Back to basics

We can all think of founders who left an indelible mark on their businesses. 

Walt Disney, Steve Jobs at Apple, Ray Kroc at McDonald's are three at the top of my list. The founders are no longer at the helm but their legacy, the vision, values and passion they instilled, still lives on in their businesses.

The founder’s mentality doesn’t just endure in in big companies like Disney, Apple and McDonald's, it has a lasting effect in great companies of all sizes. Small family businesses now on their third or fourth generation of management, successful tech start ups with new owners and management and the small consulting business taken over by the management team when the founder retired.

I recently read, ‘The Founder’s Mentality’ by Zook and Allen which expands on this theme.

Zook and Allen are consultants with a large US consulting firm and have observed the impact of founders over their long careers. The book has numerous case studies of the positive impacts of founders and the challenges faced by their firms after their departure. 

The examples mainly relate to larger companies but the principles are relevant in all cases where a founder is no longer active in the business.

They describe certain traits which are universal in successful founders:

• What they call an insurgent’s clear mission and purpose
• An unambiguous owner mindset
• A relentless obsession with the ‘front line’

Let’s look at each of these.

An insurgent’s mission and purpose describes an urgency to get things done. This might involve disrupting sector norms and doing things in a different way with relentless energy and speed.

An owner mindset describes itself. Obsessive focus on getting things right and spending money only on what matters.

Front line obsession is about focusing on customers and delivering a great product or service. It means also giving priority to front-line resources and rewarding and recognising front line employees.

That’s all well and good but how can these traits be applied practically in business? 

Zook and Allen describe what they call ‘predictable’ stages in a business life cycle when things go off track after a founder has moved on - overload, stall out and free fall.

Overload is where a growing business gets overwhelmed by challenges and new opportunities, stall out is where growth slows or even stops and free fall is a business in serious trouble. It has lost its way and starting to go backwards.

Zook and Allen argue that going back to the basics of the founder’s mentality can help companies at each of these stages recapture their mojo and get back to what made them successful in the first place. Even those in free fall can get things back on track again by returning to their founding principles to regain their earlier momentum.

There are lessons for all founders when exiting from their businesses to instil a culture and processes which enable their vision to continue, when the inevitable complexities of growth arise.

As founders, we may not all aspire be the next Disney but we can ensure that some of what we stand for endures and thrives.

www.base52.co.uk

Don’t get carried away with the bells and whistles

It’s easy to be seduced by new technology.

In the accountancy world, ‘Cloud’ is the thing. It’s been around for ages but recently it has come of age. It’s on the telly. It’s advertised as, Beautiful’. Your accounts and tax return are a breeze, completed seemingly in one click.

As enthusiastic adopters of Cloud software we’ve promoted it to our clients and in a relatively short period of time its become our preferred way of working. The benefits are clear to us - more automation, faster and easier processing, better accessibility for our clients.

Every now and then you get a reality check though. 

I met with a client this week and we were discussing her services for the coming year. I threw in, ‘Now we’re using this cloud software you can login any time and anywhere to view your financials’. 

She’s a busy, successful business owner and her response put me in my place, ‘The last thing I need is another login. I want you guys to send me a simple report, when I need it which gives me an overview of my results and actions needed’. 

She went on, ‘This is all about making it easier for you, not me’.

Bam! 

She’s right of course. Certainly about the first part. What is important is how she wants to receive her financial information. A login doesn’t work for her. She wants us to prepare management accounts at the frequency and timing she needs to manage the business, So that’s what we will do. The technology is the enabler, rather than the solution.

On the second point, the technology undoubtedly makes things easier for accountants. It does help us to a better job and do more of what matters - advising on financial performance and being proactive.

As a business owner I’m also a user of the new technology. 

We’ve adopted the cloud for our own accounts and yes, I have my own login. Do I use it regularly? I must confess its more of an occasional thing if I need to check a particular aspect of the accounts. Like my client, I’m a bit ‘old school’. I prefer a monthly discipline of a printed management accounts report which I can review in detail with another team member and take action accordingly.

Each to their own. 

My meeting with my client was a timely reminder and wake up call that new technology is great but in accountancy (and in business) it’s still ‘all about the numbers’.

www.base52.co.uk

Is your business an investment or a lifestyle?

Business owners tend not to think of their business as an investment. 

More often than not they’re a ‘hands on’ owner, usually working hard in the business they founded, managing the team and driving the business forward.

An investment?

Not really. Sure, they may be a shareholder and take dividends on top of their salary but typically the business is their meal ticket. They run it as well as they can, they draw an income (maybe not quite as much as they’d like) and often there’s not much of a surplus after that.

So really it’s a lifestyle business.

They enjoy it (most of the time) and it pays the bills but is it a saleable asset? To have value the business needs to make a profit after allowing for replacing the owner’s drawings with a ‘market rate’ salary. In other words if a competent manager was hired to replace the owner, what profit would the business make? If the answer is nothing or a very small figure, the business does not have a great deal of value.

All is not lost though.

Lifestyle businesses can transform themselves into a business that is a genuine investment. A business that is resilient and sustainable and generates a profit without the day to day input of the owner.

It requires robust processes and systems and a strong and capable management team. It won’t happen overnight. It needs a plan and consistent effort.

A profitable business not reliant on the owner becomes a business worth keeping or perhaps selling to a buyer who can see a healthy return on their investment.

So thinking of your business as an investment can be a good thing. Transforming it into one is even better.

www.base52.co.uk

Thinking big, acting small

When we first started our accounting firm we hired a marketing agency.

They were far too expensive and too much of a luxury for our little start up so the relationship only lasted a year or two. We did learn some lessons though. Firstly the importance of having regular and consistent marketing activities and secondly setting ourselves up as being different from our competitors and ‘acting small’.

One example that sticks in my head is our process for answering the phone. If we were in the office, we always answered the phone and if we were free we spoke to the caller, whoever it was. No filtering, no screening - if someone asked for us by name, if we were in and available, we would be happy to take the call.

We’ve grown a bit in the intervening years but our process is pretty much the same, although I confess we do screen out obvious sales calls.

We’ve all been on the other end of more difficult calls, ‘Is he expecting your call?’, ‘Will he know what it’s about?’, ‘I’ll just check for you...no, he’s tied up at the moment I’m afraid, would you like to leave a message?’

Our clunky analogue phone system has just about had its day though.

We’ve expanded a bit recently so the team is spread in different rooms throughout a large building. If someone calls on the main phone we don’t have the wherewithal to transfer them to some of the more remote outreaches of our office. It’s not quite working.

So we think its time for a more modern system with Direct Dial numbers for the various teams and wait for it...an automated switchboard. The challenge is how can we continue to give a courteous and friendly reception to callers whilst making the system practical and effective?

We’ll be working on this. 

I think avoiding too many layers on the call answering options is critical and we definitely don’t want callers to get stuck in a queue listening to something like, ‘Money for nothing’ by Dire Straits for an indeterminate period of time or worse still, giving them a choice of hip hop, pop or chill out music. We want the technology to help not hinder.

So if you call us in a month or two and an automated message says, ‘Press 1 if you are an existing client...’, please don’t hang up. Stick with it and we promise you will very quickly be able to speak to a real person.

It’s progress we think and we will be doing our best to keep acting small and giving you a personalised service.

www.base52.co.uk