#Budget14 | Pretty good for the #SMECommunity

It's certainly not anyones' favourite time of the year - but in the main, this years' Budget was a pretty positive one for the #SMECommunity,  Rather than penning our thoughts, here's the scoop from the FocuSME Small Business Show team, featuring Avine McNally of the SFA and Brian Cleary, CEO, Clonmel Chamber.

Learning is the New Black...[or something]

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I'm continually amazed by the seemingly endless amount of folk who no longer need to learn anything.  'That's a waste of time'... Yes, the ROI has to make sense but honestly, do we ever stop learning? In life, as in business, society and the economy - things are ever-changing - learning and being open to its merits, is so important.  Don't assume you know everything... nobody does.

Why Cashflow is a Royal Pain for SMEs

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"Cash is king" is the age-old phrase regularly trotted out in conversations regarding the equally age-old problem: cash-flow.

Having worked with and for SMEs for most of my career, the challenge of cash-flow is one which many businesses face on an ongoing basis - and in more recent times, it has become an increasingly problematic issue which can ultimately strangle a business.  I've written regularly on the importance of plotting out your financial requirements at various junctures in your business's trajectory: at start-up, during growth and particularly, when applying for various funding mechanisms.  Sadly, the 'life blood' of business - cash - can be a hugely difficult balancing act, and one which some businesses fail to manage successfully.

For three years of my career, I worked in the SME credit sector - at a time when things were good, and just as the recession showed its 'hand of cards'.  Paradoxically, in many ways, the problems were the same before, during and after - with debtors stalling payments unnecessarily, credit agreements ignored and perhaps most frustratingly, a complete lack of communication throughout.

The reality of the times we're in undoubtedly means that cash and credit are compromised and ultimately, very constrained - but this is not an excuse for money owed to become money unpaid.  As per the SFA's recent report on late payments - cash-flow or lack thereof can cause colossal problems for SMEs.  Not simply because it wastes management time and has knock-on effects for credit facilities, but in turn, businesses find themselves constricted in growth planning, their own ability to make payments on time and implementation of broader business objectives are also often impacted.

While Government measures seek to promote a more prompt payment culture, through various initiatives - an incompliant, deceitful culture still pervades, where it is almost a 'badge of honour' to delay payment.  The aforementioned SFA report clearly indicates that this is very much the case.

So, what can the SME owner do to avoid cash-flow headaches?  Here are some tips which may help...

• Manage risk from the outset | Credit-check and clarify the potential clients' position, financially
• Define expectations | Proposal, Terms of Business, Payment Outline / Schedule
• Request upftont percentage payment | Not always possible, but worthwhile considering
• Maintain contact | Ensuring maintenance of agreement throughout

The Real Meaning of Strategy in Business [Version II]

Many thanks to the SFA, who recently published this version of the SAGE Ireland post of the same name.  

Normally, at this point, a blog about business strategy will contain a pithy clipping from Sun Zu’s “The Art of War” … (“Tactics without strategy is the noise before defeat” is a favourite).  It’s hardly surprising that this recurring theme appears, given that Sun Zu’s statements of strategy and tactics contain very resonant themes when it comes to strategy in business.

However! The question for most businesses – SMEs in particular – is how or why strategy applies to their business (queue mutterings of “I just want to get on with it…” or “that sounds very corporate to me”).  The reality is, as Sun Zu infers, not knowing why your business is heading in any specific direction (or the role resources, objectives and plans are playing in it) is almost definitely going to bring about the wrong outcomes.  In some cases, rather unfortunately so.  It doesn’t matter whether you’re a Fortune 500 company, or a start-up operating from a shed in your back garden… without strategy, you’re likely to be setting out on a collision-course of risk and disappointment.

So, what is the real meaning of strategy in business? Opinions vary, and strategies change to suit different times in a business’s trajectory – guiding focus and resources to suit its point in the life-cycle.  From my experience, here are some key roles for any business strategy:

1. To provide you, your team and any other relevant stakeholders with clarity regarding the purpose, focus and objectives of the business;

2. To ensure financial, marketing, sales and operational targets are met – clarity, again, being the key focus;

3. Communication, collaboration, and cooperation: to develop buy-in, commitment and focus within your team [if you have one – if you’re a sole trader – to ensure buy-in from key stakeholders, partners, funders etc.];

4. To shore-up growth by highlighting a clear path for the future and allocating the right internal and external supports in realising same;

5. To provide an effective means for challenging, evaluating and re-strategising decisions, objectives and growth – as well as business model, marketing, financial planning and other key operational mechanisms.

Obviously, there are other associated positive outcomes for businesses implementing clear strategies.   For starters, they don’t suffer from the ‘fear factor’ as often: mainly because if something lands, meteor-style out of left field – their business strategy is resilient enough for them to ‘pivot’ [as Eric Ries talks of in Lean StartUp] or adjust the sails.  Growth becomes easier to map-out and manage:  every business experiences ‘growing pains’, but they are easier to manage when the growth trajectory is clear.

Strategy also plays a defining role in your business’s future state, how it will look and operate in the future, by activating your organisation’s “vision”.  Often business owners balk at the notion of such intangibles – but believe me, vision and clarity regarding your organisations’ aims and objectives is an absolute non-negotiable.  Arduous trading conditions require businesses to be even more focused than they previously may have been, as opportunities are not always so abundant and the playing pitch is far more competitive.

So, what could strategy mean for your business? Well, you could open yourself up to the opportunities that are potentially hidden from view right now [the clarity argument], you might also be able evaluate your ‘message’ [the purpose argument] and all of a sudden, your team, stakeholders and other valuable individuals may begin to facilitate your trajectory because they get it.

Communication [internally and externally] is a central tenet of every successful business and clear, focused communication is always underpinned by a strong strategy.  Why? Because it provides the rationale or reasoning behind why you’re communicating what you’re communicating.  Ensuring your business is delivering the right messages to the right audiences is critical – not just from a marketing and sales perspective, but in terms of management, HR and market positioning.

If you think your business is immune from strategy, you’re wrong – every business needs one. Strategy acts as the blue-litmus test for your business, not simply by being put in place, but through evaluation, regular progress reviews and continual objective appraisals… re-strategising the strategy, if you will! Don’t shy away from the ‘s’ word, it could revolutionise your business.

Ireland's 2013 GEM Report | What can we learn?

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Earlier this year, I was invited to speak at Young Fine Gael's annual summer school, a part of which was their seminar focused on SMEs and job creation / economic recovery.  It was timely that, in the run-up to the conference, the most recent GEM [Global Entrepreneurship Monitor] Report, which spanned 2003-2012, had just been published.

The GEM is a hugely beneficial report, not least of all, due to the comparative data and insights included, but also because of the specific, topline facts which can be gleaned from it.  Given the continuous theme of SMEs and economic recovery - picking salient points and the clearest thematic emblems stemmed mainly from observational experience in my own work over the past few years - not least of all, since the onset of the recession.

The times they are a-changing... or are they?

The initial comparisons presented by the GEM offer some very interesting, and somewhat surprising stats regarding real change in public opinion and within entrepreneurial circles over the ten year period.  A drop of 3% in those aspiring to be entrepreneurs, while those classified as established entrepreneurs has stabilised [up almost 2% from 2003].  Furthermore, a drop of 2% is seen over the ten year period, in those categorised as early-stage entrepreneurs - whilst entrepreneurs discontinuing businesses has fallen by 50%. A heartening figure for those of us working hard to engage more women in entrepreneurship, is the ratio of women to men starting businesses in 2012, which is a little over 2:1 versus 3.4:1 in 2003.  So, some positive strides made in this area - which is good news.

A lot done... a lot more [don't say it]... 

One figure which sticks out - is the 'fear of failure' statistic, stuck at 41% in both 2003 and 2012.  Clearly this is something which is a challenge, culturally, for Ireland - despite much talk of creating and facilitating a more conducive culture for entrepreneurs [which of course, involves risk].

Lessons to learn?

There are some heartening signals in the GEM; not least of all that, despite a particularly turbulent five or six years, Ireland's entrepreneurs continue to start businesses and most importantly, keep them trading. However, there is more scope to develop on the cultural aspects of what it means to be an entrepreneur.

Failure is always a possibility - and honest failure - is part of the learning process.  The perception of failure, however is all too-often associated with major, unbridled [ill-advised] risk-taking, with little thought for the outcomes.  This is where education, at various junctures, is critical - and I am one amongst many colleagues advocating a multi-level approach to 'educating' entrepreneurs.  At school, third level and at start-up.  Meting out the prescriptive ABC training with real-time, experiential insights is critical in really establishing what entrepreneurship is all about, as well as demystifying the fear factor.

There are other possibilities, too - not least of all - the sectoral and demographic focuses which can be brought to fruition through specific measures and programmes.  Having worked on, spoken at and advised on programmes with just these exact types of focuses - their impact pays dividends - but a sustained approach is required.

In general?

Though economic forecasts are indicating a variety of outcomes for the Irish economy in coming years - it is fair to say that the green shoots seem to be putting down strong roots.  If the GEM indicates anything, it is that there is scope for more improvements, sustained focus and cohesive, meaningful policies to further cultivate and support Ireland's entrepreneurial culture.

Service providers... Time for productisation?

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Over the past few years, I've worked with many service businesses - through both acceleration programmes and enterprise support sessions.  The one core issue I see them struggle with? "Boxing up" their services into products. Why? Because often service providers are fearful of the 'cutting the nose off to spite the face' factor of culling or repackaging their offering to appeal to a wider or more sustainable target audience [and drive a more sensible, profitable revenue model].

Having battled through the pain barrier several times with growth-focused businesses and high-potential start-ups, this initial moment of panic stems only from one thing: [to borrow a phrase from my US colleagues] decisioning.  The reality is this: without a proper 'shelf of products' any business is going to spend an inordinate amount of its time chasing client orders, delivering to all sorts of unmanageable demands, and, ultimately, struggling to achieve or develop a tangible growth model.

This is where the truth of decisioning [or decision-making] comes to the fore.  Service businesses, in some ways, can shadow their colleagues in product-based businesses - for in a lot of instances, it's the simple analogy of developing a 'line of products' out of your service offerings that will create ultimate scale possibility.  When you walk into a supermarket or store, and you know what you're there to buy - you simply head to the section of the market you know the item will be found.  It's that simple.  Herein lies the root of the analogy - knowing your customer well enough to be able to define your services' productisation clearly to resonate with their requirements...

Which brings me, nicely, along to ... So, what drives the decisions you need to make? Well, you need to be paying attention to #1 - your customers [current, past and future], their habits, needs [refer to my comments on NOSE of old!]; #2 - your market-place, trends, upcoming legislative / other changes etc; and #3 - bear all this in mind in line with your own business's vision.  Thinking about these few questions - where are the opportunities  potentially, going to surface from?

Another key driver in moving to productised services for business development, is the role regular strategy reviews play - how often have you [or do you] spend on analysing or paying attention to service demands and their trends? Which ones are rising and which are falling?  How are revenue projections and sales forecasts performing versus their real outputs? Or are you simply like that exhausted hamster on its wheel, continuing on the same track with no real sense of what's going on around you - either good or bad?

Finally - when you sit back and assess these realities - what are they telling you? Are customer trends, demands, the market-place conditions and your own strategy review revealing what your 'product line' should look like? If not - why not? Remember that your customer should be at the centre of every decision you make regarding your business [especially when it comes to your business model]... so listen carefully to their feedback and keep their [aforementioned] NOSE in mind at all times.

A reflection on business, three years' on...

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Time flies when you're having fun... time also flies when you're in business.   While I might be accused of telling a tiny fib if I said that building a business from start-up was fun - I don't think I could be contradicted when I say it's, well... challenging, exciting, nerve-wracking and most definitely one of the most intense learning experiences anyone could possibly have.

Reaching the end of year three, and looking into year four of this - I'm sick of the phrase 'journey', so I'm opting for 'excursion' - provides a really timely opportunity to consider what has passed and take the opportunity to reflect.  If I could say definitively, the specifics of what I've learned in three years - and not the day-to-day management 'stuff' - but the real qualities of survival and personal development... what would they be?

First and foremost, being successful - e.g. achieving goals in any context of your professional life - requires commitment and an unerring sense of bounce-back-ability.  Ostensibly, I'm sure many people would expect that I've never experienced a failure or disappointment... however I can say wholeheartedly that I have. It may not have concerned a magnum opus coming crashing down around my ears, but I have experienced my fair share of un-won tenders [despite very good odds], the high praise and enthusiasm of a great prospect [which fell by the wayside] and the general regret of discovering that something wasn't 'as you thought'.

In the very early days of any venture or enterprise - these disappointments / outcomes become the 'norm' - you battle daily with them.  In a lot of ways, you are no different than a musician chasing the all-important record deal - and can expect a lot of 'nos' until someone realises your talent. Resilience is key.

Another nugget of great import: if it's broke, do fix it.  I write regularly about the vanity complex many businesses suffer when they are so in love with what they do, they can't see that nobody wants to buy what they're offering.  Even the best-researched, well-thought-out and developed service or product can experience road-bumps [and of course, we're all subject to changing times and demands] - keep your eyes wide open, remain innovative and fresh.

Don't dwell on things that haven't come to pass; if it's not for you... is probably the hardest accepted reality [and not always confined to business].  Having the ability to let go of the things that haven't come your way is a skill to learn, and the sooner you do, the better.  In the fast-pace of business - it becomes easier to see why things happen the way they do, and in every instance - it's for the best, though it might not seem like that at the time.

Finally, I think the significance of connection - with others - both virtually and in person, is critical.  I can honestly say I have learned more in three years of this excursion than a degree and several years in various managerial roles could ever have taught me - much of this learning came not just from experience, but from the generosity of spirit and kindness of colleagues.