Why do Business Owners need Consultants

A Wise man once said that at the exact time you need insurance, it is too late if you do not have it in place. The same is true for management consultants. The Covid-19 pandemic has shown many business owners what they lack in order to survive and to grow their businesses. For many of these owners it was however too late because they were caught without the neccessary strategies, management systems and leadership in place, and their businesses failed with litterally hundred of thousands of jobs lost all over the world.

Richard Branson was once asked by one of his HR managers why they continue spending so much money on training their people, only to find alot of them leaving after receiving this training. His answer was a gem asking what would happen if they don't train them properly and they actually stay? What would the cost be to the company if they have untrained people? Branson understood that the better he trained his people, the better his return on investment will be for his business. John Maxwell, one of the best leadership coaches in the world says that leadership is a skillset on its own and therefore you can learn to do it and by doing it you will get better at it in the same way as you improve a technical skill when practising it.

During Covid we were faced with world leaders that suddenly had to lead their nations through one of the most difficult times in the least 100 years. What became clear extremely quickly is how especially corrupt leaders folded under this pressure. They were put in place through corrupt processes and not because they were great leaders, and once they had to actually lead, they failed miserably. The same is true for companies that did not have proper leaders, strategies or systems in place when the pandemic struck. Most of these companies failed. From information received from other business brokers, they found that alot of owners who became desperate to sell their businesses during the Covid period, but was mostly surprised at the low valuations they received. One of the main reasons for this was that they were mostly living out of the business while having no clear growth or any other strategies in place by the time they wanted to sell. This lowered their nett profits which in turn lowered their future growth, which eventually lowered the valuation of the company. If they started a few years before wanting to sell by getting all their management processes in place, training their future leaders, maximizing profits and a few other things, their company would have been worth double what it actually was. Investors will only consider invesing in a company if they can see a plan for growth. This includes a succession plan as investors are buying a going concern that must continue running after the current owners sold out and eventually leave.

It is therefore critical that business owners, CEO's, CFO's, Chairmen and women start looking at always having their companies in a ready state to getting sold. We are currently working on a large deal with a well known South African company. Another company wants to purchase them outright as it has been for sale for the last 4 years. What was amazing is that even though they are desperate to get an investor, they are unable to produce even the most basic information that is requested. Some historical information should be available immediately, depending on how far you are from your computer, but its now 4 months and they still cannot deliver this information. There is nothing like telling an investor that your company is a bad buy like not being able to supply the most basic information, so ensure that you are always ready to sell your company.

There are many things that has to be in place when you want to sell your company, but some of the most basic are the following. Make sure this information and systems are always in place and readily available.

1. Up to date Financial Statements and audited results.
2. Management accounts for the last 12 months
3. At least a Three (3) year financial forecast
4. List of all costs that owner takes out of business
5. Business Strategy - What is your plan currently and for the future
6. Succession Plan
7. Basic Procedure manual of how things work in your company. Think of it this way. What happens if you as the owner as well as three of your senior management pass away in a car accident? Can anyone else just come in and follow the procedure manual, look at the financials and succession plans and then make sure the business runs uninterrupted? If it is not, you have a serious problem that has to be addressed as soon as possible

At African Sun Consulting (www.africansunconsulting.co.za) we have the expertise to help your company to always be in a ready state to being sold. We strive to add value and transfer skills to your team so that they and not us can ensure the future growth of your business. We believe in setting realistic targets in achieving the goals agreed and then tranferring this skills to the team

We understadn that each client requires something differents and we request that you Contact us today for a FREE consultation to find out how we might be able to assist you achieving your goals

Please contact Tommy Strydom on +27 83 305 9742 or via email on [email protected]

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