral support can go a long way towards - reducing some of the emotional and logistical barriers that may be encountered whilst going through the process. Additional support from a business planning adviser may help to prevent serious errors being made that may damage the sustainability of the business.

What are the alternatives?

One alternative to laying off staff may be to implement furloughs. Furloughs are mandatory time off work periods with no salary. Some employees may well prefer a period of time away from work with no salary – in the short term. Opposed to the long term effects of losing their jobs completely. This process is generally implemented by employers as a cost saving measure before thinking about the harder options of laying staff off. As with any other process there are advantages and disadvantages of using of furloughs. Other options may revolve around asking workers to either reduce their working hours or offer their labour on a voluntary basis for a fixed period of time.

Whatever you decide to do you will most certainly need a good strategy. You will need to find a strategy that will encompass good practice and give your business a new lease of life after downsizing.

Good luck.

It is amazing to learn that some businesses do not really understand where their core business comes from or how their sales are generated. In fact many business people even neglect or overlook the opportunity to introduce existing clients to new products or services. They always seem to be seeking that elusive ‘new and bigger contract’ that always seems to be evading them. The emphasis always seems to be on the new rather than on nurturing and growing the existing.

Generating new business and new revenue streams is an integral part of running a business. It does not always follow that securing your first sale will automatically lead to a rush of people beating their way to you because they have heard how good your services or products are. A key factor of generating new sales is to help your customers to view you as an expert in your particular field. It is easier and far less time consuming to gain a sale from an existing customer than it is to find a ‘virgin’ customer.

Knowing where your sales are generated and where they ‘fall over’ is important and vital information that all business owners should possess. Taking the time analyse where sales are generated on a monthly, weekly and daily basis can go a long way in helping you to understand your business. Creating a simple spreadsheet to assist you will make the task easier when compiling data. Rather than fishing for bigger clients randomly you will be able to focus your efforts and energies where they will be most effective and reap the highest rewards.

There will always be a tussle between ‘working in your business and working on it’. Any time spent gathering data about sales and analysing it is actually an investment into your business. Any information acquired can be used to leverage new sales. Having accurate and intelligent data can save your business from spending money on ineffective marketing. The point is that any time spent on gathering this data will pay for itself in the future.

Some things intelligent data can be used for are:-

• Setting sales targets.
• Deciding whether or not to hire a dedicated sales person responsible for securing additional sales.
• Plan the timing of when to order new supplies.
• Forecast sales.
• Reduce wastage.

If you are looking for an investment into your business – then there is a high probability that investors will want to see some information on sales forecasting. It is the norm now to run a business with the aid of intelligent data drawn from the business itself. If you are not sure how to approach the gathering of such information then the first port of call should be either your accountant or business adviser. Operating without such data is akin to arriving at an airport and buying a ticket – without having any idea of where you would like to go or where he plane is scheduled to fly to....

When a business is setup there are always a hundred and one things to be done. Often the business owner starts off with a list of aims and objectives for the business. This list can be anything from simply the desire to survive the first year to how many customers they would like to acquire after a specific period of time. After awhile it is not uncommon for theses aims and objectives to be either sidelined or forgotten. This is understandable as is not possible to focus on all aspects of business at all times. Additionally this also depends on the size of the business and the number of people working within them.

The purpose of this short aide memoire is to keep business foremost in the minds of business owners.

• An aim is where the business would like to be in the future. Often this is written as a statement of purpose, e.g. the desire to develop from a regional business to a national business.
• Whatever your business objectives are - they must be measurable. For instance this can be a sales target for annual sale e.g. achieving £100,000 for the year.
• A mission statement will set out the values and the vision of the business that enables customers and staff to understand the purpose of the business and why it exists.
• Business Objectives provide clearly defined targets of what is to be achieved. A strategy can then be formulated to achieve these targets. These enable the business to measure its progress towards achieving its aims and objectives.

The most effective business objectives meet the following criteria:

S – Specific – objectives are aimed at what the business does, e.g. a hotel might have an objective of filling 60% of its beds a night during October. Objectives should be specific to individual businesses.

M - Measurable – the business can apply a numerical value to the objective, e.g. £60,000 in sales in the next six months of trading.

A - Agreed by all those who are responsible for trying to achieve the objective.

R - Realistic – the objective should be challenging, but it should also be able to be achieved by using reasonable effort alongside available resources.

T- Time specific – they should have a time limit of when the objective should be achieved by, e.g. by the end of the year.

The overarching purpose of any business should be to make a profit in order maintain existence. It may be possible that some objectives may conflict with each other. There may also be issues about whether to reinvest profits in order to achieve long-term sustainability. That is the business may only break even in the short-term.

Being mindful of your business aims and objectives will help to ensure that your business stays on track and moving forward. Additionally they can act as an aid towards making decisions about where and how your business develops.

The primary objective of any business is to create a profit. Profits are often driven by the cycle of supply and demand. Thus consumer behaviour is intrinsically linked to the economy and will always have an influence on the economy. Having an ongoing pipeline of prospective customers is only one side of the profit equation. Being able to supply what consumer’s want, when they want it, and in the right quantities is the other side of balancing the equation. All sales and procurement are ultimately dependent on the cycle of supply and demand – this naturally includes the supply of money.

Money and disposable incomes
The supply of money not only affects your business but also the buying power of customers. Your business my not raise its prices but other external price rises may force your consumers to consider whether or not it is financially feasible to continue purchasing from you. In other words consumes may choose to purchase what they consider to be essential at the expense of your products or services.

Income and Employment
Another very important aspect of the economy that affects the running of any business, is levels of employment and levels of income. The per capita income and rates of employment will affect the rate of supply and demand. Consumers may simply choose what they require or need rather than what they desire.

Product satisfaction
After continuous and successive consumption of the same goods or services, the satisfaction that is experienced by consumers starts to naturally decline. This often translates into a short term or long term fall in sales. Some businesses prepare for the fall in sales by launching a new brand before the fall in product satisfaction occurs. Launching a new brand or service will help to ensure that the revenue of the business does not fall.

Income and Employment
Another very important aspect of the economy that affects the profits of any business, is the level of employment and the differing income levels. There may be little point in supplying high end or luxury goods or services during times of high unemployment. Ultimately this may also lead to businesses losing money as customers default on payments leaving many bills unaffordable and unpaid.

Generic Price Levels
Another very important aspect of the economy, which affects businesses is the general price levels of the commodities or utilities that they require to function. That is the costs of raw materials, the cost of production and the price of transport are some of the factors that determine a general price level. Hence choosing the right suppliers is a crucial aspect of making a profit.

Ever changing economic factors will affect any business, from simple Bank Holidays where staff may need to be paid even though they are not working to the closure of a business or a reduction in working hours will all affect the profitability of a business. These are some of the very reasons why economists are always analysing incidents and trends that affect the economy. Hence it pays to key an eye to the external threats that your business faces.

There is a vast amount of generic information available on running a business. There is also a lot of information covering the different aspects of running a business such as branding, accountancy and sales. There are numerous books available from different experts or successful people about growing or running a business. There is also a lot of information available via the internet. In addition there are numerous business support agencies that provide a variety of business support.

From a theoretical perspective it should be easy to grow your business. If only there was a magic formula that could be followed in regards to growing and developing a business. In an ideal world there would be an assortment of choices and all a business owner would need to do is to choose the model that best suits their business.

Deciding when, how and where to grow and develop your business is never an easy task. There are many ways to expand a business; however, it is a prerequisite to have good business intelligence before key decisions are made. Fluctuating circumstances and the lack of control within a business does not provide a good platform from which to grow a business. Attempting to grow a business in unstable conditions could result in your business being adversely affected.

Tried and tested ways of growing include:-

• Increase Services & Products
  There are often opportunities to introduce additional services; hence the opportunity to create a niche market may be available. It is not unusual for customers to tell you about the products or services that they are finding it hard to obtain. Listening to your customers may bring some pleasant surprises. Also if your business is not online – then get online. You will however, need to be mindful that being online is not a quick fix solution. 

• Buy an Existing Business or Opening a New Store
  Depending on what your cash flow is like or how much risk you are willing to take, purchasing existing businesses or opening new stores can be a fast track to increase growth. However there is a need to be mindful that too much growth can sometimes be just as stressful as a lack of growth.

• Look for New Types of Customers
  It may also be possible that your target market is too small. Having a niche market can be an advantage. However looking for ways of reaching out to a more diverse customer base could add pounds to your cash flow. If for example your products only cater to just women, adding products for men may be the easiest way of expanding. Likewise if your products or services are mostly aimed at young people then it may be wise to look for opportunities to reach elderly customers.
  
  Catering to a niche market could also be an avenue towards success.

A key component to successfully growing your business relates to being able to make the right decision at the right time.

Remember, Holden Associates are not only accountants, we are also business consultants, and can often bring a fresh and different approach to your business with an eye on success at all times.

There is no doubt that all businesses now operate in a global market place and there is no avoiding it. Recent events in the USA have served to highlight how connected and interconnected we really are. Developments in transport and communication now make it possible to conduct business on more than one continent as well as maintaining a presence in the United Kingdom.

The development of technology has enabled and facilitates the global market place. In essence technology has aided the development of alliances and partnerships throughout the world. In reality there is no reason why someone half the way around the world should not be interested in your services or products. Whilst it is understandable that many SMEs face numerous barriers and obstacles in their home markets, they should not limit their thinking and development by dismissing the opportunities presented by global markets.

Advantages

Transcending global barriers offers the opportunity for businesses to benefit ethically from inexpensive workforces and cheap raw materials. Having more global options allows SMEs increased flexibility in the market. This in turn translates into increased growth potential. Using global resources to grow a company by reducing cost and turnover is a tried and tested method. There is no reason why SMEs cannot utilise this method to increase their profitability.

Disadvantages

One of the more prolific disadvantages to having a shared global economy relates to the transportation of resources and the impact on the environment. Reliance on internationally sourced products highlights the requirement for adherence to environmental policies that benefit the environment. Increasingly all businesses will need an environmental policy whether they trade internationally or not.

Innovation

Globalisation has created increased capacity for innovation. As such it has become a necessity for all businesses to keep one eye on globalisation. Each day a wealth of business prospects materialise. Your competitor is no longer restricted to local or national businesses. Innovation, entrepreneurialism and determination are just a few of the skills which will be required for a global market.

Big sporting events such as the World Cup of the Olympics bring with them a wealth of opportunities as well as an abundance of competition. No matter where in the world events are held they will require some core services.

Where to next

There is no reason why a small business cannot team up with a larger business to provide services to a larger company. The supply chain has in some ways become more flexible. The next time you are looking for new business why not consider expanding outside of the United Kingdom. The grass may well be greener on the other side of the fence.

There are many people who have a speculative business idea floating around their head that they believe could make them a ‘shed load’ of money. Whilst they may have a fantastic idea they are seldom able to answer simple questions relating to their idea.

One of the most simple questions to be answered is......why would someone want to buy from you or to do business with you? In short the question is asking you what your unique selling point (USP) is? This is one of the first questions that an investor or bank manager will be guaranteed to ask.

Why You?

The cornerstone of your business will always be the factor that sets - you apart from your competitors. There will always be new and existing competition in business. Inevitably the businesses that do well are the ones that are able to carve out a niche and demonstrate what makes them different from everyone else. The chances are if a consumer has to think about what makes your business different for too long they may not buy from you.

Use of the internet has now given consumers access to wide a variety of businesses that are in a vast range of locations both geographically and globally. On the plus side it means there may well be someone or a business close to your location looking for whatever it is your offering. Understanding your USP and being able to demonstrate it will enable you to compete locally to start off with.

Thinking about a USP

Making money in business will nine times out of ten involve solving a problem. Whether it is the problem of what to cook for a dinner party, finding a pair of shoes that is appropriate for a special occasion or someone to repair a broken computer. Whenever consumers walk into a shop, use the internet to shop or seek a recommendation there is always a problem that they are seeking to solve. The size of the problem and urgency of the problem will always vary. If your USP can address a specific area of need than you are half way towards securing a sale.

The bottom line is simple.....consumers need to be able to see what it is you are going to do for them. If you do not offer consumers something that they want, whether it is the pleasure of a good meal or to repair a broken window you will find it difficult to make a ‘shed load’ of money. A good USP will either offer the chance to experience great pleasure or the chance to escape some great pain.

Answering the $64,000 dollar question

Keeping your USP simple will serve the dual purpose of helping investors to understand what it is your business does and what it is offering. It will also help potential consumers to make a path towards your business. Knowing what your USP is will also help you to spend money wisely in a way that can help your business to grow and develop.

Question: What do all the Dragons on Dragons Den have in common?

Answer: They have multiple streams of income.

Yes they also have a lot of money! A key commonality is that they all earn money from a diverse source of businesses or income streams. Deciding what to do with the profits of a business is a decision that every successful business must make at some point. There are often decisions about whether or not to spend it personally, to reinvest it in the business or to invest it in another business.

A common characteristic of many successful entrepreneurs is their ability to create a develop multiple income streams. Whether it is a new arm of your existing business or an investment in a completely different business. Using your expertise to create a passive income that can add pounds to your bank account is a good method of increasing wealth.

Fortunately, it is now so much easier to earn an additional income passively. There are avenues such as the licensing of a product, franchising or even selling someone else's products or services through an affiliated marketing deal. All these avenues will still utilise your expertise. However, what they also give you is the ability to create an income stream without investing enormous amounts of energy and hard work. In other words, you can earn an income ‘whilst sleeping’.

For example one way of adding a passive income to your own business is to use automated systems where possible. That is systems that can keep your business running without you. The idea is to reduce the day to day tasks that require lots of energy and inhibit your ability to do other things. Having additional time will give you the opportunity to innovate and create new avenues of business. Whether you are delegating or using automated systems the end result will be an increase in your time.

Can you imagine having a number of people creating an income for you whilst they are earning a living for themselves? It is a simple concept that many successful businesses uses. Making use off the expertise of others is not a new way of creating an additional income. There are no rules in business that say that you need to do it all yourself.

An essential part of success in business is hiring the right people to assist in the growth and development of your business. Making a profit is one thing, turning that profit into increased growth and another source of income is another. Enlisting the support of business advisers or your accountant to create wealth is not such a bad idea. Investing in intellectual capital to assist the development of your business is something that should always be considered. If you are not sure where to start, then start by seeking referrals from other businesses. Reinvesting your profits to create another income is not something that should be left to chance.

At the time of writing there are less than 900 days to the start of the 2012 Olympics. The 2012 Olympics brings with it numerous opportunities to become a supplier to one of the larger companies that have successfully tendered for large contracts from the Olympic Delivery Authority.

Being part of the 2012 supply chain could not only improve your business financially but create a valuable network of business contacts for the future. With less than 900 days until the launch of the Olympics there is ample time ensure that your business becomes ‘fit to supply.’

Decisions on who to purchase from are based on whether or not a prospective contractor can or cannot meet the specifications of the contract. To phase it simply decisions on who to purchase from are based on:

• Ability to demonstrate that services and products can be delivered to a high standard.
• Quality standards are continually being met.
• A competent and appropriately trained workforce.

Competence to deliver for the 2012 Olympics will inevitably demonstrate to a wide variety of organisations that your business has sound management systems and standards in place. Increasingly local authorities, central government and larger organisations have begun to adopt a common set of procurement procedures.

Getting your business in order may seem like a laborious task. It is often one of those things that you put on your ‘to do list’ but you never ever action or revisit. Just think if you choose not to revisit the task of getting your business ‘fit to supply’ what would be the cost to your business in the short, medium and long term?

Whether or not you choose to tender for an Olympic contract or not it does make sense to demonstrate that your business has good management processes and procedures. It makes good sense to maximise the potential of your business and increase your chances of securing new business.

Firstly you will need to take a long hard look at your business and decide how much of your business is on paper and how much is confined to your head? The chances are you will be surprised at how much is actually committed to your head and how much more you actually do. The purpose of the exercise is to create a starting point for implementing processes and procedures if your business does not have them.

Secondly you will need to set about filling in any gaps in your business. Whether it is the absence of policies and procedures, or information on how you choose and vet your own chain of suppliers or the absence of financial data. Slowly but surely you are bound to notice that your business looks better on paper. Filing in the gaps should not be too difficult as there is a wealth and support available to help you manage your business.

One of the things we have consistently noticed at Holden Associates is that the businesses that take the time to implement management processes and policies often do significantly better than the businesses that operate on an ad-hoc basis.

Growing a business takes commitment, hard work and possibly an element of risk. In many cases it will require a change in mindset. That is to start working ‘on’ the business and not 'in' the business. This does not mean relinquishing control. In essence it means setting up policies, procedures and internal steps that will facilitate the effective management of your business.

There are many avenues from which to grow a business depending on the model and structure of your business. Regardless of the option that you choose, managing the process will require careful planning and application.

Seek Advice

There are a number of sources of business support that offer guidance and information to business owners seeking to grow their business. It may also be worthwhile speaking to other business owners that have been through similar circumstances. Depending on your individual circumstances you may also want to consider the support of your accountant or the use of business consultants.

Complete a market analysis

Before offering a new product or service, expanding to new geographical areas or buying a new business, you should conduct thorough research into the market (or markets) to gain an understanding of the potential opportunities and threats.

If your expansion option includes the development of a new product, it will be invaluable to understand the standards set within the market.

Create a marketing plan and strategy

Ideally your marketing strategy should be based on your business goals. This may also provide you with a basis from which to measure the success of your marketing plan. Being able to define the key attributes of your products will lead to being able to attract the customers you are targeting and the distribution channels that could be used to take your product to market.

Know your competitors

Specialist product knowledge is essential. In reality this means knowing your competitors and understanding their strengths and weaknesses. Being familiar with the advantages and disadvantages of the market you wish to enter, will help you to compete in a new market and understand why your products or services will be comparable or superior to those already available.

Set goals and objectives

Define your short term and long term goals. That is what you would like to achieve in year one and your long term goals in years three to five. Intermittently you should consider reviewing you goals regularly to track your progress towards your long term objectives.

Protect your intellectual property (IP)

Last but not least it is very important to protect your IP. You may own a patent, copyright design or trademark however, this does not mean your intellectual property rights are automatically protected overseas. Your protection will depend on the laws of the local market and the treaties of the countries you are trading in.