Peter Graves Growth & Investment

Thoughts on authenticity in business and in life

Thu, 04 Jul 2024 12:52:23 GMT

Last year we lost my Father, he was a chartered accountant and made it to 86 years old. He was still working for a few of his long-standing accounting clients into his final couple of years.

He was brilliant with mental arithmetic and like many old school accountants could quickly add up a whole column in his head and get the result faster than most of us can do it with a calculator.

About 20 years ago he had a series of strokes and for a period of time he was unable to work. He could think clearly, but one side of his face was hanging a bit and he couldn’t use his writing arm. Later he managed to train his body better and learned to write using the other (right) hand.

But while he was in hospital most of his clients needed their year-end accounts doing. Heather my Stepmother sat with him in hospital, he talked her through the whole process. Not being a big computer user she wrote out every set of accounts, and then every invoice by hand. She has lovely handwriting too, and everyone got their accounts on time.

Once he was home the joke was that there was never a year where his clients paid their bills faster!

It makes me think about being in love with the “craft” of your business, even down to becoming an ace at adding up. And the power of the story, his temporary misfortune and the personal touch of the beautiful hand-written invoices, to really motivate the people around you.

Getting your business “sale-ready”

Mon, 01 Jul 2024 17:43:20 GMT

The day I tried to sell my first company was the day I realized it wasn’t ready to sell. Since then, I’ve seen it’s an issue in a high proportion of SME businesses.

There is a relatively simple (to write) list of considerations when preparing a business for sale. Easy to say, but sometimes quite a lot of work to do.

Here are some items that often come up:

Profitability: A company is best to be profitable, unless you’re a tech unicorn looking at billions in imaginary future profits. Most businesses need decent existing profitability to be saleable. Some buyers specialize in buying businesses in trouble and turning them round, but the sale price in this case is usually low.
The team that stays: The seller should have a good team in place before they leave, or they can consider staying on. If staying it can be quite invigorating to work alongside new business partners, with perhaps complementary skills or new capital to invest. Some owners wouldn’t like that, or are just ready to retire or go travelling, so this needs to be adapted to your situation. In many cases an earn-out is a popular way of retaining owner support through the transition. If you’re leaving the business needs to be functional without you, so recruiting and embedding a new senior team is best done in advance of the sale.
Growth: A growing business tends to be more appealing and valuable. It is hard to buy a business that is fading away. Maybe you’re just ready to step out and leave this to a turn-round specialist? The sale price is likely to reflect this.
Sound financials: Every business has a few skeletons in the closet, but the process of due diligence will usually flush them out. Producing regular management accounts and meaningful cashflow management is important both for day-to-day operations, and for a prospective buyer to see.
Automation: A business works so much better when it’s a repeatable system that your employees can do without you. In reality a lot of the intelligence is wrapped up an owner’s head, and when they leave they take it with them. Where possible automating systems first can be great addition to the value of a business.
Digital Presence: There are still many companies who haven’t nailed their digital presence, and still acquire all their work through pre-digital channels. It usually adds value, both to operations or to a disposal, if there’s a strong digital and social presence. Have you used Ecommerce as a Channel? Could / should you? If I was to “Google” you, would I find your competitors first? This is quite easy to fix without a massive investment, but if digital is not in your comfort zone then perhaps bringing in some help would make it easier?
Documentation: What does everyone in your team do? If they left, who or what would we need to replace them? Most smaller businesses haven’t documented their processes, but is a positive for a buyer if they do.
Data Room: All the key business data, forms, ownership, financials, in one place ready for the buyer to do their due diligence. Again most businesses don’t have this, but its great for a potential buyer. Our checklist of things to include in the Data Room provides a valuable guide.
Identifying buyers: A good business exit may begin well in advance, with buyers identified. They can be asked “what do you need this business to be like in order to buy”. A sophisticated buyer will often have a ready answer for this, leaving the owner clear criteria to work through.
Risk: Identifying and mitigating the major risks is an important skill in business. Having done this it will be of interest to a purchaser – and it will be of interest if you haven’t. One of the risks you will cover is “owner leaving”, or “key people leaving”. Other risks may be industry specific.
Scale: There is usually less interest in smaller businesses. When you reach a critical size there’s no end of would be purchasers. Merger and Agglomeration strategies get over this and package a small business for a great exit, but these usually need time and direction to reach the point of value. The lesson is, plan early!

Preparing a business for sale

You should address all of the above points early, in order to prepare for a good sale. Often owners are busy with the day to day so this doesn’t happen. Bringing someone in to help can make a lot of difference. If don’t do these they will likely be the priority for a new owner to increase value of their asset.

Valuation and Audit

Ask us about our business sale valuation and audit service, a one day visit and report which will give you a current valuation and actions required to increase it.

Business Valuation and Exit Audit

We help owners who are ready to sell, or who want support getting to a good sale. Let us know if you’d like a no-commitment conversation about it.

Creating a Company or Team Culture

Sat, 20 Apr 2024 10:11:00 GMT

I was recently lucky to spend a delightful evening with one of my old teams. These guys are smart, young, talented, positive, really going somewhere in their lives and careers, and still prepared to hang out with an old git like me. I really can’t complain.

But not every business has a great culture and I’ve seen places with real problems. So I wanted to share these thoughts on how to create a positive culture in your business or team. Not only does this make your working day more enjoyable, but its impact on business performance can be profound, and none of this is hard to do.

A leader sets and shares clear goals
Always solicit your people’s input
Each individual and team should have regular cadence of check-ins
Be available to your people. And mean it
Celebrate good performances, or anything you can find an excuse to celebrate. And do it publicly
Always deal with problems or issues with team members but do it privately. There’s a useful “Sandwich” formula that helps with difficult interactions, but the aim is to come away from the conversation with a problem fixed, a positive relationship and motivated team member
When you learn of any toxic behavior in your team, you need to deal with it. Have a private conversation to let them know it can’t continue. Follow the system above
Talk regularly with each of your team about their growth and development
Encourage flexibility and work life balance
Celebrate as a team. It’s so important for team morale and cohesion

What do you think?
Can you use these pointers to turn round a toxic culture?
Have I missed anything important?