Archive for the 'Strategy & Operations' Category

Measure your Carbon Footprint… Today

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Business Link
on 14 August, 2008
in Environment, Management & Leadership and Strategy & Operations
. 0 Comments

Research from the Carbon Trust, published this Spring, indicates that 46 per cent of FTSE companies have measured their carbon footprints, compared to 15 percent of large companies and 12 per cent of medium sized companies. Overall, only 1 per cent of the general business community knows their carbon footprint. The research concludes that whilst overall carbon awareness is increasing, there is “an enormous gap between the ways in which larger and smaller companies are responding to the issues”.

Measuring and reducing carbon emissions are gradually becoming strategic objectives for large and medium-sized business, motivated not just by environmental concerns, but by the significant cost-savings associated with minimising carbon usage. Meanwhile, the majority of smaller businesses are lagging behind.

The Carbon Trust explains that smaller businesses struggle with “a lack of time and expertise” to measure and reduce carbon emissions. In addition, they claim that many SMEs underestimate their “collective role” in cutting carbon emissions; according to their research, over a third of SMEs underestimate their contribution to carbon emissions by 50 per cent.

Unfortunately, these two dynamics don’t play nicely together. After all, it’s easier to dismiss the task as time consuming and difficult if you believe the net result of your efforts won’t make much of a difference.

It’s true that the process of reducing carbon emissions can demand time and expertise. But that doesn’t explain why so many businesses haven’t yet measured their carbon footprint. Working out a rough estimate of your carbon usage takes ten seconds using the Carbon Trust’s online indicator. And with a bit more information to hand - such as fuel, electricity and travel usage data - you can immediately build a more accurate picture of your carbon footprint using the Carbon Trust’s online calculator. These tools are a quick and easy, and crucially - they are designed to guide you towards making your next steps and finding the expertise you may need.

Only when you know your carbon footprint can you objectively determine how much time and expertise is needed to reduce it. So finding out is a good start.

It’s also important to remember that measuring and reducing your carbon footprint is not simply a philanthropic pastime. There are very real opportunities to save money by saving energy. These cost-savings could more than offset the initial cost and effort of reducing your carbon footprint. And again: you won’t know where those potential cost saving are until you make a start.

Now to the question: how is cutting the carbon emissions of one small business going to make a difference to a global issue?

July ‘08 figures from The Department for Business, Enterprise and Regulatory Reform indicate that small and medium-sized enterprises (SMEs) together accounted for 99.9 per cent of all enterprises. That equates to over four and a half million businesses.

And as we’ve already learnt, it’s this group that are the least responsive to measuring or reducing their carbon footprint. In addition, it’s this group that tends to underestimate the level of its contribution to carbon emissions. In other words, the large majority of UK businesses are doing little to act on carbon emissions, and many are producing more carbon emissions then they realise.

All of these businesses can take steps to reduce their carbon footprint. And the sum total of those individually small reductions does - collectively - add up to a significant difference.

At the moment, there’s a distinct lack of action amongst SMEs in the fight to reduce carbon emissions. Many see the process as important, but challenging. And many underestimate the extent of their “collective role” in reducing emissions. The good news: these many, the four million or so, can make start on the task… Today.

Start today by measuring your carbon footprint on the Carbon Trust Website

Interactive tool - Identify where you can save money by going green

More resources - Improving your environmental performance

Quality Management: An introduction to Six Sigma

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Business Link
on 18 July, 2008
in Strategy & Operations
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Six Sigma aims to remove or minimise the causes of defects in manufacturing or business processes. The approach takes inspiration from six decades of quality management thinking, influenced by methods such as quality control, total quality management and Zero Defects.

The common ground that links most quality management methods is a focus on achieving stable and predictable process results. Both manufacturing and business processes have characteristics which can be measured, controlled and improved upon. With a top to bottom commitment - from management to ’shop floor’ - businesses can achieve improvements in customer satisfaction, efficiency, reliability and financial performance.

So, what are the key features of Six Sigma?

Driven from the top down

Six Sigma projects require unwavering commitment from the top down. Management teams must lead projects with passion and drive, so that every member of an organisation - from top to bottom - is both engaged with the project and fully supported in achieving its goals.

Customer-led

Six Sigma rigorously defines ‘defects’ as anything which may cause customer dissatisfaction. For example, that could mean a material or functional defect in a product, or a process defect which affects service delivery. This fundamental principle makes Six Sigma a wholly customer-led approach to quality management.

Measurable financial returns

Any Six Sigma project must place stringent focus on identifying expected financial returns. Achieving measurable, quantifiable financial returns is a necessity from the outset, so that any project managed with Six Sigma has a high probability of delivering tangible results.

Facts are sacred

There is no place for guesswork in Six Sigma. An unrivalled focus on verifiable data and informed, rational decision making is key. This focus forces participants to develop improvements which have proven potential for success.

“Champions”, “Black Belts” and “Green Belts”

Six Sigma employs a clearly defined hierarchical structure to leading and managing projects. “Champions” are effectively Six Sigma gurus who know the approach inside out and can lead projects with passion, commitment and confidence. “Master Black Belts” are focussed on technical delivery, and have in-depth knowledge of Six Sigma implementation, including the various statistical approaches required in its implementation. And broadly speaking, “Black Belts” and “Green Belts” are deliverers, responsible for planning and implementing Six Sigma projects.

Is Six Sigma right for your organisation?

Six Sigma is a relatively complex approach to quality management. But its unique qualities - including an unrivalled focus on the customer and measurable financial returns - offer obvious benefits for those looking to improve either manufacturing or business processes.

Even if a ‘full-blown’ Six Sigma approach is not desirable or achievable, some of its teachings are compelling. For one, the idea of “Champions” and “Black Belts” as leaders and drivers of quality management is a simple but valuable approach to managing knowledge and implementing and leading change.

Before deciding to fully implement Six Sigma in your organisation, the best approach might be to find a potential “champion” and task them with finding out more about whether Six Sigma is appropriate for your business. In short - they must be statistically proficient and IT literate, and above all, they must be passionate about quality management, process improvement and innovation. Know anyone that fits the bill?

More info - Systems for delivering change

Discussion: What makes a business agile?

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Business Link
on 6 June, 2008
in Management & Leadership and Strategy & Operations
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Uncertain times tend to get business owners thinking; arguably the one constructive outcome of economic downturn. But beyond the usual musings over cash-flow and profit forecasts, what steps can business owners take to guard against uncertainty? What makes a business adaptable and ever-ready to face change? The answer: businesses must become more agile.

The word ‘agile’ is easy to define: adjective; 1. able to move quickly and easily. 2. quick-witted or shrewd. In contrast, ‘business agility’ is a frustrating fuzzy notion. We know that an agile business has quick and sharp powers of judgement. We know that an agile business is able to respond quickly and effectively to change. But what factors contribute to such an adaptable nature?

Arguably, being small is one way of being agile. Small businesses are often much closer to their marketplace and customers, which means they can identify changes, threats and opportunities more rapidly. Reaction times are also quicker, with fewer obstacles hindering quick adaptation. Business agility is a product of closeness and intimacy - both with the outside world, and within its four walls.

Business agility may also be determined by an organisation’s management. Leaders direct a business’s fate, so decision makers who are firmly ‘on the pulse’ are more likely to identify change and adapt quickly. Again, a closeness to markets and customers, sound judgement and decisive action are key characteristics contributing to business agility. A bottom-up consciousness - where workers have influence over the strategic direction of a business - is also likely to facilitate a more adaptable and flexible business.

In these uncertain times, you may be forgiven for thinking that business agility is about responding to threats. But remember: it’s about seizing on opportunities too. Reacting quickly and easily to both threats and opportunities - with equal precision and confidence - is really what it’s all about.

Join the discussion

There is no easily definable recipe for business agility (the thoughts above are just a few ideas to get the conversation started). The best way to understand what makes businesses agile is to learn from agile businesses. Which is why we are asking for your opinions. Comment on this article and let us know your thoughts on:

  • what makes a business agile?
  • how a business can become more agile?
  • how your business has quickly and effectively responded to threats and opportunities?
  • Or more generally - share your experiences of how your business has adapted quickly and easily to change.

Thank you. We appreciate your views.

Sources of finance : overview

Published
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Business Link
on 13 May, 2008
in Finance and Strategy & Operations
. 0 Comments

Internal sources of finance

Internal sources of finance are often the first to be exploited. But unless a business is cash-rich and extremely profitable, such finance may be insufficient for ambitious growth and development plans.

The main sources of internal finance are:

  • Personal savings - Cash injected into a business by its owners can be paid back if the business succeeds, but there’s an obvious personal risk should the business fail.
  • Working capital - That is, the finance available from current or short term assets, minus current liabilities. This could fund development, but may leave cash-flow tight.
  • Retained profits - Any profit a business keeps as opposed to distributing to owners/shareholders. Balancing the interests of the business and its owners is important.
  • Sale of assets - A business may sell assets such as property, equipment, or Intellectual Property. 

There may be risks associated with exploiting internal finance - such as putting personal savings in danger, crippling cash-flow, or frustrating equity holders through retention of profits. Of course, such risks need to be weighed up against the benefits - not least the fact that internal finance does not incur borrowing costs or require business owners to sell part of their business. Such risks and benefits should be considered within the context of a business’s own circumstances, and compared with the benefits of raising alternative, external sources of finance.

External sources of finance

The options for sourcing external finance can be divided into two groups: Ownership capital involves giving up ownership of and possibly some control over the business. Non-ownership capital does not involve such sacrifices, but can be a costly way to raise finance.

Ownership capital

  • Sale of ordinary shares - Otherwise referred to as equity shares, this is a method of raising finance by selling part of a limited company. Ordinary shareholders share in the profits of a business (through dividends). Businesses choose whether to pay dividends, based on factors such as the profitability of the business or its strategic goals. 
  • Sale of preference shares - Preference shareholders are usually entitled to fixed dividend payments, regardless of a business’s profitability, which should be paid before ordinary shareholder dividends. A business may retain the right to buy the shares back at a later date.
  • Alliances or Partnerships - An individual or business may seek to ally or partner with other individuals or businesses to gain access to greater knowledge or skills, and of course increased financial resource. Sleeping partners may invest in a business but take no control over day-to-day operations. Often though, alliances or partnerships are strategic, i.e. the two entities working together offer ‘something greater than the sum of its parts’.

Non-ownership capital

  • Bank overdrafts - Expensive in terms of interest charges and arrangement fees, but often easier to access than other sources of finance. Overdrafts may be offered for a limited time which (in addition to high interest costs) might make them unsuitable for funding longer term investment.
  • Loans - Banks, building societies and other commercial money lenders offer loans on short-term or long-term bases, for a variety of different purposes. Eligibility for a loan or the amount offered may depend on a business’s financial track record, projections of future performance, or availability of security to borrow against. Interest rates vary but loans are not the cheapest way to acquire finance, and regular repayments must be budgeted for when considering cash flow. Schemes such as the Small Firms Loan Guarantee (SFLG) exist to help businesses that have been turned down for commercial loans, but selection criteria still apply, so the scheme is not available to all. Click here for more info on SFLG
  • Grants - Considered by many to be the ideal source of finance, grants do not have to be paid back and no ownership rights are given up. Grants are not free money however, because a grant is often awarded upon condition of a business doing something in return for the money - such as to develop a new idea, concept or product, employ someone or work collaboratively with others. Grants recipients may also need to report back to grant givers on how effectively the money was spent. Grants are sometimes designed to help specific groups such as deprived areas or young people, so access to grant funding might depend on a business’s circumstances or goals.
  • Debentures - Loans that are secured, where the lender has some kind of preferential rights. For example, a debenture loan may be secured for the purchase of a property, which the lender takes a legal interest in, similar to a domestic mortgage arrangement. Debenture holders may also have preferential rights to payment over and above other investors, such as shareholders, and may also have preferential rights to repayments should the business go into liquidation. Because of these preferential rights, debenture finance may impact ownership capital agreements, even though debenture lenders do not technically ‘own’ a portion of the business.
  • Friends and family (and fools) - As the ‘and fools’ appendage suggests, sourcing finance from friends and family can be problematic. Problems could occur when the borrower makes unrealistic promises of success, or when the lender expects a bigger return on investment than they ultimately receive. Such issues can usually be addressed by managing expectations on both sides. (Such funding may also be sought in exchange for ownership rights such as ordinary shares, as detailed in the previous section.)

Choosing between ownership and non-ownership finance is tricky and the decision is subject to some unknowns. For example, an early stage business may be wary of borrowing because of exposure to interest charges and high monthly repayments. Instead, it may choose to sell part of its business. In the short-term this may be an attractive route to finance, but if the business turns out to be a huge success it may regret that decision - if it is forced to share a large portion of its profits or is left with insufficient equity to raise further rounds of finance.

Such an example demonstrates how no type of finance is typically better than another. The choice depends on a business’s current circumstances - and its future potential.  Any business looking to raise finance must therefore think extremely carefully about all the options available, and how their decisions may affect the business’s success in the short and long term.

Further resources

Find out more about government-backed guarantee for business loans: The Small Firms Loan Guarantee

 

New business worksheets

Published
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Business Link
on 17 March, 2008
in Management & Leadership, News & Opportunities, Sales & Marketing, Strategy & Operations and Top Tips
. 0 Comments

Business Link has designed a new range of practical guides and worksheets that can be used to capture your ideas, explore aspects of your business and help you think about the questions you should be asking to take your business to the next stage.

Starting your business - a plan for success

Starting a business is exciting but daunting - you need all the assistance that you can get. This worksheet highlights the key areas that you need to focus on.

Read our guide: Starting your business - a plan for success.

Running your business - a guide to being more efficient and competitive

Well structured food for thought exploring the areas you should be looking at and raising questions you should be asking to capitalise on the full potential of your business.

Read our guide: Running your business - a guide to being more efficient and competitive

Growing your business - a guide to turning ambitions into reality

Businesses cannot stand still - they must constantly find ways to move forward and grow. This worksheet has been designed to help you take your business to the next level.

Read our guide: Growing your business - a guide to turning ambitions into reality

Video interviews - see how we work with businesses

See how our service could work with your business by watching our series of short video clips: http://www.thinkbusinesslink.com/interviews/

Business awards: the best in the business

Published
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Business Link
on 17 March, 2008
in Sales & Marketing and Strategy & Operations
. 0 Comments

Ask an award winner how they feel and you might be told that they didn’t think they had a chance of winning. Sometimes it’s hard to fully appreciate the significance of your own achievements - even harder to believe you are the best in the business.

In many ways such modesty represents the biggest challenge to overcome when thinking of applying for a business award. If you don’t think you are going to win, why bother? This attitude prevents many firms from entering business awards in the first place. But of course, the more pertinent questions may be: What have you got to lose? Or more importantly, what have you got to gain?

The only thing you stand to lose - aside from a touch of pride and a bit of time - is the awards competition itself. But even if you don’t win, the steps you take when entering or taking part could help you review your business performance and thus help it develop. Let’s say the application process asks you to evaluate your success based on several different factors, such as customer service, innovation, sales performance or operational efficiency. At best, the act of putting your success into words is a great boost to your confidence. At worst, the process may highlight areas where you need to improve.

Then there is the question of what you have to gain. First comes recognition, both with respect to your own achievements among peers in your industry - but also amongst customers, who will associate your business with success and prestige. This should increase their respect and loyalty towards your brand, and also give them a reason to feel good about themselves. Everybody likes to back a winner.

Winning business awards is also priceless from a promotional point of view. You will very quickly see the value in adding ‘award-winning’ to your ‘about us’ blurb, your flyers, product packaging, sales presentations, advertisements, and anywhere else you care to shout about your success. It makes consumers and competitors take note - it makes you seem unique and better - opening the door to new business. The PR and word-of-mouth opportunities are equally compelling. Local media may enjoy publishing stories of regional success, and if that happens word travels fast.

Of course, despite all the benefits, you may still be left wondering whether business awards are really just a game for the elite - the businesses at the cutting edge of technology or working in the most fashionable of industries. This may sometimes be the case, but often, business awards are less concerned by glamour and more by drive, performance and measurable results, whether that comes from a business working in new media, manufacturing, textiles, healthcare, or any number of other industries. And often, it’s not a case of what you do but how you do it. To name a few examples, business awards look for measures such as how you out-performed on your business plan, how you made your business a satisfying place to work, how you provided excellent customer service, or your versatility and imagination at solving your biggest problems.

You may need to buy a ticket to win the lottery, but to win a business award, it’s less about crossing your fingers and more about showcasing your hard work, determination and excellence. Someone has to win, and it really could be you.

Click here to view a list of current and future regional business awards

Growing plans

Published
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Business Link
on 28 January, 2008
in Strategy & Operations
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Any successful business that matures past the start up stage will face the dilemma: Should they grow bigger or stay the same size?

As cash flow and profitability increase, underpinned by loyal customers and rising demand, the temptation to grow bigger is as strong as the potential for increased rewards in doing so.

But it should be remembered that some small businesses may be anxious about growing. The idea may have always been to avoid the complications and pressures of big business. Business owners may wish to preserve the entrepreneurial spirit that flourishes in small, hungry businesses. Or they may hope to keep close ties with customers and suppliers, maintaining the personal touch. They might even worry that growing the business may dilute the camaraderie and close team dynamics of a smaller business. Desires and concerns like these may be so strong that the idea of growing too big may seem like a change for the worst.

Whether you want to grow your business or not, it’s important to focus on business planning in order to maintain control. Let’s say that you are tempted to grow but are concerned about losing the ‘personal touch’ with your customers. In this instance you should aim to tackle this issue closely in your growth plan. For example, your plans may include the appointment of customer account managers whose sole responsibility is to ensure high quality care of customers; or you might decide to employ someone to take on elements of your day-to-day workload in order to free up your time to focus on customer relations. Conversely, if the prospect of growing by recruiting staff is so costly or bewildering that you don’t want to take such a risk, you may need to plan how you are going to fulfill or manage customer demand without extra help. Often, even the act of not growing needs to be planned.

Of course, growth can too easily be misinterpreted. Sometimes growth isn’t about employing more people or raising finance for big investments and grand plans. In many ways, a business can ‘grow without growing’. Growth could be about consolidation; through increasing efficiencies, improving current processes, or raising prices. From this perspective your growth plan may be focussed on staying ‘small’ but growing in terms of productivity and profitability. Remember - it’s easy to confuse size with greatness. Many business can be great without being big; indeed, some businesses may be great simply because they are small.

Whatever your perspective on the meaning and virtues of business growth, a key step to take - whether you want to grow or not - is to have a plan. If you have a plan, it’s more likely that managing your business will continue to be exciting and rewarding, no matter of its size.

Download guide - Deciding whether to grow

Corporate Social Responsibility

Published
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Business Link
on 18 September, 2007
in Strategy & Operations
. 0 Comments

After a decade of Corporate Social Responsibility (CSR) one thing is clear - the term is here to stay. Companies across the world - from both established and emerging markets - have embraced CSR ideals and let them direct policy in areas including workforce diversity, human rights and the environment.

Founded on the basic principle of responsibility, CSR considers how a business affects its employees, customers, suppliers, the wider community and the environment. By acting responsibly, businesses can minimise negative effects, but also increase their profits. In short everybody wins: the world becomes a better place, and businesses improve their efficiency and thus become more successful.

The business benefits of CSR are varied. On a basic level, CSR helps you comply with regulatory requirements. It can also help cut costs and improve performance, by for example, improving the efficiency of waste disposal or attracting a wider pool of talented workers through more inclusive recruitment policies. Beyond that, being responsible positions your company as one that cares. This can help recruit and retain employees, forge better relationships with the local community, and differentiate your company, its products or services.

Critics of CSR say that when deciding how to behave, businesses will more often than not be motivated by self-interest, and because of this, the only effective way to enforce corporate responsibility is through legislation. They ask: when given the choice, can companies be responsible?

Proponents and critics can debate all they like. The answer to the question, however, can only be answered by the companies themselves.

More info - Corporate Social Responsibility and how your business can benefit