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The examples mainly relate to larger companies but the principles are relevant in all cases where a founder is no longer active in the business.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

Feast and famine

Accountants are lucky.

Lucky in the sense that a lot of the work we do is ongoing or repeat business. So if we look after our clients and do the right things, our firms should grow in an incremental way as we add new clients.

In other sectors things are less straightforward. A contractor on a 6 month contract needs to find a new customer when the contract ends. The same goes for a builder when they finish the extension they are working on or the freelance designer putting finishing touches to a new company logo.

When the current job stops for these guys, there can be a gap until the next one starts. That’s not a nice place to be. Bills still need to be paid, life needs to go on, but money may be tight.

So what’s the solution? How can the feast and famine cycle be avoided?

It’s a particular challenge for start ups who may not have the profile or recognition to generate a steady flow of new enquiries. 

Let’s start with what won’t work. 

Just waiting passively for the next customer, the next job to arrive, won’t work. 

You need to make your own luck. That means in the fallow periods putting all your energy and focus into finding the next customer. Whatever it takes. Following up old contacts. Networking. Finding your social media channel and using it to engage with potential customers. Email. Direct mail. Cold calling. Measure the results and keep doing what works.

Then you get lucky. You get a good lead. Proposal leads to an order and you are on the way again.

It feels great. This what you love. You get stuck in. 

This time though, you need to try and break the cycle and get your next job lined up before you finish the new one. That means putting some of your time aside every week for marketing (attracting new leads) and selling (doing your pitch and closing the deal). I’d suggest that about 10 to 20% of your time is about right for this so that’s half to one day a week. It could be one set day every week or an hour or so a day. It just needs to get done.

The feast and famine cycle is not a good way to run a business. It needs discipline and focus to break it and have a more regular flow of work.

The ideal is that you choose when to be idle rather than having it imposed upon you. 

When you are on holiday after a good spell of continuous work and your next job or jobs are lined up for when you get back, you will know you are on the right track.

www.base52.co.uk

Carry on networking

Browsing LinkedIn this week I came across a post from a marketing expert, specialising in the accountancy sector. 

The thrust of her message was that networking for accountants, particularly start-up accountants was not the best use of their time. There are better ways to spend 3 or 4 hours which would probably deliver more sales leads and be more productive.

I kind of get this. 

As an established accountancy firm owner I’m much more selective these days about the kind of networking I get involved in. More typically its, ‘One to one’ rather than ‘One to many’. A coffee and a chat with an existing contact or maybe someone I’ve not met before where there are opportunities to explore for mutual benefit.

In my start up days I did the rounds - structured networking groups like BNI and other, less formal groups. I put myself out there and got involved.

Looking back, I think it’s been worthwhile.

First it helped me think about my marketing and how I could stand out from other firms. There is nothing like knowing that you are going to have to present to 30 or 40 people to focus your mind and make you think about your message. If you don’t get it quite right, there’s always next week and gradually you refine it to get something a bit more polished and coherent.

It was a great way to learn presentation skills and other skills like...networking. How to talk to people (and listen!) in a crowded room and make a connection.

Then there are the contacts I made. The people I met networking who now look after our IT, our HR, manage our payroll, our marketing. They were contacts first, then people I liked and came to trust and then we worked together. They have developed into great, long term relationships. Being a business owner can be a tough journey and having a number of business pals to share it with is a positive thing.

It was good for awareness and raising mine and the firm’s profile. ‘There was that accountant bloke who I met at that networking group who specialises in that kind of service.’ Word got around.

Of course there were the sales. Particularly from structured networking we gained a good number of new clients, some of whom remain with us to this day.

For me, more structured networking which required a regular commitment, came to a natural end. It reached a point where the time and effort involved didn’t justify the payback. So more informal, targeted networking became more effective.

What would I say to my younger self though if I was starting out again? 

I think I’d say, ‘Carry on networking’. Keep reviewing, keep re-evaluating what works and what doesn’t, but carry on.

The benefits are much more than just achieving the next sale. The learning, personal development and connections you make are just as important and probably more enduring.

www.base52.co.uk

Partnerships should come with a health warning

Partnerships can be a beautiful thing.

Two people (it is usually two) working together to achieve more than they could on their own. 

It sounds great but the reality can be different. I’ve failed at working in a partnership. My ex-partner was (and is) a lovely, capable guy but being a double act didn’t work for either of us. We went our separate ways in business after a couple of years and I think we have both been happier and more fulfilled since the split.

Thankfully our break-up was fairly harmonious (they are never completely so) but in my time running an accountancy firm I have seen some less-friendly splits where the partners have ended up falling out very badly indeed. Often the rift comes from an imbalance in the relationship. One partner feels they are working harder or want more from the business than the other. Tensions build and often come to a head with an agreement to break the partnership.

For me it was a learning experience. On the positive side, having a partner gave me the confidence to start and develop the business. After we achieved a modest amount of scale however, I wanted more control of decision-making and mapping out the future direction of the business. In a nutshell I wanted to be master of my own destiny. 

I have seen some partnerships that work. More often than not, these are a couple who are already in a relationship. They are used to dealing with the ups and downs of life - falling out, making up and able to communicate effectively with each other.

One of the key ingredients in successful partnerships I believe is having clarity of roles and responsibilities. At the start up stage, each partner tends to ‘muck in’ and do what needs to be done. Very quickly they will need to carve out roles built around their individual strengths. One partner will usually emerge as the leader and I think it works best if each partner is responsible for different activities - marketing, selling, operations and so on.

Another important feature of successful partnerships is communication. More than this it needs to be open and honest communication. I have observed partnerships where there are clear roles and responsibilities, one partner is clearly the leader and the partners get on well. The weakness has been that the junior partner has not been able to communicate their concerns effectively to the senior partner. This has led to the senior partners taking excessive risks with poor outcomes for the business.

Partnerships can work but if you are thinking of joining forces with a work colleague or friend, my advice would be to think hard and then think some more. Visualise how you will work together, not just in the good times but in the bad times too, which will inevitably arise. 

Before committing, spend some time together preparing a business plan. This can ensure that you are 'on the same page' at the start and is a good trial for seeing how you work together and reach consensus,

1 + 1 can equal much more than 2 in the best of partnerships.

In some cases it can be much less than a sum of the parts and can lead to the end of a close and long-standing friendship. 

So tread very carefully and do your homework before taking the plunge. It may help you avoid an expensive and often painful mistake.

www.base52.co.uk