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Got a wonderful business but have hit ‘the brick wall’? Here’s what you need to know

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Fast business growth is a joyful experience. When that momentum kicks in and business flows, so many business owners believe they are on the right path in realising their maximum potential. For some this is very true. For many, this is a temporary reality as the good momentum can quickly come to an abrupt halt and the rollercoaster cycle of business highs/lows is about to begin.

Whilst I do not want to go down the path to suggest that true growth comes from business pain, how many CEOs and business owners have a need to continually re-invent both themselves and their businesses when they hit the proverbial ”brick wall” and find themselves in unchartered territory with the realisation that business is no longer smooth sailing.

When the roller coaster is heading down, self-doubt settles in. Too many business owners become reactive and lack the ability to respond with commercial acumen. The dirty words of poor cash flow, unproductive staff, low profits, unhappy customers and dusty shelves become a reality and raw emotion doesn’t help anyone.  Given its very difficult to remain level headed during this time, the ability to navigate through this unchartered territory almost seems unattainable.

A classic example of this is where a business realises its service offerings are no longer in demand due to competitor disruptions. Demand is down and the financials read poor – hello brick wall, hello rollercoaster. Normally, it is at this stage of a business`s evolution that I get a call. “We need help! We need a CFO and we need help with our cash flow and we probably need funding too (finance broker yes!). Can you help us?”

Here is why you won`t fall out when the roller coaster goes upside down or when your business is about to smash into that brick wall.

1. Options

Options are great, who doesn’t love options! Options do give a competitive advantage – this is true. So instead of selling price, what you want to sell is a ‘choice of yeses’ and make these available to your customers. You will want to give the customer a sufficient taste of differing value – the lowest (or is it least) of these options will more than satisfy the objectives of the purchase but additional options will deliver more value. You are selling value packages and not price.

So what would the mindset of the customer be now? It is likely that you are moving your customer away from “Should I use these services” to “How should I use this service, which options suites me best”. Quite simple but very effective.

2. Model-it-out

I`m not referring to the reinvention of one`s business. What I am referring to here is the building of an abstract representation (a model) of how these service choices would be mapped out in a real world situation. In less sophisticated words, what is needed is a model that tests the financial outcome of all possible strategic scenarios of a business and when delivered by an expert, provides a recommendation enabling prudent and effective decision making.

This is a fantastic way to model out the financial effect of all possible business scenarios and also mitigate potential risks by identifying issues that may arise from poor strategic ideas. With fast growth it’s all about risk mitigation, is it not?

Recently, a CFO Client brought a big smile to my face when he described the benefit that financial modelling has had on his business. “Financial modelling identifies my business valuation potential on an ongoing basis.”

He wants to sell in three years. I love it!  He totally gets it – we built the best strategy that tells the Cash, Profit & Loss and Equity story using real-time and reliable data. The best part, it is fully integrated, supported with analytical and graphical representations with a CFO cover report to boot.

We use the same modelling fundamentals to roll out financial forecasts (and reforecasts) which are measured against monthly trading results identifying areas of success, failure, risk and opportunity. Transparency provided and a great way to manage your working capital over two, five, 10 even 20 years.

With pro-active financial modelling, business strategy becomes manageable at any stage of the business evolution. No matter what the business or industry, prepare the strategy well because failure to prepare is preparation for failure.

3. Mitigate cash flow stress

Earlier I mentioned offering fantastic customer value by giving an example of a business that sells service packages and options. When the cash flow heat is on, business owners all too often forget that they too have product and service choices in dealing with banks and lenders. They should also not feel obliged (or obligated) to only deal with their current bank or lender.

There is always choice and it is all too easy to make a reactive cash flow funding decision during turbulent times. So why do business owners try figure it out alone (do they not have enough on their plate anyhow?) Speak with a finance broker who is skilled in sourcing out the best funding products in the market and by default, providing business owners with multiple product choice and options.

Leave it to the pros! Remember, he has your best interests at heart as he too needs to deliver value and will not just push a single product or single lender. Even better, the same financial modeler can get the finance for the business too.

4. Bringing it all together

Referring back to our example above and remedying it with the model iDeal CFO Solutions applies, here is how we do it:

Option 1: We will interview key personnel via a business ‘Discovery session’ and provide feedback with financial metrics to the owners. We will understand and assist with the recalibration of of business strategy and map out the effect of various scenarios up to 10 years. We will present and discuss the impact of strategy financially and visually.

Option 2: This includes Option 1, but we will also develop a business forecast (with ratios and visuals) that will be the 12 month trading pillar against which the business will be measured. We will meet with you monthly to present our findings and provide CFO level advice.

Option 3: Includes Option 1 and Option 2, plus we will perform a business reforecast quarterly and assess ongoing funding requirements and provide lending solutions to mitigate cash flow risk both for the business and for you personally.

Fast growth can certainly become an emotional rollercoaster but with the prudent adaptation of the 4 steps above and with the support of an experienced CFO Consultant and Finance Broker a business can climb over the brick wall and get over to the other side quickly.

With over 20 years national and international executive experience, Alan Sharfman, Founder and CEO of IDEAL CFO SOLUTIONS, is a dynamic CFO Consultant and Finance Broker. By using a tailored and engaging approach, Alan has successfully assisted some of Australia’s fastest growing companies in the planning, implementation and execution of their business strategies. Having spent many years as a leading corporate CFO and then company director, Alan has a broad range of commercial skills creating a wonderful balance between strategic management, risk mitigation and financial excellence. With an energetic and holistic approach, Alan focusses on “connecting the dots” between company goals and their desired outcomes. This knowledge base has resulted in Alan being a sought after business mentor, consultant and finance broker.

Alan Sharfman
Alan Sharfman
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