Plan Now to Hand Over the Reins

Whether you’re new to business or you’ve been operating for some time, odds are you put a lot of time into setting up your business. Probably the last thing on your mind was thinking how you were going to sell your business, or pass it on to the next generation, in the future.

In fact the best time to start succession planning, or planning to sell, is at the very beginning of the life of the business.

You need to plan for selling or succession with the same attention and thought that you put into your business, marketing and financial planning. It’s critical to the ongoing success of your business.

Yet it is estimated the vast majority of family-owned businesses do not have a formal succession plan in place. Losing a key person in the business with no obvious successor can do serious damage to the value of the business. As well, there will be financial arrangements and rearrangements to be made in the event of the death, disablement or retirement of a family member which, unless planned for, can have drastic consequences.

In the worse case scenario the business itself could collapse and the family would be left with immense problems.

Sadly, the vast majority of New Zealand businesses do not reach the second or third generation, in most cases because of improper planning.  Evidence indicates that only businesses that have nurtured and developed the obvious successors within their business, both family and non-family, are likely to defy the statistics and continue to succeed.

It’s the same rationale for non-family businesses. One day you will need to sell your business, and, however distant that may be, you still need a succession plan in place right from the beginning. Your business needs to stand alone, without being too reliant on you. You need to create that culture at the start and continue to make it a part of your business. 

www.astillhawke.co.nz

Measuring business performance with KPIs

These days you need more than a set of financials to accurately measure business performance.

Today businesses and financiers are demanding more effective performance measuring systems that will not only enhance their performance levels, but also give them that all important competitive edge.

The traditional statement of financial performance, statement of assets and liabilities, and so on, is great for providing the financial information. But what they don’t do is link operational performance to the business’s strategic objectives.

Performance needs to be judged against objective criteria.

This is where KPIs come in – Key Performance Indicators. KPIs are those critical measures which ultimately determine profitability and shareholder value. KPIs are essentially a method of measuring business objectives against performance.

They tell businesses, amongst other things:

• How well they provide services
• How long they take to process customer requests
• Their product delivery performance
• How much time they spend fixing mistakes.

Investors are demanding to know that management strategies are creating value and business people need the appropriate tools to accurately measure performance in the critical areas of profitability and return on net assets. The financials alone are not enough to effectively manage businesses that are seeking to survive and add shareholder and owner value.

KPIs are a way to broaden what businesses measure.

Most small businesses would benefit from improving performance measurement standards, and while there are differing views on how this should be achieved, one point is clear. No single measure can provide a clear picture of a business. The complexity of managing a business today requires managers to be able to view performance in several areas.

Understanding Key Performance Indicators will greatly assist in finding out the financial health of your business, identify the critical strengths and weaknesses and evaluate the impact of future business strategies.

Your accountant will be able to discuss these issues with you in greater detail.

www.astillhawke.co.nz

Use the Magic Words of Advertising

Use the Magic Words of Advertising

These are the words that grab our attention in advertisements. Use the words as often as possible in the advertisement and especially in the headline.

• You
• Money
• Save
• Easy
• Love
• Discovery
• Results
• Proven
• Guarantee
• Free
• Amazing
• Incredible
• New
• How to

www.astillhawke.co.nz

Why Customers Go Elsewhere

Customers are the most important people in any business. They are not dependent on us, we are dependent on them. They are not an interruption of your work, they are the purpose of it. Your aim is to bring them back time and time again, and surveys show that the rewarded customer does come back. Look at these statistics showing why customers go elsewhere.

A survey has indicated that the reasons customers quit a business were:

§  3% move away

§  5% develop other friendships

§  9% go to a competitor

§  14% are dissatisfied with the product or price

§  68% quit because of the indifference of the owner/management/employee.  This means that nearly seven out of 10 customers decided to shop elsewhere because they felt nobody cared about them or their custom.

Some key statistics relative to customers:

§  A typical dissatisfied customer will tell eight to 10 people while a typical satisfied customer will tell five people.

§  It takes 12 positive service incidents to make up for one negative.

§  The average business spends six times more to attract new customers than it does to keep existing ones, yet customer loyalty is in most cases worth 10 times the value of a single purchase.

Find your competitive edge, market it effectively and make your business an enjoyable place in which your customers do business.