Accelerating growth through continuous performance improvement

Fuelling Ambition is a series of four seminars hosted by accountants Buzzacott and law firm Winckworth Sherwood exploring the factors that contribute to sustainable growth and success of SMEs.  The Management Perspective was the second seminar in this series and was held on 11 September at Buzzacott’s St Paul’s offices and was attended by more than 40 business owners, managing directors and their advisers.

The route to success for small and medium sized businesses is much harder in today’s economic environment.  Strategy is no longer enough; the behaviour of leadership teams is, as many of our largest institutions might testify, increasingly playing a pivotal role.

Ian Muir, a former executive committee member of Charter International PLC and now a director at Keeldeep Associates reminded delegates that businesses need the right people, structures, incentives and the right behaviour.

The right people - Business owners should look for the three ‘Cs’ – confidence, competence and commitment.  As a business owner you want your staff to have the confidence to raise concerns, the competence to understand the cause behind problems and the commitment to take countermeasures to resolve issues.

The right structure - Does your structure enable people from a diverse range of backgrounds to rise through the ranks?  Does it allow mastery, autonomy and purpose?  Review management layers and spans of control regularly.

The right incentives – Can the total reward be easily understood and would it stand-up to the three-minute elevator pitch?  The right incentives can lead to meaningful change.

The right behaviour – A cost advantage can only be maintained for six months or so, but a cultural advantage can hold competitors off for seven years or more.  Every business should have its vision and values clearly articulated from the top down.  “Leadership is communication.  What do you want your people to think, feel and do?”

Into the Dragon’s Den

The popular TV programme Dragons Den has brought private equity investment to a whole new audience.  But what do private equity investors look for before saying “I’m in”?

Hardeep Rai of Hamilton Bradshaw Venture Partners, a private equity firm founded by Dragon James Caan, wrapped up the seminar with some firsthand insights.

Investors look at people, their passion and personality followed closely by product, position, price, production and investor proposition.  The management team has to be believable and credible.

The financials are next.  Buyers and investors look for potential, not just turnover.  Growth trends, profits and margins, and balance sheets all come under close examination.  Market share, however, doesn’t always necessarily inflate a sale price; if a company dominates its market investors will want to see where future growth will come from.

Business owners should explore all funding options - bank loans, overdraft facilities, invoice discounting and potentially funding from friends and family - before embarking on a journey with private equity, said Rai.  “Private equity firms are generally very good at growing businesses, but you will need to be prepared to give up equity in return for that growth.”

The Buzzacott/Winckworth Sherwood Fuelling Ambition seminar series continues on 25 October with the third seminar – The Owner’s Perspective.  Speakers include Grant Gordon, Director General of the Institute for Family Business and Emma Rogers, Chief Executive of Little Bridge World. To book you place or find out more information please email marketing@buzzacott.co.uk.