Step Five: Business Performance

Ascend Business partners have developed a systematic approach, called the “Seven Steps to REFIRE”, to work with business owners to increase the value of their business and improve their profits. This allows them to exit their business with a valuable asset they can sell, transition to the next generation, or provide them with an ongoing passive income.

In this blog we share the fifth of the seven steps – Maximising Business Performance

Does your business provide the appropriate level of return for your investment of time and money? Creating a high performance business requires owners to have a clear focus on product/service innovation, growth activities, financial management, attracting and retaining good people, and being well-systemised. Regular business performance reviews, that utilise the skills and knowledge of management and appropriate advisers, will create an environment focused on constant improvement. Best business practices typically ensure a monthly review of financial reports and key performance indicators, and key staff taking ownership of areas identified for business improvement.

Best business practice also requires business owners to have a structured approach to reviewing business performance. In essence, this really means taking time each month to review the financial performance of the business through the review of the financial information listed above.

We recommend that meetings are well-structured and focus on outcomes. They should have a range of stakeholders present that are prepared to look at the big picture issues of the business.

When setting up this review process it is worth noting:

  1. Many business owners have friends or associates who have skills that would be invaluable to their business. Creating a forum to review business performance and each functional area of the business is a great way to engage external people who may have the skills to complement your management team and assist you on your journey.
  2. Key Performance Indicators (KPIs) are one of the most powerful ways to get clear focus on the things that matter in your business. They support the old adage that “what gets measured, gets managed!” You should make these the focus in your performance review, although you should be careful to focus on “leading” indicators” that provide information about where the business is headed, rather than “lagging” indicators that only look backwards.
  3. Making the time is important. It’s understandable that running a business can be demanding and stressful, so taking time out is often the last thing business owners want to do. However, time spent looking at the business from an overall perspective can save you an extraordinary amount of time and effort in the long run by allowing insightful decisions to be made using valuable information. Look at this time as being important time spent working “on” your business rather than just “in” your business.
  4. Use this time as an educating forum. There are a great number of business owners and other key staff that are not well educated in the financials of running a business. Helping key employees to better understand business financials will help them make better business decisions.

Medium-size businesses should contemplate having an advisory board in place that will help create a profitable, thriving and valuable business. Having an advisory board in place may help:

  1. Monitor the financial performance of the business, allowing you to address key issues as they arise, and identify opportunities in advance.
  2. Gain finance from banks or venture capital.
  3. Win new contracts.
  4. Stay focused on achieving long-term value creation goals.

Having expert advisers means that you could access best-of-breed information from strategic, accounting and marketing advice to HR, QA, OHS/WHS right through to venture capital, bank financing, mergers and acquisitions.

Running a good business requires effective financial management. At the end of the day, the business exists to make money, so having in place the mechanism to ensure it maximises profitability is a key to ongoing success, as well as being one of the most significant factors in creating a valuable business.

We are here to help

To find out how to create the ideal exit strategy designed to meet your personal needs choose one of the following easy options:

  1. Complete one of the free online self assessments on our website
  2. Register for your own complimentary “Business Breakfree” workshop
  3. Download the free E-book
  4. Or simply call or email us anytime
  5. Check out our website at http://ascendpartners.com.au/contact/

Photo Cred: http://brainfitness.co.nz/

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