Having established that the road to better financial controls lies in changing the business culture from a nurturing, family ambiance to a tough numbers-driven environment – it’s time to get into the driving seat.
In my What if Forums comprising groups of owner managers and bosses of family run businesses – the need for making this hard-hitting culture transition sparked from robustly challenging my members to venture into what are often perceived as the ‘no go’ areas.
By this I mean digging deep to find out what they want – and need – for their respective futures, what their families expect from them – and whether the two are aligned or diametrically opposed. Having reflected long and hard, the subsequent ‘light bulb moments’ made the guys (and gals) realise they needed to take dramatic action – hence the reason for this series of posts.
Embarking on this culture transition requires a four-pronged attack that starts with planning the future of the business before embarking on the people, financial and mental preparation. Step three is changing your leadership style and the fourth and final stage is executing and sustaining the cultural change strategy.
Planning the future entails digging deep and establishing:
1. Where are you in your journey as a boss and leader?
This puts the spotlight on you. It is not an exercise for the faint hearted and one which demands brutal honesty and introspection. Answer the following questions:
Why did you go into business in the first place?
Cast your mind back to when you took the first bold steps to ‘break free’ and ventured out on your own – energised and excited to fulfil your dream. Were you seeking a 9am -5pm lifestyle business that enabled you to spend more time with family and friends – or were you looking to build an empire?
Do you enjoy a healthy work/life balance?
Did you get on top of your business over the past years/decades – or are you still the proverbial hamster on the wheel whose hours and working life are spinning out of control?
Are you still missing important family events or are you the first to arrive?
What is your exit plan?
When do you want to retire – and how will you pass the endless hours and days that stretch ahead? Taking the time to devise a life plan is a crucial – and one which becomes even more complex if you are a family business where the issues of succession planning can be a minefield.
2. What type of business do you want going forward?
Having signed up to making seismic changes – which include ditching friends in business who have been among your nearest and dearest over the years, to get the financial results you need to fulfil the lifestyle you seek from your life plan – it’s time to set business goals.
Where is the business now?
Is your company trundling along or is it consistently meeting its goals and objectives? How would your clients or customers describe it?. Does it have a competitive advantage – and if not why not? How would a prospective buyer perceive it in its current form?
Where do you need it to be?
Do you aspire to run a lifestyle business that delivers you sufficient income and a wealth of free time to pursue you hobbies and passions? Or are you seeking a more clinical, corporate operation which runs with military precision and delivers maximum profits?
What needs to happen to achieve the above?
What steps, processes and people (which are currently lacking) does the business require which is to get it on the right path? We’ll examine this in more depth in the next post.
3. How are you currently managing your financial information?
In a previous guest blog by world renowned accountant Steve Pipe we examined how getting the balance right is having key figures presented in a format that can be instantly understood and acted upon by all the decision makers in your business.
Are you producing monthly management accounts?
If so, you will not be receiving enough information to really drive your businesses forward.
For example, the only information traditional management accounts give about sales is the value of invoices raised. But for many businesses that kind of backwards looking lag indicator is not very useful for understanding what is already happening, or predicting what will happen next.
Are you producing too much information?
Does your accountant or Financial Director produce a mind boggling mass or information which prevents you seeing the wood for the trees and does not give you the bigger picture of what is happening in your business?
Are you producing too little information?
Does your accountant or Financial Director produce so little information that you conversely have no idea about what is happening?
The secret to success lies in a one page plan which we’ll address in the next stages of your journey to change your culture in order to dramatically improve your financial planning and controls – and reap the benefits.
Stay posted for the next critical step. In the meantime, you can e-mail initial queries to me on firstname.lastname@example.org or contact me via @RichardWhatIf on Twitter, Richard Bosworth on LinkedIn or post on www.whatifforums.com.