Bought the Business - Now for the First 90 Days
Frank Choy
Management Consultant & CFO @ Capstone Consulting | Business Strategist - Growth, Profits & Value Creation
"The things that are standing in the way is not a lack of resources, but a lack of resourcefulness"
Introduction
If you have any thoughts about a honeymoon period as you step into your newly acquired business, perhaps think again. The first few months is the BUSY key action time to set the path for a successful sustainable business under your leadership.
By the time you get the keys to your business, you should have done proper due diligence, identify the burning areas for prompt attention, observed staff and the previous owner in action and maybe even met a few customers and suppliers
There is a lot to learn, think about and do, not the least being getting used to your new life.
This article lays out the key steps which will help you to quickly settle in and implement actions to keep the business running well and setting new agendas for action. At all times watch sales and cash flows.
The Key Things
1/ Action Plans
Keep Calm & Carry On
You will be excited with some nervous butterflies. The key is to have a week by week schedule of actions for the next 3 months. This enables you to keep business running smoothly as you settle in.
In the first month, you are quickly learning more about the staff and customers. Avoid major changes, unless there are pressing needs to prevent or reduce losses and attending to difficult staff, customers or suppliers. There may be major new customers to sign up; just make sure that you are able to deliver on large new orders.
1 - 3 month Plan
Your Plan must include:
3 Year Vision (Slow accumulation)
To formulate a 3 Year Vision of where your business could be, the following are included:
The formulation of a longer term vision is an evolving accumulative process which is iterative and takes time, right from the get / go. As time goes by, some of the factors will change, e.g., new products replacing superseded products and services.
Strategies
Your strategies will change over time because markets change, and new opportunities present. Be prepared to be agile and flexible, e.g., if a business acquisition presents, be prepared to at least consider a bolt on business to turbo charge sales and profits.
2/ Finances & Information
Cash flow
This is the fuel and oxygen of your business. It requires continuous monitoring and action so that you do not run out of money and have to close the doors.
Follow your Business Plan and Budget actions to maximise sales and control costs, especially Direct Costs - Materials and Labour.
You should have a weekly Cash Flow Forecast in the first month. This information determines the actions required to maximise sales and cash collections. A lot of companies fail by not controlling input costs for materials and labour right from their early days.
Information and KPI's
On a weekly basis, you should have available:
This essential information gives you peace of mind on the current status of your business and its prospects for the next 1 - 3 months. It will focus your mind on the ongoing requirement to win sales and drive business efficiencies.
3/ Staff & Other Resources
The key people in your business are your staff. Without good staff, your firm's customer service suffers and so does your customers' loyalties and sales.
Staff want to be reassured that you do not plan mass changes or redundancies.
In the first 3 months, go carefully with any changes! Staff have been there longer than you, and you rely on them to produce and look after customers and you.
If you have any problem staff, speak with them one on one and see if the situation can be remedied. Sometimes it is a case of some training and encouragement to bring a staff member to work at their best. Otherwise, it may be best for all to terminate their services (legally).
4/ Customers, Marketing & Pipeline
The most important people are your customers; without whom you do not have a viable business.
The 80/20 Rule
80% of your business comes from around 20% of your customers. Accordingly, allocate your customer relationship building time to the 20% to see how else you can improve your offerings and increase your value proposition. For example, increased range of products and services, incorporation of technology to reduce manual handling at both ends, and more.
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Your first month should have significant times for customer meet and greet. This should cement or improve existing relationships.
As you get familiar with customers, consider how you can increase sales through:
It may be painful and yet sometimes you have to weed out customers and products falling into the 20% value zone. Often these customers are loss making ones.
5/ Suppliers & Reliability
Review your suppliers for service, reliable deliveries and pricing. Over many years, some suppliers cost more and are slower in their supply lead times. Arranging alternative suppliers may provide cheaper products and capacity to supply larger quantities without disruption.
6/ Change Management
Take time in your first month to understand the nuances of your business - the workflows and how different staff operate including their personalities.
If a process or a staff member's behaviour has a negative impact on customer service, speak quietly with the staff member(s). Lead by asking them to think of different ways of running a process or customer interaction in the style of Lean Methodology. This encourages learning without judgement or blaming.
Weekly short meetings for quick briefing and debriefing is good for staff engagement. Ask them about the wins they have experienced in trying different ways of doing things. This is a great way of incremental improvement when incorporated into workflows.
7/ Business Helpers
Running a business requires help:
Helpers do not have to be expensive. Just make sure that they are technically capable and fit in with your persona and ways of doing things.
8/ The Next Stage
As you grow in confidence from your initial successes, you will be continually planning the next steps for your business.
Growth is Risky
As your business grows, it chews up more resources, money and time. This is a dangerous time because a larger firm requires more management of staff, operations and customers. Importantly cash flow may lag to the point of insolvency. Planning and monitoring is essential.
To manage the growth process:
1/ Keep a rolling Business P&L Forecast. This will drive your decision making and management.
2/ A Monthly Cash Flow Forecast for the next 12 months. This will identify any cash flow shortfalls or the need to borrow for cash flow, equipment, vehicles, new premises, etc.
If you have kicked in substantial loans to the business, this may be a suitable time to pay back some of your loans.
3/ Staffing requirements - the mix of qualifications and experience which your new recruits must have to enable your business to keep delivering to customers.
Business Strategies
At this stage of a business life cycle, work closely with your helpers and advisers. Business strategies (marketing, sales, products, services, HR) must dynamically evolve to meet with the changing circumstances.
Your Mindset & Qualities
Being a business owner requires you to be a Leader, Manager and Entrepreneur. It can be a lonely existence as it is a marathon with occasional sprints. It helps to keep in mind at all times your purpose which may include:
Qualities
What got you here is unlikely to get you to your business vision and goals. Leaders and managers have or develop the following:
The early stages of your business ownership is an exciting and sometimes nerve wracking time. With careful management and help, you should be able to navigate safely through to beyond the first 3 - 6 months.
Use the learnings to date to continually plan ahead. Remember to look after yourself and take time out to rest and refresh.
All the best in your journey!
Frank Choy
21 August 2022
Principal at Reeve Law
2 年Great advice again, Frank Choy!
Ex CEO | CEA | AGM | Board | Legal Rep | Director |
2 年Well written CFO Frank Choy !
MD and Principal of Forward Business | Specialist Business Broker connecting Asian investors and 188A immigrants with Australian businesses looking to raise capital or exit | MAICD
2 年Very comprehensive and pragmatic. Excellent advice!
Senior Recruitment Consultant at Robert Walters - Transformation - Banking, Wealth, Super, Insurance
2 年Good insights Frank Choy