Problem 1: Lack of processes and procedures

Due to the growth of the business, and the fact that the business owner had never run their own company before, they didn’t know what they didn’t know in terms of what needs to happy when it got to a certain size. They were at that critical stage where they’d gone from lifestyle business, to needing to be a ‘proper’ organisation. Additionally, various members of the team were dipping in to all jobs, as you do at that size, but there was no real lines of responsibility of process.

Solutions:

We went through each job that needed doing in the business, who was doing it, and who would be responsible for it. We created something called a RACI, which helps to structure the tasks in a company. From there, I tasked the team with writing up process flows and notes for each job they did. The idea is that anyone could come into the company and follow the process. The business owner was clear on the fact that they would want to sell down the line, so now was the time to start thinking about it and creating as much value in the business as possible.

Outcome

The business is mostly in a position now that would allow anyone to walk in and be able to do the job they’ve been employed to do.

Problem 2: Lack of cash flow management

Clients were all paying on invoice, but no one was managing the credit control or the cash flow and it would get a bit ‘squeaky bum’ at payroll time.

Solutions:

Firstly, I put in place direct debit mandates for all new clients, and as many old ones as I could. I then put in place credit control procedures for those who refused, and ensured we stuck to them on an ongoing basis.

I also built a cashflow forecasting file that is updated regularly, and ensures that cash stays where it should be, and that we spot any issues before they become a real problem.

Outcome

The business was quickly able to build up cash reserves of around £100k, which is saved for a rainy day because you never know what might happen, and clients mostly pay on time with very little overdue debt.

Problem 3: Lack of reporting

As is the problem in most companies, they had inadequate to no financial or otherwise reporting, so the business owner didn’t know how they were performing or what they could do to improve things.

Solutions:

I put in place a system for financial reporting, which shows the reports in a graphical and more visual format, to make things easier to understand for the owner.

From there, and with huge buy in from the business owner, we expanded this to include customer satisfaction, employee satisfaction, sales and pipeline reporting etc.

Outcome

Now the management team receive a pack every month in time for the board meeting with lots of data that we can review and act on.

Problem 4: Lack of support for the owner

Another issue in many businesses is that the owner doesn’t have anyone they can talk to about things on a day to day basis. Whether it’s just a second opinion, or they need to rant at someone who understands etc.

Essentially, business is a very lonely place.

Solutions:

Part of the reason I love what I do is that I provide this support to the owners. They can call just to have a chat, get a second opinion or discuss their day, and I will listen and provide feedback if that’s what’s needed.

Outcome

Myself and this client talk most days on the phone, and he often says how helpful it is to have this support.

Problem 5: As the business grew, the owner was too in the day to day

The business owner knew he wanted to sell down the line. When selling a company, it’s a process that should be considered years in advance if you want to get as much money as possible for it.

The staff, processes, structures etc are what increases the value, and a business that relies too much on the owner will be worth much less than one that doesn’t.

Additionally, as the owner, when you sell, you’re not going to want to go back in and watch someone else run your company with absolutely no say over how they do it. You will, however, be targeted on what they do and they will likely dock your payments if they don’t hit those targets.

Solutions:

Over the period of 18 months, we have slowly removed the owner from the day to day operations. This was done with a mix of things.

Firstly, recruiting into various roles that the client was still involved in, along with the processes and procedures being put in place.

Secondly, we put in place a plan for the operations director to step into the MD role when she was trained up and ready. This happened on 1st January 2024.

Outcome

The business owner spends minimal time in the business, and has said on multiple occasions that he’s bored and needs something else to work on. This is what we want in order to get the highest valuations possible when the time is right to sell!