One of the first things I do with clients who are seeking funding is chat through their business idea and ensure it is viable, sustainable and scalable. If a business has too many barriers to entry, is not going to appeal to a wide enough audience or doesn’t have any chance of growth, the chances are that investors will be wary.
With that in mind, and to help you conduct something similar on any business ideas you might be considering, I thought I’d share an example using a popular business I think most of you will be aware of.
Christmas Services Ltd t/a Father Christmas, Santa Claus, Saint Nick
Clear and simple with an attractive colour palette. Although the name varies slightly when used globally, it does seem to translate to roughly the same value set:
- Family friendly
- Celebrates good
The authenticity of the brand needs some consideration. Because of the strong links with the biggest dishonest collusion any adult will ever enter into, this may be called into question.
Action: Gather and submit evidence which proves this is, in fact, a white lie (which we all know are ok).
- Presents for good children
- Lumps of coal for naughty children
- Goodwill to all men
Consider the definition of ‘good’ and ‘naughty’ including examples of what bad behaviour results in the delivery of coal. Customer satisfaction reports seem to imply that most clients recover their behaviour sufficiently to receive presents.
Action: Is the production and provision of coal still a valid part of the enterprise? If so, should the presentation be tailored for a modern generation?
Action: Update service descriptions to reflect modern society – “goodwill to all” is more diverse and inclusive.
The main consideration is the extremely seasonal nature of the business.
Operating ‘but once a year’ may be considered high risk by investors. However, due to manufacturing and workforce constraints it is not clear whether the operation could be scaled while maintaining standards.
Potentially, this is only an extreme example of the bias that many retail businesses have towards seasonal trading.
Action: consider whether service could be scaled to any other occasion annually. (NB: set up negotiations with key competitors; Easter Bunny, all witches, skeletons and ghouls, tooth fairy)
The workforce is seen as extremely loyal and effective at producing the required type of artisan goods that link with the brand. However, diversity is virtually non-existent, with almost the entire workforce being of a single nationality/culture. However, the mass employment of the vertically challenged has been seen to be of advantage to the local population as a whole and certainly assists in bringing in goodwill.
Action: consider recruitment campaign to attract a more diverse workforce. (NB: assess impact of this on elf and safety given size constraints of machinery and factory)
The requirement for 9 months of the year being used to prepare for 3 months’ worth of manufacturing and delivery is unusual. Consideration must be given to whether the workforce remains efficient.
Action: assess workforce capabilities with time and motion study. (NB: Particular reference to CEO who appears to be on holiday for those 9 months).
Finally, consider the overall wellbeing of the workforce, who reportedly work long hours at times. Night shifts should be properly staffed to ensure regular breaks are being taken and adequate facilities are provided for inclement working conditions. Anyone showing signs of illness (red nose, overly hot, red cheeks, or overweight bellies that shake like jelly) should be given a company medical.
The Supply Chain
The original brand USP was for artisanal products. However, in recent years, there has been increasing outsourcing leading to a dilution of the brand values and a prevalence of non-environmentally friendly materials being used.
Attention should be paid to the importance of the brand values and goodwill (of all men) towards the original business plan. Should the outsourced manufacturing be brought back in house?
How has the sugar tax affected profit margins? Have suppliers passed this cost on or absorbed it?
Action: conduct supply chain audit to identify contractors whose brand values do not match that of the organisation; rerun competitions for all contracts.
Distribution & logistics
The use of a non-fossil fuel delivery system is well established and appears to be working well. It might be of use to carry out a survey or surveys to establish whether the production of greenhouse gases (e.g. methane and carbon dioxide) might be seen as a negative and to establish the viability of sustainable alternatives, especially for the lead tractor animal who has his own branding with a red nose.
Are the towing animals at risk of extinction? What facilities are there to ensure regular fleet replacements? Is the red nose a common characteristic or deemed to be some sort of rare throwback gene?
The recent global pandemic has caused some issues for the survival of the business. The brand story has been tested and messaging needs to be clear to all clients: if 2020 doesn’t stop us, then nothing will (particularly because ‘magic’ seems to be the main rebuttal to any question concerning disruption of supply).
However, modern technology is yet to catch up with the iconic delivery system utilised by the business and this is a positive aspect to be included in any sale calculations.
Currently, options for exit are:
- Franchise and assume managerial/brand guardian role (beware quality control of franchisees, many less-than-convincing substitutes have been seen – beards on elastic, cheap wellies, rubbish plastic presents)
- Sale as going concern (consider location of new owner and possible impact on workforce, brand story and general authenticity – Superman will get cold in just tights, Iceman thought to lack empathy)
- Merger/acquisition (difficult to identify sufficiently similar organisation, but possible contenders are:
- Multinational drinks company with really nice lorry but likely not to embody brand values or extremely competitive pricing strategy
- Other cloaked heroes all of whom do seem to have their own battles ongoing, therefore present risk of lack of focus or departure from core business
- Tooth fairy, although concerns on size match mean this business might not be viable option – currently SME with little ability to grow.
So, what do you think? Would you invest?
Wishing all my clients, colleagues, collaborators and followers a very happy Christmas.
It’s the topic on everyone’s lips at the moment but, as the saying goes, ‘this too shall pass’ and eventually we will need to start thinking about life after covid. This three-part blog series looks at moving on from crises and why businesses need to acknowledge what’s happened and learn the right lessons.
McKinsey & Co have been publishing a fascinating ongoing blog on the impact of Covid-19; one instalment of which explores the somewhat unexpected performance of the stock market in recent months. Despite crisis, uncertainty and deep recession, the markets are reaching new highs. Why? Firstly, because investors tend to take a long-term view of things and even the resilience of this pandemic is only a blot on the landscape of the average investment period; secondly because the markets are dominated by five major tech companies who, understandably, aren’t really affected by the change on working practices; and thirdly because for every plus there is a minus and impact across the various business sectors has varied wildly. For every disaster, say the events industry, there has been a success, say those manufacturing PPE. The market is a reflection of the whole and so its aggregate value remains resilient.
The report, however, made me think that there is an important lesson in positivity for us to take away. Despite pain and sadness, 2020 will leave another legacy. An understanding that there’s more than one way to do business. A feeling that we’re perhaps more resilient than we gave ourselves credit for.
So, what did we learn and what can we take away for the future?
- We can pivot. It’s become one of a few hideously overused words but that can’t detract from the fact that we experienced an incredible agility in our business world. Manufacturers suddenly started making ventilators or manufacturing PPE. We found out we could meet online instead of in person. Small, medium and large businesses found a way to adapt.
- You’ve (probably) got deeper business relationships. Being ‘in it together’ has a unifying impact and many businesses are likely to experience increased loyalty from clients and employees alike. I said in my last blog on this topic that the way we show up in a crisis underlines our future reputation and this is never more true than when it comes to our people.
- You’ve got a story to tell. Your brand identity will be enriched and authenticity enhanced by letting people know what you did to survive. Many businesses didn’t just survive, they contributed to their community, helped in the national effort to save lives and supported their peers without question. Marketing aside, this is a story of community and we need a little more of that in our business lives.
- Survive this, survive anything. Or so the saying goes: complacency has no place here but you have now stress tested your crisis plans, pushed your business to the extent of its comfort zone and survived. That’s something to celebrate and also to learn from. Disaster and business interruption planning is important but probably overlooked unless you’re a giant corporate. That’s likely to change and our agility can only improve as a result.
- The importance of connection. Whether it’s working in a remote team or keeping your customers up to date with what you can and can’t do, we’ve all learned the lesson that communication matters. Your messaging could easily have been the difference between adapt or die for your business and there’s no reason to change your approach now. Keeping people informed, continuing to be front-of-mind with your audience is great for business at any time and hopefully this will be a new habit we intend to continue with.
As the reality of the financial burden of COVID dawns, there will no doubt be yet another round of cost-cutting in the business world. It has become a well-worn path – recruit and increase manpower when times are good; restructure and reduce overheads when trouble hits.
However, there is a school of thought that COVID has merely been the magnifying glass which exposed a culture of overstaffing which has been building for years. According to an article run by The Telegraph during lockdown, both the public and private sector have become addicted to overmanning, with armies of people employed in spuriously-named positions who seem to have very little on their to-do list.
However, the recovery following COVID will likely need to dig deeper than simply getting rid of excess manpower. Cuts will need to be deep and a focus will need to be given to prioritising core activities within organisations.
The outsourcing opportunity
Luckily, the other side of the crisis coin means many businesses have pivoted to offer remote services, thus potentially offering resourcing flexibility without the commitment and cost that comes with employees.
Outsourcing is nothing new. It first became a cost-saving strategy in the late 1980s and, more recently, a plethora of online platforms have emerged; Fiverr, PeoplePerHour and Outsourcely to name a few; which claim to make engaging with freelancers even quicker and simpler.
With furlough having the potential to turn into a giant time-and-motion study for the future, the future of outsourcing looks good but, as with anything you don’t deliver in house, quality can be a key concern.
Many businesses prefer to work with known and trusted consultants who will take the same care of their business as they would themselves; something that isn’t guaranteed by the digital ‘freelance farms’ mentioned earlier. In some cases, it’s impossible to know exactly who will carry out the work you send, not to mention what quality will be returned. Such bidding sites are based on a ‘cheap and cheerful’ model and, as many businesspeople know, you get what you pay for.
So, what’s the alternative?
Enter the Ecosystem
Another concept that has grown in popularity during the abnormal times of 2020, is that of a business ecosystem. Again, it’s nothing new, but the attraction of being a part of one has perhaps become more evident as smaller firms look to support one another in order to survive and, eventually, thrive. Because firms within an ecosystem work together on a regular basis, there is a trusted relationship and quality can be assured because everyone’s reputation is on the line if it is not delivered.
Streamlion has long adopted the approach of building an ecosystem within which we operate. Our natural ability to network and build relationships with clients and suppliers alike means we have a powerful list of partner and associate affiliations which enable us to offer our clients a wider range of services, whilst still ensuring the quality and satisfying experience they would get by working directly with us.
Happily, this approach enables us to continue supporting smaller businesses after arranging their funding and giving them the chance to thrive during any economic climate. Of course, it’s always sad when people are made redundant but, following a decade of growth and easy money, businesses are carrying additional costs which are not sustainable. Moving back to an outsourcing model could actually be better for the economy in the medium term, especially with our new-found flexibility and ability to run operations with less infrastructure and overhead costs than ever before.
Smaller, remote teams or individuals can be nimble when responding to the needs of their clients, thus turning work around faster and ensuring quality that comes from using an expert in their field.
At Streamlion, we pride ourselves in collaborating for success. Check out a recent case study from our website for more information on how this works.
“Ask for what you want and be prepared to get it!”
I feature this powerful quote from Maya Angelou on the home page of my new website because it encapsulates the approach I take when I’m speaking to business owners or entrepreneurs wanting their latest idea to come to fruition.
I also like it because it’s true – if we are willing to work hard enough, and build relationships with a great network of people, we can make pretty much any dream a reality.
So, what is the secret to achieving your goals when it comes to business? I help all sorts of people from successful small business owners who want to scale their operations, to entrepreneurs needing angel investments for their embryonic business idea. There are a few things which hold true whatever the situation and whatever the customer.
I call them my “4 tips to make your business ROAR”
Tip #1 – R is for Resources
When you embark on a business startup, success becomes all about what you have at your fingertips. Money is likely to be tight, even if you have funding, and time is of the essence so having resources to hand is essential to getting yourself up and running as quickly and efficiently as possible.
Resources could be anything from people you know to lessons you have previously learned from. They could be educational, training programmes you need to fill any gaps in your knowledge, or physical such as buildings, materials and tools to start work with.
Resources aren’t just relevant at the start of your business journey, of course. They’re something that needs planning right the way through the lifecycle of your work. From knowing the right time to upskill or recruit additional people, to having the capacity in terms of space and/or materials to deal with the success of your marketing.
Tip #2 – O is for Optimisation
I’m talking about efficiency and accuracy. The quicker you can nail your business processes, ideally automating as many of them as possible, the quicker you will be in a position to make money. That’s because the admin doesn’t just drag us down, if it’s not addressed, it can actually drag us under. Paperwork: insurance, accounts, invoicing, contracts – if we don’t get these things right we are welcoming risk into our business.
Many start-up businesses fail to survive beyond their first 5 years and this is likely because while lots of energy went into the idea, the brand design, the launch and the business development, nobody really thought about the steady-state. What needed to happen once the orders were rolling in on a regular basis? Did the systems exist to keep on track? What aftercare or customer experience work has been done? How do we keep people loyal to our brand?
Tip #3 – A is for Access
Often, ideas – even brilliant ones – never get off the ground because those that come up with them simply haven’t got access to the right people. This is when your network comes into its own. I’ve spent years building a network of people with the right skills to help businesses get off the ground. In part, this consists of subject matter experts, marketers, branding experts, financial planners and more. It also consists of a strong network of investors.
Finding someone willing to put their money where your mouth is can be tricky if you don’t have the right contacts. Often, these angel investors will only consider business owners who come with a personal recommendation. It makes absolute sense to tap into the right network even if it’s not your own – doing so is a surefire way to ensure a sound investment, with a strong business footing and boundaries which help everyone measure progress.
Tip #4 – R is for Review (and refocus)
As a business evolves, it’s easy (especially for those of us who are over-excited entrepreneurs) to get distracted and start tweaking the business to cater for every enquiry. This can lead to a business that isn’t scalable, has no consistency in its offering and ultimately confuses its prospective client base.
It’s important to pay attention to that business plan you spent so long compiling. Stick to your aims, follow your goals and, if you do veer off centre, don’t be afraid to refocus.
An important element of any business is the ability to scale what you offer. Having bespoke processes and offerings for every client isn’t going to give you that option and you’ll then be very unlikely to meet your growth targets, not to mention killing any chance of ever getting your money back out of the business. Of course, there will be times when you need to change tack but this should happen as part of a conscious change program, carefully managed and implemented to ensure the necessary improvements are realised.
As a business consultancy that offers business advice, strategy, funding and planning services to start-ups and scale-ups, Streamlion Consulting has helped hundreds of entrepreneurs get their business journey right and realise their dreams.
A one-stop-shop for helping businesses to roar, Streamlion can help with everything from accessing funding and angel investments through to building, and exiting, a successful and sustainable business.
Find out more at www.streamlionconsulting.com
So, you’ve successfully entered the world of start-ups and found the adrenaline buzz of owning your own business to be addictive. Most entrepreneurs love the thrill of seeing an idea launch, which often leads to them moving on to new ideas in a fairly short timeframe.
However, to successfully remove yourself from a business and continue with the heady path to portfolio status, you need to know how to scale your existing business so it can continue to fund your future adventures in business.
Scaling a business is about more than just growing your sales and employing more people. To successfully scale, your business needs to be based on the right foundations which ensure it is equipped to deal with a continued higher volume of transactions. It will undoubtedly involve further investment and a good amount of time invested in strategizing for future success.
At Streamlion, we work with clients at all stages of building and scaling businesses so we thought it would be useful to capture our top 5 tips on how to scale your business successfully.
Top Tip #1: Start at the beginning
It’s all too easy for excitable entrepreneurs to leap over the initial stages of scaling a business and move straight to the increase in marketing or selling. Before that, it’s essential to ensure your business is equipped to handle this extra throughput. Not doing so could result in disappointed customers which, in turn, could seriously damage your reputation and put paid to any future plans for growth. Premature scaling is cited as one of the leading causes of startup failure.
The beginning is planning. Scaling a business is not the same as growing it. Scaling involves innovating your business model as well as your product or service. You need to invest time in working out potential new markets, back-office automation and funding.
Top Tip #2: The price of growth
Scaling a business effectively is never cheap. In fact, one of the most common reasons that startups fail to scale is down to funding. And funding a scale-up is an entirely different prospect to funding a startup so it’s essential to work with experts who can help with creating a sustained growth plan as well as helping you understand the transformations that need to happen to set the business up for a successful future.
Like scaling, finding funding is down to putting in the right preparation and demonstrating that your business is ready for change and growth.
Top Tip #3: Optimisation is key to transformation
To quote Einstein “If I had one hour to save the world, I would spend 55 minutes defining the problem and only five minutes finding the solution.” Scaling a business needs the same approach; success is all about understanding how things work and how they need improving to cope with a larger volume.
Achieving automation and integration, which are the likely outcomes of optimisation, will likely involve technology. The happy fact is, there’s no shortage of packages, apps and products that can help make things easier. However, finding the right one for your business is critical.
CRMs, automated marketing, accounting and your overall IT network all need to come under the microscope at this stage.
Top Tip #4: A change of pace
Your business goals might be clearer but it’s a well-documented fact that change management needs careful handling.
As well as any team members involved, it’s well worth getting under the skin of your customer experience journey. Plotting out every touchpoint between you and your clients will help to identify any areas that might need attention prior to scaling. We use Customer Journey Maps to help our clients to see any areas of friction which might cause problems when scaled. Additionally, you can identify areas for investment, which could be wrapped up with the other areas that need funding in order to create the very best version of your business.
Top Tip #5: It’s not all about you
Creating a business is a little like having a baby, you bring it into being, nurture and help it to grow and, inevitably, you eventually leave it to stand on its own two feet. This time is now.
For a business to scale, it needs to be able to operate consistently based on the policies and processes you’ve spent so long on assessing and improving. You have options as to whether you outsource some of the regular activities, or whether you hire a team to run things for you. Either way, taking a step back for the first time can be daunting.
The key thing to remember is that you’ve invested time in getting things right, so your business is ready for this, even if you aren’t. It’s also really important to hire the right people – people you know share your values and will continue to inject enthusiasm and innovation into the business.
Finally, as with most things in business, successful scaling is also a mindset. By working with a strong team of advisers and having faith in your own ideas, scalability becomes infinitely easier.
At Streamlion, we’re well known for getting business owners started and business ideas up and running.
But, did you know, it’s just as important to give some thought to how you leave your business when the time is right?
An exit strategy is a plan for how you will end your involvement in your business. The business will continue, perhaps with new ownership. You may go on to start something new or you may be retiring. Whatever your reason for wanting to exit, it’s important you get a good return on your investment of time and hard work over the years.
Exiting your business – where (and when) to start
The first and most important consideration is to leave your business in the very best shape. That means good turnover and profits, yes, but it also means your admin needs to be up to scrutiny. Processes need to be documented, your books must be up to date and accurate, and so on. As you can imagine, some of these things take time to put in place so it’s never too early to start planning.
Apart from increasing the likelihood of your business lasting long enough for you to need an exit plan, putting in this planning and preparation will almost certainly get you a better price when you come to sell it.
The Main Ways to Exit a Business
For an entrepreneur or small business owner, there are several ways you could consider as your exit plan:
- Merger & Acquisition – you might join forces with a similar business to create a larger or more wide-ranging business and then make yourself redundant as a result, or, you might look to be acquired by a larger organisation who operates in the same space as you.
- Initial Public Offering (IPO) – this method looks to bring in shareholders who buy up your shares and effectively repay you and any other investors. However, this get-rich-quick scheme of old is less lucrative these days and no longer the preferred approach.
- Sell to an individual – this is different from a merger or acquisition because there’s no other entity in the deal, you’re simply handing over the reins for an agreed sum of money. Your ideal buyer would be someone who can take the business to the next level.
The method you choose will depend upon the type of business you have and the outcome you want from exiting. There are, of course, a myriad of other options, such as selling to your management team, passing the business on to family or simply shutting up shop and liquidating. It’s important to get good advice and consider every option carefully before committing to a plan.
Exit Strategies – Keeping It Real
We’d all love to be the next ‘Innocent Drinks-becomes-Coca-Cola’ type of success story but, in the real world, exit deals are often more modest. The most important thing, as a business owner, is to decide what you want from your exit and then engineer the best opportunity to achieve it.
Making sure your business is as automated as it can be is important, not just because it can drive a higher sale price. According to growthbusiness.co.uk, a massive 83% of entrepreneurs end up staying involved with the business they chose to exit. Now, in some cases, this will be part of the plan, as entrepreneurs reportedly continue in advisory or shareholder roles.
However, it’s clear that entrepreneurs still love the ‘art of the start’ as an incredible £108bn was made in sales during the 5 years to 2019 and, according to FreshBooks, 61% of baby-boomers say they would work through retirement by choice.
If you’re keen to explore exit strategies further, why not pick up the phone to Streamlion Consulting?