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Business Development & Marketing General Rescue, Restructuring & Recovery Turnaround

Why would a business leader need a business mentor or a consultant ?

Successful businesses need leaders who can make decisions. Input from others makes it easier to make the right decisions first time, instead of wasting time on rectifying the wrong decisions.
All the most successful business leaders, including Mark Zuckerberg, Elon Musk, Bill Gates and Warren Buffet reputedly practice what is called the five-hour rule, according to various articles on inc.com.
It was a practice started by Benjamin Franklin, one of the USA’s founding fathers and authors of its Declaration of Independence and its Constitution.
It involves spending an hour a day either reading, reflecting or experimenting in order to stay well-informed as a business leader.
While it is clearly a good habit for a business leader to follow, whether they are the head of a SME or a large corporation, it can be lonely at the top and there are times when it can be important to have another person with whom to explore ideas and perhaps refine them into something workable before making a key decision.

Which to choose – business mentor or a consultant

businessman with business mentorA successful business is never static so there will always be new problems or opportunities confronting the CEO and, no matter how much attention she or he pays to learning and developing their skills, knowledge and ideas, there will be times when it will help to get specialist expertise as well.
The business consultant is likely to be more focused on the business and its success. Their approach is likely to be more formal and structured so it is important to choose someone who understands or has worked in a similar business environment as well as someone you can be open with.
This means asking some pertinent questions before choosing a consultant who is right for you and your business, such as their experience in business, their experience of the issues you want to deal with, qualifications, and asking for examples of their work.
It is helpful to have a written agreement with a consultant that includes frequency of meetings, objectives, milestones with dates, confidentiality agreement, charges and payments and how either party can terminate the agreement.
Mentors tend to focus on the individual leader, on their wellbeing and personal development. An arrangement with a mentor can be less structured, although it is still wise to define the frequency of meetings and expectations of the relationship on both sides.  It could be someone you already know, whose expertise and judgement you respect and who is willing to act as a sounding board for ideas, or it could be a more professional business mentoring service. The good mentor asks questions and invites reflections.
Having a mentor can reduce risk when considering options and making decisions. Mentors tend to explore the rationale for any decision rather than giving advice in relation to the options or the decision.
Both mentors and consultants help focus a leader on the main issues to be addressed and bring clarity and process to decision making. Do you have one?

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Accounting & Bookkeeping Business Development & Marketing Cash Flow & Forecasting Finance General Turnaround

Do SMEs gather enough data to make informed decisions?

While large companies tend to have systems that provide information for management to monitor activity and make informed decisions, small businesses tend to ignore these in the mistaken assumption that because the directors are involved in everything they know what is going on.
Many SMEs simply focus on profit and loss, where the directors monitor how profitable the business is. They will also certainly keep an eye on the bank account. This may reassure them about their cash position.
However, without a balance sheet and regular scrutiny of the current assets: book debts and work in progress, stock and short term liabilities: factoring, trade creditors and VAT/PAYE it is difficult to know the real situation.
It is common for small businesses to run out of cash because they simply haven’t been paying suppliers or HMRC.
The reassurance of cash in the bank is little comfort when liabilities are mounting.
We would argue that it’s essential to have a basic dashboard of key figures to review regularly, including some of those items listed above. This will give a more accurate picture of where the business is today, but even so does not necessarily tell you where it is going.
Monitoring performance also requires further information, such as debt collection, aged debtors or pre-payment by customers as well as sales related information such as inquiries, quotes and sales orders are equally essential for planning the future.
While every business is different, each should have a dashboard of information that will help it monitor performance and adjust plans to ensure it doesn’t run out of cash.
What information is crucial to your business future?