5 traits successful business people have – do you have these?

5 traits successful business people have – do you have these?

Missed a week due to travel folks so firstly apologies for that – clearly my first trait should be the inability to keep an appointment with ones blog :)

OK so there are probably hundreds of things you need to be successful in business but I’ve been day dreaming this last week and working out my top 5 – I love a top 5 as you know :)

So here they are in no particular order

1). Passion – In bucketfuls. I spend an awful lot of my time with other businessmen and women. In my working life, networking constitutes at least half my time. It’s one of the key ways we build our brand and get our company noticed. From there, when people want a job done, we’re at least in with a chance. One trait of seriously successful businessmen and women I’ve met over the years is passion for what they do. Passion is catching; you know when you’ve met someone who is passionate about their business – you come away feeling good about yourself. Without this trait you’re going to start off on the back foot. If can’t get passionate about your business is it the right business for you? Think on that for a while.

2). Sales skills – Every start-up business needs to bring in sales. If you’re on your own then that’s you pal :) If you’re not and you don’t like selling you better hope you’re in partnership with someone that does. You could have the best product or service in the country but if no-one knows about it then you may as well give up now. Sale’s doesn’t need to be cheesy, it doesn’t need to be immoral, it doesn’t need to feel dirty! Much of good quality sales is about building relationships and making the customer want to buy (not be sold). I strongly suggest reading the book below (affiliate link) which will, without a doubt, help with your sales process. In fact, even if you’re not in sales or running a business, read it anyway because its awesome.

The Little Red Book of Selling: 12.5 Principles of Sales Greatness – You can buy it from Amazon here.

3). A good product or service – Not technically a trait, but the ability to either come up with or be involved in selling a good product or service is a trait that I see all the time in successful people. You make your own luck, you earn it. These people have a sixth sense for getting involved with projects that do well. They fail a lot as well but the difference is the ones that work, really work. I know there are an awful lot of people out there selling sub standard products and services in their business – forget that – it’s a short-term attitude if you ask me. It won’t be long before you’re found out and the churn rate on customers will be huge meaning you never build relationships with people, you continually need new prospects poured in the top of your sales funnel. If you ask me, without a good product or service that you truly believe in, just don’t bother. You need to believe that your customer is truly better off by choosing you over your competitors.

4). A head for numbers and in particular cashflow – Since I started this blog almost exactly a year ago I know for a fact the most blogged about topic has been cashflow. There is a good reason for this – because it’s so damn important :) Without cashflow you have no business. I’m not going to go over old ground again on this. I wrote quite a lengthy post about cashflow here and even gave a step by step guide on how to write a cash flow forecast – you have no excuse :)

5). The ability to accept help and support – Business is a lonely place sometimes, help and support is essential but how often have I seen business owners that think they know it all and therefore are not prepared to accept it fail – Too many is the answer!!! Friends and family without their own business may not understand quite what it takes to run a business and unless they ever do it themselves they may never understand. This doesn’t mean you don’t listen to these people or dismiss their input – it can be just as valuable. It’s important to build a network of support around you that you can bounce ideas off. I’m lucky to have a great business partner at Optix Solutions who I bounce ideas off and chat with about strategy regularly. We also have a couple of mentor figures who consult us on the business regularly and keep us on track. We also have supportive families and friends – all of which make the days when it’s not so fun, easier to deal with. The successful businessman or woman doesn’t know it all and is willing to listen to others…do you?

So what are your top 5? Maybe you just want to add in a couple? I’m keen to hear from you

Turnover for show, profit for dough

Turnover for show, profit for dough

It’s interesting when you think that the majority of people, having been asked the question, “how well is your company doing” or “how big is your company” would probably quote a turnover figure or number of employees. “Hey, I’m Billy big banana’s because I’m turning over 5m a year”, or “Yes, I am the man/woman, I have 100 employees”! I wouldn’t be surprised if the percentage of people in that scenario giving one of those two answers is in the 90%+ region. So how many give you their profit figures or margins? Not that many, maybe because they feel they don’t want to give away sensitive data and there is certainly a case for that but I just find the metrics we all seem to monitor our companies by publically to be a bit farcical.

Lets take a quick example – A 5m turnover company producing a profit of 100k and a 500k turnover company producing 80k – which would you rather have? I know which one I would! Think of the work required, the staffing, the redtape in the 5m turnover business all for just another 20k profit – starting to make sense? Yes I realise that small margin businesses could churn out a scenario like the one above comfortably but I’m trying to give a more general overview for the purpose of this post.

I also think, and this is the main reason for writing this post, that this whole topic has the potential to be a danger to young start-up’s who get caught up in their own hype – thinking they are doing well because of the inflated figures and then coming a cropper because they’ve not concentrated on what’s really important.

So, be careful of not getting caught in the trap of thinking success is in Turnover or how many staff you have. I’ve made that mistake myself on a number of occasions. To be fair, it’s quite easy in our industry to flatter your turnover figures because more often than not digital agencies will pay for online advertising on behalf of clients (services like Google Adwords) then simply bill this straight back to the client. This has the effect of inflating your turnover but doing absolutely nothing for your bottom line. If you’re in digital and want my advice, then I’ve tended to stay away from this altogether as it can cause cash flow issues and as we know “Cashflow is King

It’s vital in any business to keep an eye on management figures regularly. If you’re anything like me, in the early days you’ll probably know everything off by heart because you’re staring at it everyday. As you grow I recommend having monthly management meetings where you keep an eye on cash flow forecasts, monthly P & L’s and breakeven charts. Together, these figures give you a good snapshot of where you are as a business.

Stay on top of the numbers – don’t stick your head in the sand and hope they are not there…

Have a great week

Cash Flow is King! Guide to setting up a Cash Flow Forecast

Cash Flow is King! Guide to setting up a Cash Flow Forecast

Right now – Here’s my first post on Finance. To be honest with you, it probably should have been earlier because of the importance of it, but hey lets face it, finance isn’t the easiest/most enjoyable subject to blog about. :)

OK, in any business there are lots of different things you need to consider about your finances – most importantly your ‘cash flow’, ‘profit and loss’ and ‘balance sheets’. In my opinion, especially as a fledgling business there is no more important metric than cash flow. Why I hear you ask? Quite simply because if your business has no cash flow, then you cannot survive for very long. As the recession looms on its very difficult to loan money from traditional places like the Banks, so cash really is vital to how long you can stick around for. You could have the best product, with the best profit margins, but if you are not getting the money in then you may as well forget it. I think I’ll deal with getting money in on a separate post as that’s pretty important too – lets save that one for another day.

OK so cash flow is, as you would expect, the measure of cash coming into and out of your business. It will help you forecast your performance and assist in making important decisions over whether you need to or even can invest in certain things to push your business forward. Any business owner without a healthy understanding of cash flow or how to keep track of your own is, in my opinion destined for problems.

So lets break down how to measure your cash flow. If you haven’t set up a cash flow forecast then I strongly suggest you open up a spreadsheet now and create one with me. I’m now going to help you do this step by step. Obviously you can go into a lot of detail breaking down income and outgoings to suit your business type, but I will give you the basics so that you have a good base to expand on. At this stage I would also like to dedicate this post to Jamie our business mentor who taught me everything I know about cash flow and forecasting. :)

So now you have your spreadsheet open the first thing to do is to make a note of the year and horizontally across the top of the page put the months of that year. I measure our cash flow on our financial year (in our case its August to July) as this helps us work out averages for the year when we have completed that fiscal period. Down the left hand side of the months, (in a separate column) you can then set up invoiced values and perhaps break this down by services or products you offer. Under the month you’re currently in, you can then start to record details on money you’ve actually invoiced (Important *This is money invoiced NOT received). Add in a row at the bottom of this that sums the values above it to give you total invoiced value for that month (Sales Delivered). Now below that create a row called ‘Cash Inflows’. While you’re forecasting (i.e. the data is not real yet) I advise that you create a cell equation that automatically puts the SUM of the sales values for the current month in 2 whole months later for the cash inflows row (when forecasting this allows for the time difference between invoicing and people actually paying you). This is important because as I mention earlier in the post it doesn’t matter how much you invoice, if you don’t get the money in quickly enough. Obviously when you complete an actual month you can put real values into this ‘cash inflows’ column.

So you’ve now got rows of sales values and cash inflow. You may wish to separate these easily with a heading, in a way that suits you, such as INCOMINGS.

Now we’re onto OUTGOINGS which again you might wish to title.

I find it handy to break down our outgoings by Variable and Fixed costs. So for variables I would have rows for things like (you may have more than these):

  • Wages
  • Tax and NI
  • Project Costs (Costs that are only there IF you sell something)

Then list your overheads or fixed costs – This will include things like:

  • Rent
  • Rates
  • Electricity
  • Gas
  • Phone
  • Office Consumables
  • Marketing Material
  • Accounts and Bookkeeping
  • External Services (consultancy/mentoring etc)

Again, consider your business and which costs are important to you. I find it helpful to have a few more rows at the bottom of the spreadsheet for other costs such as:

  • Capital Expenditure
  • Corporation Tax
  • VAT payments (only applicable if you’ve included VAT in other areas of your spreadsheet)
  • Bank Costs
  • Sundries

It is probably wise to have a contingency row as well which i generally set between 1-5% of all costs above.

At the very bottom of the spreadsheet you should then sum the OUTGOINGS. Finally, create a row which subtracts the outgoings from the in-comings to give you your cash flow for that month.

You should also sum up the accumulation of the years INCOMINGS and OUTGOINGS down the right hand side of the spreadsheet, so you can get a grasp on how the year as a whole looks. This is especially useful when you have a good amount of actual data and want to see a snapshot of your business in any one year. Having a row at the bottom of the cash flow, with actual bank balance figures, will allow you to predict, based on changes in in-comings and outgoings, what effect decisions will have on your available cash. For example, you can easily put in another persons wages and see how this affects the coming year, or perhaps plan what would happen if you were able to increase your sales by 10%. THIS IS THE REAL POWER OF A WELL STRUCTURED CASH FLOW FORECAST.

As you move through the year, make sure you update the cash flow from budget (forecasting) figures to actual figures. I find that when forecasting you can use averages for the rest of the year. The more actual data you have, the easier this will be.

Now you have your cash flow setup you need to make sure you review it regularly. We review ours monthly, so we have a really good idea where we are at all times. Please make sure you update and review this as regularly as possible or there is no point doing it. You’ll probably find that if you are the one updating it (as I was in the early days of our business) it helps you have a fantastic grasp on your finances, but you may have other people to show and account to and this is a great way of doing this.

I cannot tell you just how important cash flow is and although not the most interesting of posts, I’d urge you to do this today if you haven’t done so already and get a better grasp on your business.

I have uploaded a sample cash flow forecast for you to look at and check whether you’ve followed the instructions above correctly. If you click on the image below it will load a larger version of this sample. Have Fun :)

Sample Cashflow Forecast

Sample Cash flow Forecast

click me

Business Mentoring and its Importance

Apologies for the time its taken me to write this post. Moving house has been my priority this last couple of weeks and left me very little time to sit down and think about this important subject.

This post deals with the role business mentoring plays in successful businesses. It can be lonely at the top! :) OK so maybe that’s a bit dramatic but in all honesty when you are at the top of your business there is often no one to turn to, no one to ask whether you’re doing the right thing and if like me, you’ve not worked for anyone else (I started my business at University and am still running it 10 years later), no precedent has been set for most of the situations you come across. The learning curve is unbelievably steep, especially at the beginning and a big factor for why something like four out of five start-ups fail. This, in my opinion is why its so important to find yourself a business coach/mentor.

In Optix (my web design business), I’m lucky that I have my business partner James to bounce off. I’m sure that many of you reading this will not have anyone else because you’re running things yourself. If you’re in that position then I’d suggest a mentor is probably even more important for you.

James and I are extremely lucky that my father Jamie doubles up as our business mentor. Having run businesses with more that 150+ staff and now running his own consultancy in Essex, he is perfectly placed to offer advice to James and I as and when we need it. I’m big enough (well actually if you know me you’ll know I’m quite small!) to say that without Jamie’s help I don’t think James and I would be here today.

So what do you need to look to a mentor to help you with and why? When you find someone you get on with, trust and respect (this is critical), the sort of things you might want to talk to them about include:

  • Regularly looking at cash flow (the lifeblood of any business)
  • Profit and loss
  • Contracts (both ones you’ve been asked to sign and ones you need to draft for other companies)
  • Personnel issues
  • Financial decisions
  • Company strategy and Goal Planning

We have a regular monthly board meeting with Jamie and stick to a structured agenda with many of the points shown above discussed as a matter of course, even if there is nothing to note that month. It’s great practice to get into this routine so you always have a grasp on where the business is at that moment in time and where its going. It’s also a good time to report back to the board on issues that only you have been dealing with.

One thing I see a lot of is people who act as business coaches. Business coaching is a different kettle fish. Many coaches have developed their own models which can help you focus on your business goals and not get sidetracked by the day to day runnings of your business.

So if you’re reading this and saying to yourself, ‘yes but I don’t need a mentor/coach because I know my business and am successful in it’ then let me make a quick parallel for you:

Just think about sport at the top level – If you’re a premiership football club at the top of your game you have coaches, similarly if you’re a top ATP tennis player you will have a coach. Sportsmen and women all over the world have coaches and I believe in the business world its sensible to do the same.

Quite often as a director you’ll find yourself too ‘inside your business’. By this I mean you’re blinkered by the day to day goings on. Someone with experience of business outside can often break things down for you and help you make the best decisions for your business. A good mentor/coach in my opinion doesn’t make decisions for you, they merely pose the right questions that help you get to the right conclusions. You may find that these ‘answers’ often seem obvious but it’s this kind of mentoring which is fantastic for any business which wants to grow and go places.

I’ve met a lot of directors that have said they don’t need mentors/coaches and in my opinion some of these have let thier egos get in the way of good solid business sense.

If you’re wondering now how you can find a mentor, I’d suggest networking your local area and asking around – make sure you get recommendations for the person you’re thinking of getting in and of course, it goes without saying that if you’d like to talk to my father Jamie about what he can offer your business (anywhere in the UK), please contact me and I will happily put you in touch. I can put my hand on my heart and say that he is one of the biggest reasons that Optix is still around now, ten years after our incorporation and doing so well. :) Thanks Jamie!