How to ensure you're not the only reason your SME is a success
Last November, my family and I moved house. After 16 years accumulating all sorts of stuff, I was dreading the prospect of packing up and hauling boxes. Apparently, moving is one of the most stressful experiences and I can't tell you how pleased I was when I was introduced to Alan Delaney.
Alan is the owner of AAAB Mini-removals, which has been specialising in household furniture removals since 1996. I had never used such a service before but my main expectation was that my belongings would be handled carefully and that they take care of the property that I was leaving and going to. And, of course, all of that had to be done at a fair price. With respect, I didn't want to use 'a man with a van', as I was concerned about adequate insurance cover.
If I had been asked to give feedback, I would have scored them at 100pc. They disassembled beds and tables, carefully wrapped glassware, crockery and ornaments diligently, and handled my guitar as if it belonged to James Taylor! They did the same in reverse in the new home.
Alan has a strong quality-service ethic and would never accept the words "Ah sure it'll be fine". He recognises that quality drives repeat business. But he also knows that poor quality costs money. I was impressed that Alan was fully hands on himself and supervised the whole production. But that too made me think - and it encouraged me to have a chat with him.
Like most SME owner/managers, Alan has an ambition to eventually sell his business. So how do you maximize the value of your business to get the best price when that time comes?
Aside from asset value, a potential buyer will value the business based on such things as: recurring income; future revenue; the team; margin; contracts; customer base; reputation; and so on.
My concern for Alan is that the business is overly dependent on him personally. While his passion for quality is admirable, his need for control at an operational level is stunting growth. He can only be on one job, in one place at a time. Acquiring more trucks, more customers, new territories, are all futile activities right now, as Alan continues to personally attend every single job.
It must also be stressful for Alan when going on holidays. As with other SME owners that fall into this trap, I'll bet their phones are always on.
The starting point here is to change your mindset. What can an SME owner do to create a 'machine' that is driven by other factors and not so reliant on the direct involvement of the owner? What can you do to give yourself peace of mind that standards don't slip when you're not there? Firstly, it's about standardising the business and making it run effectively even without the owner's direct involvement.
1 Having a clearly defined mission statement that articulates the service standard will help to ensure consistency. At the very least, take time to write down 'what good looks like' for every aspect of your service or product.
2 Involve your team. Engage them in doing this exercise and get their buy-in. You'll be surprised at how much they'll have to say in terms of good ideas. Communicate the defined standards and incentivise them to achieve them. (Make sure that consequences for not delivering are equally clear.)
3 Consider future potential buyers of your business. Who might they be? What might their purchase criteria be?
4 Are there some members of your team that may have a future interest in a management buy-out? If so, is now the time to start that conversation? Is there a deal to be done today whereby a small stake is negotiated now, that might grow each year linked to performance? (Capped at whatever level until a full sale in say 10 years?)
5 Regardless of whoever, consider the potential buyers of your business. What changes do you need to make so that it will be more attractive and valuable to them?
Maximising the value of the business will be done on the back of great sales, margin and cost control. AAAB has great contracts with some key players already. Storage businesses such as U-Store-It is an obvious partner - and already send business Alan's way, as do other removals companies like Oman Beverly Smyth.
But right now, it's all reactive and coming from word-of-mouth. That is indeed admirable but I would much rather see Alan having an additional sales strategy that is proactive.
Here are some simple steps for now:
1 If you're going to invest time in proactive sales, you want to have the best chance of success. Make a list of preferred customer types. What are the criteria of an ideal customer. Who and where are they?
2 Using a professional sales approach, go and sell to them. For a company that has relied on word-of-mouth, this is a big deal. I would strongly encourage engaging the services of a skilled salesperson. Or else get professional training.
I have no doubt that there are lots of SME owners that fall into this trap. You owe it to yourself to reap the rewards of your life's work. Depersonalise your business!
Alan O'Neill is a change consultant and non-executive director. For 25-plus years he has been supporting global and iconic brands through change. Alan-oneill.com. Business advice questions for Alan can be sent to firstname.lastname@example.org
Sunday Indo Business