Zombie Businesses – you will find it dangerous coming out of the crypt!

The term “zombie businesses” has been used over recent years, particularly by insolvency practitioners, to describe those businesses which are just surviving. They have been just able to meet their costs, pay interest on loans etc. but are treading water on the thinnest of knife edges with the risk that the business will fail if things deteriorate just a bit more. The numbers of these businesses peaked last year, with things improving in 2013, but there is some good and some bad news if your business falls into this category.

First the good news; the latest survey by a leading insolvency practitioner shows a fall of 39% in the numbers of these “zombie businesses” in the second quarter of 2013 compared to the same quarter a year ago. This result they see as the first real sign of recovery in the economy, although there are other signs around of the first of the much maligned “green shoots of recovery”. This is particularly good news if you are a business in the food and beverage or logistics sectors which showed some of the biggest falls.

Unfortunately there is a downside to the good news, and in this case it is the problems likely to be faced by these businesses as the recovery gains pace. If they weren’t under financed before the recession, they are likely to have exhausted all their reserves just surviving, and are therefore likely to be chronically under funded. Experience from past recessions has shown that the most dangerous time for these businesses is actually as the economy starts to recover and the order book starts to grow. This is because many businesses don’t realise the negative impact that this will have on their cash flow as they have to increase their purchases of raw materials and finance a growing debtor book.

However all is not lost, this disaster scenario can be avoided with a little thought and planning, rather than rushing in, grabbing every order that comes onto the radar, keeping your fingers crossed and hoping for the best.

If your business fits the description of a zombie business or you feel that you need some help to plan your future in an uncertain world, give me a call. An initial meeting to discuss how I might be able to help is free and there is absolutely no obligation. There is even better news if you are in the manufacturing sector; there is the potential for 50% of the costs of my work being funded under a scheme managed by the Manufacturing Advisory Service.

But don’t just take my word for it; you can see how I have helped past clients in my testimonials and past experience on my LinkedIn profile by clicking the button below.

So don’t be afraid to come out of the crypt into the light of a new dawn for your business, you just need to plan your resurrection. Zombies arise!

View Trevor Edwards profile

Forget the economic “geek speak” and deal with it.

The problem with the current trend for headlines using, or more often misusing, economic technical terminology, is that they risk paralysing us mere mortals into the business equivalents of rabbits dazzled in car headlights, just waiting to be run over. We have been assailed by double dip and now triple dip recessions, fiscal cliffs, and all manner of disaster scenarios until we can no longer so see the wood for the trees. Yet each day the sun comes up, and we find that, once again, the world has not ended.

My point is that despite all the doom and gloom, since we don’t have a magic wand to change things, we only have two choices, give up and crawl back under the duvet or deal with it. While no-one can deny that things aren’t as easy as they seemed to be before the banking emperors were found to have no clothes, things are not universally disastrous. Even in the torrid areas of retail and construction there are businesses adapting and thriving.

As in nature, so it is in business, those businesses which adapt to the changing environment thrive, while the dinosaurs become extinct. Not perhaps the most comfortable thought in the current economic environment, but if you are prepared to come to terms with the fact that life isn’t fair, so you had just better get on with it, there are things you can do.

First of all, ignore the headlines and concentrate on the underlying economic environment as it affects your business. The consensus is that growth in the UK economy is going to be slow, but of course that is an average of activity across all sectors, so your sector could be better or worse than this.

Next take a step back from fighting the day to day tactical battles and take a longer term view of the business in relation to the business environment you find yourself in. This is something that most businesses just don’t do, and done properly you will be surprised how it can unearth opportunities and identify problems before they occur, allowing you to plan the actions needed to take advantage of the opportunity, or overcome the problem. This doesn’t have to be a time consuming exercise or a complex bureaucratic process, it just requires some hard thinking about where are we now, where do we want to be in the next 3-5 years, and how do we get there. What it may require to be really effective is someone to facilitate the process, preferably bringing a fresh pair of eyes to the business. The key thing is to have someone independent of the day to day activity, to challenge the status quo and ask the awkward questions we all avoid if we can. This may be a non-executive director, if you have one, or an external consultant.

Then once you have developed your longer term plan make sure that it is broken down into action plans, with responsibilities, time scales and resources allocated.

Finally regularly review the plan, it should not be seen as having been written on tablets of stone, and here again the third party can be key to its successful delivery, by regularly monitoring the process and holding people to account. Both the internal and external environments are constantly changing, and your plan may have to change to keep it on track, and maybe even change completely in the event of a major dislocation like the crash of 2008. My view would be that a progress update against the action plans should be discussed at a monthly board meeting, with a quarterly or half yearly review in more depth. Of course if you are hit with a real curve ball that knocks you substantially off track then this will probably require more immediate action. The point is that once you have mapped out the way that you want the business to go, by regularly reviewing progress any deviation can be quickly identified and corrective actions put in place.

And that’s it, a simple process requiring a bit of investment of time and effort. Hopefully once you have seen the benefits and clarity that a regular longer term planning process brings it will become part of the fabric of the business, and that can only result in a better business.

Lastly some good news for manufacturing based businesses; there is funding available to cover 50% of the cost of getting an external facilitator to assist with this process. As always there are criteria to be met but the definition of manufacturing is pretty wide. So if you are interested in learning more I can be contacted at trevor@uniqueconsulting.co.uk, and remember, forget about the headlines and just get on with it!

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Workforce engagement is key to creativity, and creativity = profit

One definition of creativity is the capacity to develop ideas, solve problems and exploit opportunities. Isn’t that just what is needed in organisations to create success out of the recent downturn? Certainly chief executives in a Boston Consulting Group survey thought so, because creativity was a their number one strategic objective for seven out of the last eight years ( in 2008/9 not surprisingly it was survival).

Creative businesses and their people are more productive in every way. Whether it is their efficiency,  their creative approach to cost cutting, the development of new product ideas or in a myriad of other ways, creativity equals profit, so it’s hardly surprising that the survey results came out as they did.

So what has all this got to do with workforce engagement? More on that later, but first why do we employ people at all, now that so much of the repetitive work can be automated?

The answer is of course to deal with the non repetitive tasks. Developing new products, new and better ways of doing things, and even producing the equipment that automates the repetitive tasks. In other words for their creativity.

Human beings are inherently creative, a fact that is perhaps best demonstrated by looking at small children. Just give a small child a cardboard box and it becomes anything from a tank to a house, in fact anything their imagination can conceive. Unfortunately as we grow up we become more constrained. Experience teaches us to restrict our imagination, or at least keep its products to ourselves, and with work in many organisations still being organised in the restrictive and controlling ways more suitable for the days when  most work was manual and repetitive,  any creativity we might exhibit is crushed at birth.

So how do we change this situation. In my view the only way to release this inherent creativity to the benefit of the organisation is to change the workplace environment, to make it a place where the workforce are allowed to use the creativity they are born with in positive ways. If you don’t you will continue to get one of two responses, at best apathy, and at worst active disruption and rejection of the organisation’s objectives. Just one example of how destructive and expensive this latter response can be  comes from an organisation I worked for some years ago. Here a group of the warehouse staff demonstrated their creative talent by developing a very elaborate, ingenious , and unfortunately very successful,  scheme to steal products on quite a large scale. How much better if we had been able to harness that ingenuity for the benefit of the organisation.

So my thesis is that creativity does not have to be created, it is there already but suppressed. It has first to  be released, and then nurtured, and yes, you can train people to be more creative, but unless you create an environment which supports and encourages creativity, the money spent on the training is completely wasted.

This is where workforce engagement comes into play, because properly done, it develops a work environment where everyone in the workforce can contribute, and is most importantly is valued for their contribution, irrespective of their job title. In these circumstances you will be amazed by the flow of ideas that is generated across the organisation, some will be new but many will have been around for a long while, but not discussed because ” it’s not my job to think”. Well in this new environment it is everybody’s job to think, and amazingly they can, and they do, and what’s more they feed off one another’s ideas making them bigger and better.

This is not a magic wand, providing a quick fix, although properly implemented using a consistent process it’s amazing how quickly things begin to change. What it is,  is a long-term self-sustaining solution to the lack of creativity seen in many organisations. After all taking this approach you are now utilising the ideas of everyone, rather than  the few who were previously charged with the responsibility to be creative, and if each one only contributes a single good idea you will have difficulty keeping up with implementing them all.

So before trying to train creativity into your organisation, start by creating the environment to release the hidden creativity in a resource you already pay for, your staff. Of course  the benefits of workforce engagement are not restricted just to improving creativity, but I’ve discussed these in previous posts, so if you are interested have a look at them, and of course if you are interested in how to create the engagement in your workforce I would be happy to discuss this with you.

17 ways to increase profits by 50%+, the first few

In discussion with friends at the pub, I asked one how his business was going. His complaint was that he had too much work! Not the usual response, but a recent change in legislation seemed to have really helped his business.

In answer to his dilemma my response was “If you don’t want to take on staff why not increase prices? That way you will lose some business but what is left will deliver more profit”  This is a perfectly viable strategy in his business, but may not suit everyone. He offers  a service that consumer clients only buy once, therefore a price rise should not trigger a response, as long as the new price is not wildly out of line with the market price. His repeat business to business clients can be dealt with differently as the route to that market is generally different.

This discussion reminded me of a presentation on increasing profits I gave some time ago, and this series of blogs is a dusted down version. No magic wand, just things to think about and try, and particularly relevant in the current climate where the profitability of many businesses needs a boost.

While I remember I will make the point about trialling. If you see something that you think might work, first try it on a small-scale and see how it works. Then, if it works, gradually roll it out. That way the risk of unforeseen consequences is reduced and success is  more likely.

First a point about growing sales. I will return to this later in the series but while  growing sales is very important, equally important is controlling costs since every £1 saved goes straight to the profit line, while only a small proportion of £1 of extra sales is profit. The current recession was preceded by 10 years when business life was relatively easy, and as a result people seem to have lost sight of cost control as a profit generator. I can’t understand this, because if I am making good profits, surely I would want better profits? “Simples” as the Meerkat says. Or maybe not, it’s all about getting too comfortable. Well the current situation has sure changed that for most businesses.

The next point is about action. If you read this and don’t take action when you see something to use in your business, what will happen? Nothing, that’s one thing I can be certain of, in fact I can guarantee it! You may have gained a little knowledge, and hopefully enjoyed the read, but knowledge is only powerful when used.

The final point in this first instalment is to exhort you to put aside time to plan. A well thought through strategic plan will identify a clear route to your business goals and set out action plans (that word ACTION again) to move you forward and if you take action on this one point alone your 50% profit improvement should be assured. Why do I say that well it comes from a survey by Shell LiveWire which showed that on average a business that undertook a regular planning exercise produced profits 50% greater than those that didn’t.

If you are still not convinced and don’t think strategic planning is for you, have a look at my earlier post under strategic planning, or have a look at a testimonial from a strategic planning client at http://ucs-success.com/testimonials.aspx, and of course I would be happy to help you to develop a plan. Just e-mail me at trevor@uniqueconsulting.co.uk.

The next few ways in the series “how to increase profits by 50% plus” will follow over the next week or two. Hopefully among the topics covered there will be things you can apply to your business to make it more profitable but remember in the end it all comes down to taking action.

Strategic Planning isn’t just for the big boys

Whenever I talk to owner managers about strategic planning you can see their eyes glaze over. It all sounds like the sort of management speak they don’t have time for at the sharp end. They will say “It’s all very well for big companies with big budgets, but what will it do for me other than cost me a lot of money and time?” or “I have a budget/business plan”. Having said that  I am regularly astounded at how many don’t have either.

Be that as it may, why should a business in the SME sector do strategic planning, and how do you do it faced with the level of uncertainty around in the current business climate?

Well lets take the last question first. Let me say first of all that all of life is uncertain all of the time. You can’t get rid of uncertainty, so you have to learn to live with it. As they say the only certainties are death and taxes. However in business, as in every other aspect of life, you can reduce uncertainty by identifying those things which are likely to affect you the most and then thinking through what you would do should these things occur. By doing this, hey presto, you have some strategies to deal with the potential issues that may arise and thereby have reduced the uncertainty. Now you can’t remove 100% of the uncertainty, and some events are so infrequent that you wouldn’t think them worth considering, but if you can remove 50% of the uncertainty surely that is worth the effort.

The key issue for me is first of all is to do this analysis, the difference at the moment is that you should perhaps do it more often to make sure that your strategies reflect the fast changing environment.

So why should businesses small or large do some strategic planning? Fundamentally businesses that spend time considering the basics of, where are we now, where do we want to go, and how do we get there, are much more successful on average than those that just bumble along reacting to whatever is thrown at them. If you were going to cross the Atlantic you wouldn’t set out without a map and supplies because, get it wrong and your dead. So it is with business, get it wrong and the business dies.

It seems to me fundamental that if you don’t know what you are trying to achieve with your business how do you know what actions you should be taking (if you don’t know where you are going any road will take you there). You don’t have to be aiming to be the next Microsoft to do this sort of planning, it is just as effective if you just want to make a decent living and not have a lot of stress. Both are equally valid aspirations but they will, of course, require totally different strategies.

Strategic planning done well will help you see the wood for the trees and produce a solid plan as a foundation for the future of your business. Once you have this in place you can build around it a set of action plans, which are consistent with the plan and take the business towards its long and short-term goals, and which identify the resources required and their timing etc. All this then gives you a route map for the business against which progress can be monitored, and when the inevitable problem hits you will be able to see it early, consider its impact and take the appropriate actions to get back on course. Essentially a business which routinely carries out strategic planning as part of its business practices will be more in control of its destiny, and for the owner manager that means greater success with less stress.

For some of the benefits experienced by my clients, see their testimonials at http://ucs-success.com/testimonials.aspx. N.B. the Fletcher and Co testimonial was based on approx 8 days of work with the business so judge for yourself its effectiveness.