Welcome to “Improving Your Business” a message from Peter Towers.
In this edition we discuss three of the key components of “Creating Value” for a business, company, charity, Not-for-Profit or sporting organisations:
If you are pursuing a strategy to establish a growing company, it is important that your vision has been divided into separate goals.
If you have an objective to raise capital to assist in funding the growth process, investors are seeking companies which exhibit a strong understanding of the need to create real value for the company and not just to generate quick returns.
Investors are trying to determine whether the Directors and Leadership Team have the required skills and stamina to pursue the goals that the company has set.
Goals need to be set as to whether they are short term, long-term or periodic, and those goals are incorporated within the task allocation, allocated to a Leadership Team member for follow-through and achievement.
Investors like to see goals outlined in a following format…
What are the exit goals? Investors in a start-up company or a company undertaking the scaling up process are generally not interested in being a long-term investor. They want to know whether the Directors have set a policy to achieve an exit by a set time.
Next month goals: what needs to be completed by the end the next month? This is obviously a high priority!
Next quarter goals: this is a normal planning process for a Leadership Team – what has to be completed in the next quarter?
One-year goals: this is normally a larger project that is going to take a year to complete. The Leadership Team should implement monitoring measures which will ensure that the project is completed on time.
5-year goals: whilst this appears a long time, it can go fairly quickly. The Directors and Leadership Team should have set a clear strategy on the results that they would like to achieve over five years. It is advisable to implement a reporting process to ensure that the Directors are kept informed of progress.
When a business is growing, there needs to be an awareness of the key “assets” within the business. These assets are not just land and buildings or plant and equipment, but include a range of individual items that, when they are consolidated, are real “business assets” of the company.
These key assets should be subject to ongoing monitoring and evaluation to see where changes could be made and improvements implemented. Companies which are committed to growth strategies will have most of these assets:
Intellectual Property: has it been documented and is it safeguarded?
Patents applied for: is someone monitoring the deadline for the next document to be lodged?
Patents owned by the company: has a Business Case been developed to exploit the value of this asset?
Products/Services: what stage of the business cycle are individual products/services at? Have strategies been implemented for rejuvenation of products/services or phasing out and replacing products/services?
Trademarks: are they being used effectively in your marketing strategies?
Trade secrets: have these been documented?
Team: have you implemented team training, skills development and succession planning so that your company does not experience problems from “talent attraction or retention”?
Leadership Team: has a skills matrix been prepared for each member of the Leadership Team? Have strategies been introduced to supplement the skills of individual members and succession planning?
Board of Advice Members: has your company introduced a Board of Advice? These boards can make significant contributions on business matters.
These assets are very important in the overall corporate fabric of a company.
To successfully manage a business, you need more information than just your sales figure and profitability.
One of the key sets of information that you can have is “metrics”.
Metrics enable you to track, monitor and assess the success or failure of various business processes. This will enable you to identify your firm’s progress to achieving your objectives, both long-term and short-term, which might not be evident from just reviewing your Profit and Loss Account.
Metrics can incorporate Key Performance Indicators (KPIs) as well as many other aspects of the business operation, which might not be reflected in the financial terminology to which KPIs normally relate.
Metrics are numbers that measure your performance. There are three kinds of metrics:
Metrics suitable for most businesses include the following:
Financial Health Metrics:
We will conclude this overview next week.
If your company is interested in raising capital you need to articulate the “Value Proposition” that your company is presenting to potential investors.
Towers Business Development Pty Ltd can assist in the articulation of your key components for the “execution of your plan” which will assist in highlighting to potential investors your company’s or organisation’s unique characteristics to assist in raising funding.
If you would like to have a discussion with Peter Towers, Chief Financial Officer, Company Secretary, Company Director, please contact us or telephone 1800 232 088 for a time for a complimentary Zoom meeting (up to 45 minutes).