Turnaround

All posts tagged Turnaround

SME's Going Under WCP2014

HELP! – I am out of cash & going down!

At which stage do you accept that without a cash injection your business is probably doomed? Looking at the ABS statistics they show that in any three year period around 42% of registered SME’s fail. So the answer is that we should look for and accept cash and or help a lot sooner!

It is very hard when investing the enormous time, energy and focus needed to start and build an SME, to then find the time (and to provide the mental distance needed), to properly analyse and re-assess your management and direction. Being naturally entrepreneurial, SME owners have a tendency to fight on, often to a very bitter end.

When I left the corporate world to start my first SME I got to the end of year one and realised I was emotionally drained, failing and down to my last eight weeks or so of cash. Everything I had was on the line and I had no answers.

Recognising that I was no longer thinking straight I bundled my worried wife and two noisy young children into the car and we headed off for a long (and very cheap) weekend by the beach. It was mid-winter and raining; you can imagine my despair.

Late in the afternoon of our second day I took a long walk along the beach, in the rain and asked myself three questions:-

  1. Is the business concept viable

  2. If its viable have you managed it well

  3. If you had sufficient resources available what would you do differently

My answers were 1) yes 2) fair 3) build a team to leverage revenues.

I returned to the shack motivated and excited for the first time in weeks and when back at work I went about raising the cash and partners needed. It was surprisingly easy and within a year we had a happy and booming business.

Lucky bastard! I hear you whisper. Not really. In a now long career in and around SME’s I have realised a few truths about human nature:-

  1. By and large people want to help you

  2. There are more investors looking to invest than there are good ideas

  3. If your business is a good idea and you are honest, fair and hardworking you will find funding

  4. Investors are usually older, experienced, have suffered and recovered from failure – they understand your position

  5. By understanding your position and taking positive action you earn respect from your stakeholders.

So when do you put up the red flag and shout for help?

Assuming your business concept is viable and you are offering a product or service your customers want then consider the following danger signs:-

  1. Your business is growing, you are profitable and yet you are always short of cash. This happens in growing companies as to service higher sales you need more stock, labour, materials etc and your debtors ledger expands as sales grow. This all eats cash.

  2. You have more potential customers than you can handle and you are falling behind on paperwork and starting to knock back new business. At this stage you need to employ and or outsource more resources but how do you do this when cash is so tight?

  3. You know you could win larger more lucrative contracts and strengthen your business if you had more people, plant and equipment.

  4. Your debtors are slow payers and it is impacting on your ability to meet your payments as and when they fall due.

  5. The bank offers you an overdraft but only if you provide the family home as security.

If you are experiencing any one of the above your business is at risk, if you are experiencing any two you are in trouble and should seek help quickly.

In our company we see so many businesses fail which are fundamentally sound and indeed held so much growth potential.

When we analyse them we invariable find a point beyond which they had insufficient cash to maintain the business. Corners start getting cut, staff numbers are reduced, marketing budgets cut, bills go unpaid, staff morale falls, the staff start leaving and eventually an administrator or other court appointed official is installed

Possibly as many as 90% of the failed businesses (assuming no underlying fraud etc.) we look at could have been saved had appropriate action been taken early enough.

So what should you do if you are at risk?

First of all have an open and frank discussion with your advisors including your accountant and lawyer. Walk them through your business plan and figures and explain your concerns and the amount of investment you think you need to achieve a turnaround. Not only will they offer advice but they may well know of potential investors.

Look on line for SME Turnaround Specialists – a good specialist company should have all of the in-house skills you need and access to numerous investors. You may be able to negotiate an hourly rate or a fee based upon their success or a combination of both. A preparedness to complete some or all of the work on a success fee tells you a lot about their level of confidence!

What will I have to give away to attract an investor? Less than you think. A savvy investor will want to see you remain motivated and happy so as to help build a return on investment. If you are both fair, reasonable and above all offer each other respect you should enjoy a profitable relationship which sees the business turnaround.

Once you have an investor on board start to build a team of business mentors. Many SME’s have an advisory board of a couple of specialists who meet as a regular board would and help you analyse and guide the business forward.

Neil Steggall

The Barking Mad Blog

SME Advice with Bite!

Article Shortlink:  http://wp.me/p401Wv-cb

www.wardourcapital.com

Logo Small wcp 2014

Marketing Redefined WCP 2013

Marketing Redefined

Think, Change, Grow, Prosper!

 

In the dark distant past when coffee came without froth and computers were kept in sealed rooms and operated by bespectacled men (sorry ladies its true) in white coats, I spent a few years climbing the corporate ladder which included a stop off in the Marketing Department of a major multi-national.

We saw marketing in aggressively military terms of war, battles, and campaigns, all fine-tuned through tactics, strategy and whiskey.

Statistics and information was gathered from the market and analysed, products were designed, costed, tested, refined, manufactured, advertised and sold, hopefully, at a profit.

Much thought and combative discussion was applied at each stage, key objectives were established, strategic marketing plans, short term tactics, placement attacks and budgets were drawn up and approved before being committed to endless reams of paper. Weekly meetings were held to gauge progress and we wrote up even more notes in pencil before dictating them to our “girl”, sorry PA, to be typed up.

Much time and efficiency was lost in the process and very few really great ideas came out of it.

When I attend marketing meetings today the mood is less combative and the whiskey has unfortunately disappeared  yet I fear just as much time and efficiency is being lost in the discussion of SEO’s, word place rankings, the placement of hash tags and how well the product will look on mobile devices. I leave the room bored and just a little concerned that no one is actually marketing the product.

Perhaps it’s time to redefine MARKETING.

“Marketing is too important to be left to the marketing department.”

– David Packard, co-founder, Hewlett-Packard

When you own the show you can make such bold statements! However, if we ask any ten business leaders today to define marketing we will probably get ten different answers. Marketing its function and its purpose appear to have entered a management grey zone.

I was fortunate some years ago to meet the father of modern management, Peter Drucker, on a number of occasions and his view was: “Because the purpose of business is to create a customer, the business enterprise has two – and only two – basic functions: marketing and innovation. Marketing is the distinguishing, unique function of the business.”

So, what is marketing and are we moving closer to a definition? The Silicon Valley venture capitalist and former Intel executive Bill Davidow said, harking back to warfare, “Marketing must invent complete products and drive them to commanding positions in defensible market segments.” The man should know. He wrote the seminal book on high-tech marketing.

Interestingly Davidow didn’t learn marketing at university as he studied electrical engineering. Steve Jobs, another brilliant marketer, dropped out of school. These guys and others like them demonstrate that great marketing skills can be developed.

So how do great marketers learn about marketing? I am convinced that great marketing skills are best learnt on the job. Doing the hard yards.

SME’s and Startup companies are great places to learn and develop marketing skills because they’re all about developing innovative products and getting customer traction – and not much else. Further they’re always strapped for cash and needing people to wear multiple hats.

Interestingly as an engineer by training I also learnt marketing on the job.

Its been a long and complex journey but here are THE SIX KEY LESSONS  I learnt along the way:

Marketing is Hard.

It has been said that “Marketing is like sex: Everyone thinks they’re good at it”. Well I’m not getting into that one but on observation there are more posers in marketing than most other fields, probably because the demand is so strong and the supply of real talent is so weak, and it’s easy to fake. When discussing a Telco acquisition with an American banker some years ago he started to tell me how the marketing model needed to change. When challenged he answered “Bankers like to think that they are marketing geniuses. We really do.” He said, this is because “we can fake it far more convincingly than in other areas …” It’s worrying but it’s out there, be warned.

Understand People.

It’s about determining what customers want, often before they know it themselves – look at Sushi-Sushi and how they got everyone eating raw fish. If you’ve got a knack for that sort of thing, trust it. Be your own focus group of one. And while it’s tempting to think of markets as amorphous virtual entities, remember that, even in the B2B world, every product is purchased by a human being in the real world.

Marketers don’t reinvent the wheel.

Some people are great inventors. They come up with wild concepts that nobody’s ever thought of. But great marketers tend to be innovators who turn inventions into things people can use. Marketing thrives on reusing ideas in new ways. Most modern Japanese industry was based on this premise. Steve Jobs didn’t invent he moulded inventions into products people wanted to use.

Marketing is too important to leave to the marketing department.

It really is! Marketing is the hub of the business wheel. It’s where product development, manufacturing, finance, communications, and sales all meet. Marketing’s stakeholders are every critical function in the company. Every member of the leadership team is an adjunct of the marketing department. SME or Giant Corporation it’s all the same.

Marketing Really Counts.

Contrary to today’s popular feel-good wisdom, in business, winning is everything. Every transaction has one buyer and one seller. If you do it right, buyer and seller both win. All the other would-be sellers lose. The real world is brutally competitive. Be different to win.

Great Marketing Ideas are Rare.

By executing the right communication strategy, great marketers can create a groundswell of customer excitement and viral demand for a company or product that nobody’s ever heard of. And it can be done on a shoestring budget. Steve Jobs was a master at maintaining secrecy and controlling exactly how and when anybody learned anything about Apple’s products. MacDonald’s are turning bad press about fast food into selling points through its new menus and PR.

The truth is that great marketers are few and far between. Which begs the question, who exactly are you trusting the most important aspect of your business to? Something for you to think about as you take your SME global.

Finally my definition of marketing is to “take something useful and turn it into something desirable”

 Neil Steggall

The Barking Mad Blog

SME Advice with Bite!

http://www.neilsteggall.org

Shortlink: http://wp.me/p401Wv-9O