Every business eventually runs out of gas By Mike Rich from Attache on Mar 6, 2015
Every business eventually runs out of gas, including accounting firms. Failure to recognise this can destroy the creative potential in an organisation with the misguided decision to maintain the ‘status-quo’. I believe, recognition of this is the key to growing advisory services in our profession.
I came to this conclusion over 40 years ago while completing my accounting degree in New Zealand, before coming to Australia in 1981. I worked in businesses as diverse as a cheese factory, meat works and as an executive trainee at Mobil Oil. I have been in the business improvement advisory space ever since and have loved every minute of it. I was the only one in my family not to join the medical profession, but I’d like to think I’m a ‘business doctor’.
I recently co-founded the not-for-profit M-Institute. Our aim it is to double the number of medium sized businesses over the next decade, building jobs and GNP in the process. I am also involved in running ‘How to renovate your business’ events with like minded organisations, including a growing number of accounting firms. Here’s 5 key points to consider:
1. Proof businesses run out of gas. There are over 2 million businesses across Australia and New Zealand, yet only 10,000 are estimated to have a turnover over $10 million. Every year, 300,000 businesses start-up, while another 300,000 close down! If you are a ‘baby-boomer’ trying to sell your business at an acceptable price, it’s difficult if you are stagnating. In some industries, like transport, you are lucky just to find someone to take over your lease obligations.
2. Debtor’s reduction is the place to start. For many businesses a reduction in debtors will both reduce stress and generate the cash flow for further improvements. Interestingly, if Australia’s average debtors days was reduced by 10, it could pump something like $20 billion back into the economy. To assist this process, I helped create a debtors app that we are currently giving free access to – in trials to date we are seeing a 50% debtors reduction within a few weeks.
3. Business improvement should be done in small ‘chunks’. Research shows multi-tasking doesn’t work – for example, trying to do three things at once you’ll waste about 40% of your time in what’s called ‘switching’. And doing things in ‘chunks’ doesn’t mean having to throw out other systems – for example, the debtor’s app integrates with over 20 desktop and cloud solutions.
4. Put some ‘start-up’ energy into the business. I suggest you read ‘The Lean Start-Up’ by Eric Ries and ‘Blue Ocean Strategy’ by Kim and Mauborgne. Contrary to popular belief, today’s ‘start-ups’ are more agile and scientifically based than yesterdays ‘waterfall’ developments, which often saw buckets of money going into products and services that few customers ever wanted.
5. Use the Scorecard. It is quicker and easier for clients to get a competitive edge by improving their business systems, rather than their products and services. This also helps fund start-up activity that may be subsequently initiated. To facilitate this process, I have been involved in the creation of the ‘Scorecard’ which received a 2014 Best Cloud Product Award. Access is free. The Scorecard both ‘quantifies’ their potential cash flow improvement, then provides a check list of over 350 business improvement ideas. Many of the ideas can be done manually or within existing business software and implemented immediately.
For accounting firms, I offer free access to the debtor’s app for internal use first so you can experience the benefits yourself – it integrates to most practise management systems. With the Scorecard, you can also get free access by picking a client who has debtors and stock – so both of you can experience the benefits first-hand. If you’d also like to be involved in the ‘How to renovate your business’ events, I’d love to hear from you as well. Simply email me with your contact details: [email protected]