Which way is it Flowing?

Keeping a close eye on our cash, sometimes even to a point of paranoia, is an essential discipline in running a small business, particularly during its immediate post-start up period. Why? Because, we are so often unaware of the likely highs and lows of our business at this embryonic stage, what competitive forces are out there, what is affecting our customers' buying habits and so on. Then, of course, in the back of our mind, we need to remember that insufficient cash is a major reason why so many small businesses barely get off the ground and eventually fail.

So what is cash flow? Put simply, view it as how much is coming into the business as a result of your technical skills, sales and promotional efforts and, you've guessed it, how much is going out to repay any loans and, of course, to cover the expenses required to run the business. These would include rent, salaries, accounting costs and consumable items etc. If we lived in a COD (cash-on-delivery) world this task of constant monitoring would be a lot easier as we would have a day-by-day picture of money physically coming into the till and, likewise, what is going out. In the real world of course, customers often don't pay at the time of buying your products or services as a result of which your cash flow is dependent on collections of 'accounts receivable'. On the other side of the ledger (accounts payable) you have some suppliers who are happy to provide you with their goods or services on credit. As a result you need to balance what you are expecting to come in from your customers and what you owe your creditors.

So what if your business is impacted by seasonal fluctuations at different times of the year? Imagine if we were a business located in a ski resort or if you're one of the building trades which invariably go quiet over the Christmas and New Year months. This can really test us as we need to ensure that we create sufficient reserves during the 'good times' to ensure our survival in the lean ones.

There is a lot to say about this important topic but the more we are aware of the ins and outs of our business and the trends that affect these two way money streams, the more effectively we can Manage our cash flow as you will see by way of the tips offered in this helpful link.

Ted Beecher, BLA Director

That All Important 'WHY?' Question

When we look back on the day when we owners started up our small business ventures, undoubtedly there would have been a number of clear cut reasons as to WHY we decided to switch from our 'ho-hum' comfort zone and make this new and exciting journey. However ambitious, brave and even a little scary that journey may have first appeared, the all important WHY question was probably the driving force. As we continue on the journey, it's always a good idea to reflect on that original WHY and to ask ourselves whether it is still the same today. Chances are it is not because things change…don’t they? So asking this question regularly is a sound commercial discipline.

The French have a great way of illustrating this with the term, 'raison d'etre'. As small business owners, our raison d'etre is all about our purpose and WHY we do what we do. In French, raison d'etre literally means "reason for being," and in English it means about the same. Someone's raison d'etre is the most important thing to them: Michael Jordan's raison d'etre was basketball. We should always reflect on our raison d'etre or WHY, and how that may have changed or may be just about to!

A simple way we small business owners can address this is by making a list on one side of a piece of A4 of all the WHY's (or one if there's only one) that make up our raison d'etre. Next go to this link, courtesy of Success Harbor. From their list of the 50 reasons 'Why businesses fail while others succeed', put alongside your list of 'WHY's' the reasons, positive or negative, that could impact your business.

Turning to a more broader perspective, when we look at the main precursors to the questions we need answered in business, namely, How? Why? Which, When? What? etc., it's probably fair to say that the WHY is the most powerful. The reason is that the answer to the first WHY may not be the final answer. Think of a conversation like this:

A: 'Why are you starting a small business?'
B: Because I can make more money than being an employee in the same trade.

A: Why would that be?
B: Because I can fix my own charges for services and control my costs effectively.

A: Why would you want to do that?
B: So I can compete effectively , win new customers and watch my business and profits grow.

It may seem a bit over-simplistic but, in this drill-down example, just by continually probing the WHY, we go the full circle and end up having answered that first question. Buoyed by this confirmation that we are beginning on the right track, we are now poised for the next steps, namely to build our strategic plan, determine revenue expectations, project costs, create a marketing plan, build in assumptions and risks etc. WHY?

...Because we believe we are going to succeed as a small business owner and make a massive difference!

Ted Beecher
BLA Director

Is A Leader Born or Made?

On the back of our last posting covering the similarities between followership and leadership, this week we're going to take a brief look on the personal characteristics of a leader. A popular myth is that an effective leader is one who dominates and possesses high degrees of intelligence, confidence, initiative and limitless stamina. Even their height can be deemed a contributory factor. That is until we look at the physical stature of leaders like Napoleon or Gandi as well as the more infamous examples who turned the tides of history such as Hitler and Stalin.

Early theorists who supported these myths also assumed that leaders could only be born and not made whilst often forgetting that leadership characteristics can differ significantly. Take, for example, a general leading an army, a politician, a priest or team leader in a supermarket.

In running a small business, effective leadership embraces a number of factors:

1) Deliverables - this all about the goods and services. Things like quality control, customer satisfaction, competitive pricing and the numerous efficiencies that ultimately determine what is usually referred to as our business' bottom line.

2) People - an empathetic and considerate approach that leads to the motivation and job satisfaction of the team.

3) Education and coaching - linked closely with 2); these are the influences that govern our team players' growth in terms of knowledge and skill sets.

4) Values and culture - This ties together all of the story so far by being able to answer key questions, like exactly WHO we are, WHAT we are and WHY we do what we do. (If you're wondering about the 'HOW' and the 'WHEN', they usually sit in 1).

Think about this. In larger corporates, each of the categories above may come under the responsibility of a single executive with a CEO at the top whose job is to periodically run her or his thermometer across each of the 4 cells in order to report authoritatively (and hopefully with a few 'smileys' in tow) to shareholders and board members.

It's all a bit different in small business. An owner rarely has the luxury of being able to delegate these types of roles but rather embrace a little bit of everything themself and that's really the long and the short of it. Sound familiar?

In previous posts we've touched on a lot of things associated, directly or indirectly, with this topic. So, because of its importance, make no apology for any repetition. Indeed, we are confident, small business owner and writer, Susan Ward's take on leadership will help you on your journey, particularly the bit where she says, 'Leadership can be learned'. Enjoy the read.

Ted Beecher
BLA Director

Good Leaders Know How To Follow!

In Praise of Followers!

This is the title of a paper posted by Robert E.Kelley in the Harvard Business Review back in 1988 (Nov - Dec edition, pp 142-148).

The writer reminds business people of the emphasis we all place on leadership, and rightly so of course. He then quickly switches to the question of what about the people they lead? He cites Napoleon as being, without the support of his massive armies, ' merely a man with grandiose ambitions'. In the case of a business, Kelley states that they survive or fail partly on the basis of how well their leaders lead and partly how well their followers follow.

Recognising the importance of good followership, back in the last century when Jack Welch took over the reins of the massive, yet crippled, GE Corporation, he came up with an intriguing yet effective plan to save the Company. Put simply, it involved delegating responsibility by cutting through the many management layers and empowering those of the so-called lower echelons to make decisions which would collectively transform the organisation. In other words he created an army of effective followers.

Now hang on! I know BLA is all about small business, but don't be put off as the principles here can easily be applied in any size operation; even a one man band who is often a sort of leader/follower hybrid!

OK, back to Kelley. He explains that what distinguishes an effective from an ineffective follower is enthusiastic, intelligent and self-reliant participation - without star billing - in pursuit of an organisational goal. Culturally, self-confident followers see colleagues as allies, not competitors, and leaders as equals. Organisationally, more often than not, they can also see both the forest and the trees!

But how does the boss create this sort of environment? Simple!! (as that pesky meerkat would say!) Good leaders know how to follow and, in doings so, set an example for others.

By the way, do let us know if you want to know more about Jack Welch's pitch in the followership arena as we realise we barely scratched the surface by giving it the cursory air time above. In the meantime, here's another great article on the subject which hopefully will foster some practical tips on the roles of leaders and followers in the successful running of your business.

Ted Beecher
BLA Director

Finding Our True North

Anybody who's succeeded in the sport of orienteering, or pursuits like flying, sailing and other activities which involve navigating skills, will know the importance of maintaining a watchful eye on True North. Just to get technical for a second, True North (also called geodetic north) is the direction along our Earth's surface towards the geographic North Pole or True North Pole. Because it differs from Magnetic North, which is the direction a compass points toward the Magnetic North Pole, the navigator has to plot his or her course in order to make the necessary adjustments for that difference.

In running a small business, we must keep a keen eye on our True North. This means, figuratively speaking of course, we are standing up there on the bridge with the ocean all around us, having to constantly navigate the changes, conditions and environmental factors that impact on our plans and budgets etc. Of course, it's all a test of our leadership role and, as such, worthy of occasionally taking time out to ask ourselves a few pertinent questions, such as:

  • What's keeping us awake at night?

  • How do we want to be remembered (sorry if that sounds a bit morbid!)?

  • Who inspires us?

  • What is the one word that describes us?

'C'mon!', we hear you say. 'Isn't this all a bunch of airy fairy stuff that is so far removed from the nuts and bolts of my business. Wouldn't we all be better off if it's left in the domain one of those highly paid psychologists?'

Not so! These are just some examples of the kind of questions posed by Harvard Professor, Bill George, who emphasises the importance of finding True North in many of his postings and books. Have a peruse of his full list of questions in the link, noting that most are of a personal nature and a timely reminder of the synergy between our business world and private life. ............And perhaps a reinforcement that, since starting at 8 years or so ago, BLA's catchcry remains, Business is Personal and a key consideration when seeking our True North.

Ted Beecher
BLA Director

It Takes A Community To Run A Small Business

They used to sing it at Funerals before they realised the value of COMMUNITY!

Not so long ago, in celebrating the life of 'so-and-so', and especially when the deceased was once a sharp shooter in the business world, their funeral service would often end with the famous Frank Sinatra recording of, 'I did it my way'.

Invariably there would be at least one of the mourners quietly cringing in the pew thinking, 'His way (or hers, of course)? ' 'What about the time I got him out of that hopeless mess-up with the books? Without my team's intervention, we would've soon had the liquidators knocking at the door?' Then there'd be others recalling and mumbling to themselves about all those situations where the 'My Way' factor was completely trumped by the time, effort and specialist knowledge of others.

Now let's be fair. Resilience, fortitude, tenacity, leadership and all those other 'power-words' may well be part of the DNA being eulogised on behalf of the subject in the coffin. And so they should.

But...Remember the old African proverb, ' It takes a village to raise a child '. This means that it takes an entire community of different people interacting with children in order for a child to experience and grow in a safe environment. How easy it is to apply this to the small-business world. Think about it, 'An entire Community interacting'. Not a bad legacy to take with you if you were the driver behind it (and the mourners smiling at your photograph on the crematorium wall instead of glaring at it indignantly!)

Moving away from all this morbidity, let's take a look at the value of integrating into our business life the topic of community engagement as articulated in the link.

You may well be saying this Forbes HR Council article is all very well but I'm not there yet. Alternatively you may be struggling to get things started or have hit a rough patch. Come and talk to us and let's explore the ways and opportunities that may be available to you.

More to the point, let's go far beyond the undertaker's reach with another song, courtesy, Lennon and McCartney, 'I'll get by with a little Help from My Friends !!!!!'

Forget Perfection - Get Something Down!

Unless you're a novelist (or blog-ist!), you'll be wondering what on earth has this topic got to do with running a business. Writers earn their living from using their gifting in the written word to create plots, twists, romance and all sorts of other page-turning tactics. The purpose here is to, not only get their readers to buy their books, but to share their 'take' on a particular tale with other fans of the author. After all, becoming a much talked-about writer is the obvious short cut to fame and fortune (especially if, later on, Netflix come knocking at the door!).

When the writer is impacted by what is known as 'Writer's Block', it's usually because he or she has run out of ideas, creativity or originality and struggles to put pen to paper. This can be de-motivating and, if allowed to fester, will have a negative impact on the writer's standing and, in the longer term, their bank balance.

The condition is so common in the literary world that the famous writer, George Orwell, wrote a novel called, Keep the Aspidistra Flying where the central character struggles to complete a poem about a day in London. It turned out to be too big for him and never really progressed having crumbled into a series of unconnected sub-stories. Now, doesn't that sound familiar when likened to all the different elements of running a small business?

Let's put it into the context of a new year and we're sitting down to articulate that dream plan that is going to bring in the results like we've never seen before. OK, we may be lucky but, chances are, we soon find ourselves stuck, just like the poor old writer staring into the ceiling and waving her pen around in frustration.

One particular literary practitioner's ideas about how the writer might address this is to give himself or herself permission to write rubbish . Yes, you heard it right, rubbish. Otherwise, they're as likely to be only focused on that masterpiece of perfection . Your rubbish may be that dream of a business plan. Whatever, type it into your phone, PC or write it down and put the timer on for 3 minutes using that time to add any other supporting rubbish.

Better still, this can be done in a group where everyone is given permission to go for the rubbish, no different from the time-honoured 'no holds barred' principles in brainstorming. After all it's well known how this can help a business move forward especially when embedded into its decision-making culture.

So what happens next? Despite sounding contradictory, rarely is this type of rubbish actually wasted. The writer's golden rule is to never dump any of your original writing in the WPB as, even though it might not be applicable now, it may come alive in another text later on. Likewise those pieces of rubbish that emerged from your business' brainstorming efforts may be anything but rubbish in another context at another time!

For the moment, however, you've as likely now got a collection of wild ideas and goals. Take each in turn and apply the SMART 'litmus test'. Are they?:

  • Specific

  • Measurable

  • Achievable

  • Relevant

Ted Beecher
BLA Director

Welcome to 2019!

Obviously we at BLA are hoping it's going to be a rewarding and successful one for small business especially those of you who follow us regularly. Oh yes, a big thank you for reading our weekly topics and for the feedback you take the trouble to share with us from time to time. This is really helpful in knowing we're striking the right chords.

Last year's blogs talked a lot about vision and goals and the changes that need to be put in place to turn our plans into reality rather than simply crystal ball gazing. A great way to start is to identify what those goals might look like but without necessarily trying to qualify them against too much market place detail; especially the negative stuff, such as what we're hearing in the lending space and falling property prices etc.

Start by looking at where they sit in a life-style sense: family, friends, health, well-being, values, learning and so forth. Think about how you can truly pursue your passions and return something back to the community. A vision, by definition, is more than just words but a picture, sometimes a simple illustration, other times a more detailed one, maybe even a masterpiece! Whatever the case, if hidden in the picture are lots of smiles on the faces of those close to us (family, customers, suppliers and other stakeholders), then that should spur us on towards all the practical stuff that supports our commercial endeavours.

So what exactly is that practical stuff for small business? The logical start is your new business plan for 2019, most likely based on last year's performance and how it sits against new opportunities for growth and increased revenue . Carefully ask yourself, how different are conditions likely to be in 2019 in terms of how much will they dictate the year's likely outcome?

For small business, there may well be challenges with liquidity, obtaining credit and other more onerous financial conditions so it's important to take stock of what changes there are in the world of taxation. Start with a meaningful conversation with your accountant but, before doing so, please take time to view this important ATO link which outlines those changes.

Indeed, welcome to this new year! And remember, if you do know of any small business that maybe struggling, we're ready to speak with them.

Ted Beecher
BLA Director

FREEZING, THAWING AND REFREEZING!

Over recent weeks we've delved into various facets of change that impact the way we run our businesses. In particular we've looked at the effect of the ever changing environment, not just the 'green-type' things but the economy, the political landscape, legislative change, technology and those ever present competitive forces.

Pages and pages have been written by often brilliant change practitioners, some of which can be quite complex at times. Our focus has been on keeping it simple and so, to wrap up the topic of change before we all head off for a well deserved Christmas break, let's share in a very simple, tried and tested, 3 step theory of change developed some 60 years ago (Kurt Lewin 1958). Indeed, we can take this wisdom with us into the New Year and beyond:

Unfreeze; this applies when we take stock of the old ways we have been managing our business and, in doing so, create a sense of readiness where we need to confront a new changing environment. This is supported by proper diagnosis which,in turn, strengthens the very need for change in the way we do what we do.

Move/Change; this is where the hard work kicks in mainly through our setting out an implementation agenda in order to propel all necessary change interventions to maximise our effectiveness.

Refreeze; this is about stabilising the new behaviours as we embed them into our culture, practices, norms and values and, most importantly, ensure we have mechanisms in place to avoid slipping back into those ever comfortable old days and ways!

It would be nice to think that it all ends here but, as we said in a previous posting, change is very much a continuous state of affairs in the modern world. Once that refreeze is locked in, lo and behold, so often we're back again into thawing or unfreezing mode, and so the process starts all over!

The good news is that, by embracing change with enthusiasm and positivity, the more we deal with it, the easier it becomes. And so, for example, if we want to expand, re-brand or add a new feature to our product or service range, we have already embedded into our practices the versatility, energy and attitudinal qualities to enable us to proceed with all the changes associated with those strategies.

So there's some food for thought as 2018 comes to a close accompanied by all our very best wishes for a Happy Christmas and a prosperous New Year.

Ted Beecher
BLA Director



Christmas comes but once a year!

In both our business and personal lives, Christmas time has an impact of some sort, positive or negative.

So, before all the stress and frenzy takes over our lives, (which it probably has already!), let's all just take a deep breath and quietly ponder on what that impact is going to be. Next, we have to take control of it and, should it be gradually edging us towards the 'Dark Side', make it change direction!

Take heed of some key words like 'Joy', 'Generosity' and 'Giving' . That way we, along with our families, are more than likely to end up in the right place. To get us into the zone, there are many, many quotes about Christmas, some inspiring, some cynical, some funny and some downright depressing.

Here's a random selection coupled with BLA's Christmas wish that only the inspiring ones will make the grade for you this season:

The Good (and very true)

"We should make the Yuletide season an occasion not merely for the giving of material things but an occasion for the giving of that which counts infinitely more … the giving of self"— J. C. Penney

"Christmas day is a day of joy and charity. May God make you very rich in both" — Phillips Brooks

"Your children need your presence more than your presents"— Jesse Jackson

"We make a living by what we get, but we make a life by what we give" — Winston Churchill

"The best of all gifts around any Christmas tree is the presence of a happy family all wrapped up in each other” — Burton Hills

"A gift opens the way for the giver and ushers him into the presence of the great" — Proverbs 18:16

“To be rich in admiration and free from envy, to rejoice greatly in the good of others, to love with such generosity of heart that your love is still a dear possession in absence or unkindness – these are the gifts which money cannot buy" — Robert Louis Stevenson

The Not so Good (but sadly also very true!)

"Even before Christmas has said Hello, it’s saying ‘Buy Buy.’" — Robert Paul

"Christmas is the season when people run out of money before they run out of friends"- Larry Wilde

"What’s Christmas time to you but a time for paying bills without money; a time for finding yourself a year older, but not an hour richer." Ebenezer Scrooge in Charles Dickens ‘ "A Christmas Carol"

"The Christmas season has come to mean the period when the public plays Santa Claus to the merchants"— John Andrew Holmes

"Wretched excess is an unfortunate human trait that turns a perfectly good idea such as Christmas into a frenzy of last-minute shopping" — Jon Anderson

The Funny

"One good thing about Christmas shopping it toughens you for the January sales". — Grace Kriley

"Let me see if I’ve got this Santa business straight. You say he wears a beard, has no discernible source of income and flies to cities all over the world under cover of darkness? You sure this guy isn’t laundering illegal drug money?" — Tom Armstrong

The Thought-Provoking

"Probably the reason we all go so haywire at Christmas time with the endless unrestrained and often silly buying of gifts is that we don’t quite know how to put our love into words"— Harlan Miller

Ted Beecher
BLA Director