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The examples mainly relate to larger companies but the principles are relevant in all cases where a founder is no longer active in the business.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

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

Adding capacity

For a growing business, deciding when to add capacity can be a tricky.

Too early and profits and cashflow are adversely affected. Too late and service levels to customers will suffer.

I lean towards adding capacity (in the form of people, space, other resources) sooner rather than later. The boldest businesses have followed this path and for the most visionary it has paid off handsomely. Transport and distribution businesses like railways, airlines and international couriers are good examples. They didn't wait until they had enough customers to justify the investment. They built the infrastructure (in the case of the railroads at significant cost) and the customers followed afterwards.

What about in a small business where access to capital can be difficult and margins are tight? 

I still believe that with a robust plan for future growth, investing early in additional resources is the best approach. If the decision is postponed until the extra resource is urgently needed, this places additional strain on the business and there will be a further delay before the resources are in place due to lead times for recruitment, negotiating leases etc.

For professional service businesses like accountants the extra capacity we need to grow is usually people and space. I still regret to this day that when an adjoining office became available I didn't snap it up but decided it was a little bit too much of a stretch at the time. The landlord said to me, 'Fred, it's a little bit like a farmer where the neighbouring field is up for sale. When it's gone it's gone'. He was right of course.  He ended up letting  it to another tenant who resides happily there to this day. We have had to manage with 'just enough' space and our situation has only eased a little recently as more capacity has become available.

Taking on additional employees ahead of an expected increase in workload can be a challenge. It is also an opportunity however to give them a thorough induction and make sure they are trained and prepared when the rush comes.

If capacity is added early it is critical to ensure that the expected growth occurs to cover the additional costs and to make extra profit in the medium term. That's where the robust growth plan comes in and ensuring that it is delivered.

For a growing business adding capacity just a little bit ahead of the curve makes sense to me. It makes growth more manageable and orderly and I believe will have a more beneficial impact on profits in the longer run.

Getting this right is not a precise science. 

I know from experience that I have rarely regretted taking on capacity too early but I have had regrets and felt the pain where I have waited a little bit too long.

www.base52.co.uk

A perfect pipeline

I'm not a marketeer but like all business owners who want to grow their business, I do marketing.

The nirvana we search for is a perfect pipeline. A method or methods of marketing which delivers a steady stream of leads, where we know the cost per lead and we know the liklihood of converting each lead or enquiry into a new customer.

If the cost for each converted lead is justified based on the price of your product or service then, Bingo! That's it! Growth plan sorted.

But its not normally that straightforward.

What I've found over the years is that something works for a while - a networking group, google adwords, telesales, a referral scheme...and then it stops. Sometimes this is an abrupt or sudden change. Your brilliant telesales person moves on, Google changes their algorithm, more competition - something happens to make your trusty lead generation star less effective.

Of course when this happens we try and change things. Find out why it has stopped working so well and try and fix the problem. But often tinkering doesn't work. The moment has passed.

So it's back to the drawing board again

I'm in that happy phase now where I've stumbled upon a lead generation method which has exceeded my expectations and is delivering impressive stats

So I'll be enjoying this while I can. I fully expect that just around the corner there will be a glitch. We will tinker and tweak but it may not be the same again

And then the search starts again for the next big thing...

www.base52.co.uk

Are you super successful, getting by or struggling?

Business guru and entrepreneur Nigel Botterill often quotes statistics that only 5% of businesses are 'super successful' or doing very well, 15% are doing ok and a massive 80% are just 'getting by' or struggling.

Not a great advert for the joys of running your own business. I have no hard evidence for the validity of the statistics but leaving aside 'one person' service businesses (which tend to do well), the figures kind of ring true.

So what sets the top 5% apart? Why are they able to thrive in challenging times whilst the majority are not doing so well?

I've had a good think about the successful businesses I've worked with over the last 15 years and these are some of the attributes they show:

1. Review and adapting to change

The best businesses are continuously reviewing their effectiveness and adapting to changing circumstances. They hate complacency and being comfortable and are always striving to get better

2. Focus

They have a core offering which is the essence of their business. Most of the business resources are deployed into making this core offering as attractive as possible. They might diversify but not at the expense of the core business.

3. Business owner freedom

The business owner is released from some of the 'day to day' grind and is able to focus on customer care and team and business development

4. Processes and roles

The business has clear processes and routines for sales and marketing, production and finance and job roles are also clear. Basic stuff gets done well, over and over again.

5. Pricing

Getting this right is key. Price too low and your business will never make money. There will be a constant battle to cover overheads and manage cashflow. An uncomfortable place to be. Price too high and the business will stagnate. Hit the sweet spot where your pricing matches the value the customer receives and gives you a respectable profit and you are on a good path.

That's probably it in a nutshell.

Having a great product or service helps as does finding an attractive market niche. Even in a more competitive space, if you follow the above steps you are more likely to end up in the top 20% and move closer to super success

www.base52.co.uk