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Category: Strategy

Planning to avoid energy horror this winter?

Posted on by Susie Kevern

Do you have an energy strategy?

Even with the governments proposed interventions energy costs feel like they are spiralling out of control. Energy has been a relatively predictable cost over the last couple of decades, but as with Covid lockdown, uncertainty makes any sort of planning for the future seem risky. However planning is vital as this will have a big impact on cash flow planning.

While I was tidying out files last weekend and came across an articles that I had pulled out of CIMA’s members magazine in 2012. Energy costs were rising at that point, but the article seems ahead of it’s time now.

The positive thing about looking to reduce energy costs (and therefore usage) is that it also reduces your carbon footprint and improves future energy security.

1. Develop an energy saving strategy. Massive price rises make small steps like checking insulation, draught proofing and getting an energy performance review seem trivial. However these can also be relatively easy ways to start reducing energy usage, so make a good place to start. Furthermore, investing in building improvements will often qualify for tax savings.

2. Promote a change in staff behaviour. We are all aware of the current pressures of cost and the need to reduce carbon emissions. Welcoming and even offering rewards for ideas from your team for ways to improve energy efficiency gives everyone an opportunity to contribute

3. Look for quick wins: the same things that you’d do at home. Review your energy deals (that advice may not have aged well), turn the thermostat down a little, etc.

4. Monitor IT energy consumption. As we have transitioned to paperless offices and video conferencing we are using IT more and more. Staffordshire University studied their IT energy use and found that desktop monitors consumed 30% of their energy use while they were idle, and 40% outside of office hours. By encouraging users to turn off monitors when they were not needed they saved £65,000 per annum.

5. Install a smart meter (again, this may just frighten you more at the moment)

6. Use an energy management system. Similar to the principle of smart meters, detailed information about where energy is used allows targeted, informed action to reduce spend. Working to reduce the big energy usage slightly makes the impact far more noticeable.

7. Check efficiency of machinery. Whether this is IT, air con or machinery, everything works better when it’s regularly serviced. Compressed air leakage is often a huge (avoidable) source of energy waste in manufacturing companies.

8. Finally, because we’re accountants… manage the financials more effectively. Can you breakdown utilities by type, supplier, site? Getting better information about what’s driving spend to team leaders who can make changes allow them to act. Good data is essential to make good decisions.

In the current climate the article would probably have added “keep your fingers crossed” but taking action to combat the current price pressure and reduce future reliance on energy is much more effective.

Planning for successful business innovation

Posted on by Susie Kevern

Every business needs to innovate, to stay relevant to their customers and stay ahead of their competition. But successful innovation requires thorough planning and careful implementation. Financial planning is a key part of this.

Lets face it; it’s easier to come up with new ideas to grow your business than it is to implement them. Change is always necessary, but needs to be carefully planned to avoid destabilising the successful business that you’ve taken time to build.

A key part of the planning is what I think of as “Sequence and Cadence”. You could say that they’re the same thing, but bear with me – the difference is subtle.

For successful innovation you must plan to allocate enough time and resources to new projects to allow them to reach their logical conclusion (the cadence) but also balance the timing of competing projects so that they don’t drain your core business of the resources it needs to continue (sequence). A collection of half finished plans could be worse than no innovation at all!

Cadence

When you set out on something new; a product development, a new marketing campaign, etc, you have to commit sufficient staffing/ management/ capital/ investment/ time to give it a fair chance of succeeding. Even the most promising ideas struggle to reach their full potential if they’re starved of the necessary budget or attention. Each project is inherently different, so there’ can’t be a generic “one new development per quarter” approach.

In budgeting, and business planning in general, it’s vital that you recognise this and reflect it in the numbers. It’s also worth thinking about a “what if” analysis: what if progress has been slower than expected but you’ve come this far and giving up now would waste all the hard work – you just need a few more months (we’ve all been there…). When do you draw the line and move on to new opportunities?

Sequence

Sequence is about the bigger picture. It’s when there are multiple projects in progress but a limited amount of investment (time or money) to go around. If you spread your resources too thinly you could end up doing catastrophic damage to the whole business even if individual projects are growing nicely.

A resilient business model has to be grounded on profits and cash from established products and markets. New lines may promise great rewards, but the investment of time and resources that they require will take up cash and add to spending while they are establishing a niche.

This is especially true when the new sales involve customer credit. They can deliver new sales, but the cash doesn’t arrive in your bank account to pay for new marketing efforts until a month or two later.

Keeping an eye on the timing of expected spend and income from new projects is the sort of planning that is much easier with detailed budgets and cashflow plans. Information on how good that glittering opportunity actually is, in comparison to what you’ve already got, and highlighting where the pressure points may be gives you the chance to model how you could work out strategies to keep business running smoothly.

You can find out more about how I help businesses manage their finances here.

How to plan for an unknown future?

Posted on by Susie Kevern

How can you plan for the future when you don’t know what it holds? Come to think of it: what do you not know about your business?

December is usually a busy month for business planning with my clients as we spend time looking at the next year in more detail. That tends to be true even when their year end isn’t December 31st – the change of calendar year is a good time for reflecting on progress and looking ahead to the future.

However 2020 has already been littered with new forecasts, re-forecasts, new opportunities and dashed hopes. We’ve pretty much exhausted all the options for revising the financial detail!

Instead, I’ve set aside time to think about, and crucially, document the things that we don’t know about the future.

We don’t know whether there will be more coronavirus disruption in the New Year, or the impact that a vaccine will have on the economy – can it stave off the predicted recession? We still don’t know what Brexit will throw at us, but we’re used to that by now!

But what about other risks?
What if one or several of your customers moved their business elsewhere? What if one went bust? How reliant are you on a particular customer? What’s the spread of business (and importantly profit) between customers? How much do they owe you?

Where* do you think the risks could be? (* you’re bound to be wrong here, but considering the risks is still valuable). What action can you take to get better information, or reassure yourself?

How about your suppliers? How quickly could you replace one if they hit problems? How close are your relationships with key suppliers? And while we’re on the subject do you have adequate back up if a staff member handed in their notice?

Do you have deposits or prepayments with suppliers that you depend? And what about directors loans? This is getting generic now, because every business is different but hopefully you see where I’m going.

While this isn’t a cheery, “season of goodwill” sort of message the point is that a relatively small amount of time working out what you perceive the risks that your business faces are will let you start to plan around them. You will bear them in mind when you make decisions, perhaps even subconsciously. And most importantly when the worries are on paper, not stuck in your head, you can sleep better at night.

So what did I find out about the businesses I work with?

Firstly, I find it’s always enlightening to look at all my clients together (in private of course). They are a diverse bunch: small and not so small businesses in different sectors.

However looking at the challenges in one can spark off ideas about the challenges in others and that’s one of the benefits of having an almost outside perspective on the business.

The risks that I identified initially were:

  • Unsurprisingly Brexit is still a big unknown (no prizes for guessing that)
  • Continued Covid disruption (don’t even mention the L word) will either be a bonus or a hindrance depending on sector
  • Reliance on key staff is a threat everywhere, which is true of any small business. That’ll result in more efforts to document and share information in the New Year; improving contingency plans especially where business owners are concerned
  • A bit of work needs done thinking about the reliance on certain key customers and what can be done to reduce the impact if they were to disappear
  • And in one business we need to monitor the levels of cash paid upfront to suppliers – cash that would be lost if that supplier was to cease trading

So plenty of work to be done in the New Year thinking about future proofing business, even while we don’t know what the future holds.

If you would like to take a look at where the risks may be in your business give me a shout; I’m always keen to help. You can find out more about how I help my clients here.

Make a Plan

Posted on by Susie Kevern

How do you make a plan for the rest of this year? If the last six months have taught us anything it’s that we can’t predict the next twist in the story. So is planning a pointless waste of time?

This is the (polite) argument that I’ve been engaged in this week while I was supposed to be working hard on other things. Granted, it’s difficult to see what the future will look like, but is planning still worthwhile?

My point is that actually we have never known what the future holds – the unknown is nothing new. What is hitting harder at the moment is the uncertainty; the range of potential outcomes that are theoretically possible and those that haven’t seemed possible up to this point. There’s also a big chunk of consequence; in many businesses there’s less margin for error now.

So in the current scenario I’m pushing to follow General Eisenhower’s dictum: “In preparing for battle I have always found that plans are useless, but planning is indispensable.”

Without having devoted some quiet time to assess what we’d like the plan to be and, more importantly, what we’d like it to deliver we won’t have the right perspective to spot potential opportunities as they arise.

While it may take time, focus and some out of the box thinking, having a plan which you can adapt later remains the best way to order your thinking and prioritise action. And who knows, that preparation may put you in the position where you can see new opportunities arise out of the uncertainty!

Financing a growing business

Posted on by Susie Kevern

Yesterday I was lucky enough to be at the NatWestBoost event in Exeter with Wilfred Emmanuel-Jones of The Black Farmer. It was a fantastic morning full of inspiration and really good advice – but what struck me was Wilfred’s take on financing his business.

With an eye-catching brand and great proposition it is ripe for raising capital from investors or crowdfunding & he confessed that he had looked into it. But in his words: “the moment that you have outsiders in your business you have to listen to all sorts of other perspectives. Growing a business needs the tenacious drive of a passionate entrepreneur”

I speak to lots of ambitious food businesses who need more cashflow in order to grow. Some of the successful crowdfunding stories make it seem like a low risk, easy way to grow. However in practice it’s never as simple as the stories make out and you give away some of your control and potential rewards as well.

At the workshop on 25th March I am lucky enough to be joined by Toby Jones from Start Point Finance who advised Wilfred on raising capital to grow his business (Start Point Case Study). Toby will share his advice and experiences on the right way to raise money for growing businesses.

Does my Business Plan need a Mission Statement?

Posted on by Susie Kevern

Mission statements are just corporate waffle, about “empowering”, “finding new paradigms” and “evangelising findings”. Right?

Recently I have been working in developing Business Plans with two (very different) clients. As part of my preparation for this I started working on my own Business Plan.

It has been about two years since I wrote my original plan. At that point I was just beginning – exploring what I wanted to do and trying to work out what my clients valued about the work I was doing for them.

So it was very vague in some ways, but it was specific in others. For example I knew, and wrote down that I wanted to limit my working hours to school hours, and then only during term time.

This has proved really valuable – when things were going badly I could remind myself what my original idea was and see that if I could pull it off it would be worth it.

Once or twice people suggested full time roles to me which would have been financially lucrative, but demand much more time. My written down business plan enabled me to compare those opportunities to my expectations and see if a job was something that was worth sacrificing my flexibility for. Clearly it wasn’t, or I wouldn’t be writing this now!

Over the course of the last year things have gradually fallen into place and so it seemed like a good time to refresh my business plan to fill in the gaps in the previous one, and set new targets for the next few years.

I have developed my own template for my clients’ Business Plans; a bit more personal and detailed than some of the generic internet ones but basically covering the same material. So, I worked through it and finally came to the mission statement (I think you should leave the Mission Statement to last, because sometimes it’s difficult to understand what’s important until you have focused deeply on what you want to achieve and how you’re going to do that.

Initially I thought that I might just write a sentence, but I have recently read “The 7 Habits of Highly Effective People” which extols the benefits of having a Mission Statement that means something to use as a guide to what really matters. So I really thought about it and lo and behold I settled on:

“I will help small businesses control their outcomes by taking the time to understand their practices and problems and by respecting their hard work and their trust in me. ”

This reflects my clients’ feedback on how they feel about the way I work, but most importantly I feel that if I can stay true to this I will be really proud of and fulfilled by what I do.

With a Business Plan that’s written down I have the ability to look back in one, two or even five years and see how the actual progress compared to my plan.

So, to answer my original question, I think my Business Plan is better for having a statement at the beginning that sums up, in one sentence, what it is that’s important to me and what I’m aiming for.