Ask yourself: Am I playing the role of manager in my business, or that of owner? And which would I really like to be in?
For many, although they would like to be "in" the business as a manager, it can be difficult to do so when having to manage the responsibilities of an owner — such as, primarily, performing the governance function.
If you're looking to transition from the latter to the former, the first and most important step is appointing someone, or a team of people, to drive the governance aspect of the business for you.
In fact, no matter the size of your organisation, it's crucial that you have access to independent advisors, to challenge the status quo, and help you to determine the most effective way to run your business.
These should be individuals you respect, from within the business community (separate from your organisation, but preferably with relevant industry knowledge), and who aren't afraid to offer robust counsel where necessary.
Whether the right solution for your business is a single advisor, or something more structured by way of a board of directors, formal or informal, it needn't break the bank. By any measure, the (nominal) investment will be far outweighed by the return.
2. Streamlining financial processes
Ask yourself: If your business needed a loan, who would go to the bank to request it?
SME owners typically have an intimate understanding of the business and its operations (from time spent on the shop floor), which will stand them in good stead as far as finances are concerned — to a point.
As the organisation grows, the financial complexities become more difficult to deal with. There will come a time when it is necessary to separate the finance function from the owner / manager, via the appointment of a financial accountant or controller.
The key difference between these individuals and a traditional accounts clerk, is that, aside from performing basic creditor and debtor management functions, it's also their job to oversee the funding of the business.
With input from the owner, these individuals can successfully drive forecasting and planning for the future, and (if necessary) should be the ones supporting the owner with the bank to secure that loan — so you can focus your efforts on winning work and running the rest of the business.
3. Having a strong, detailed succession plan
Ask yourself: How would I manage the sale of the business, if I decided I wanted out tomorrow?
You started your business at 21, operating our of your garage — your passion and drive have allowed you to build it up to be a successful enterprise, but after a number of years, you are thinking about moving on.
Chances are your retirement, or indeed your next venture, will be, in large part, funded by proceeds from the sale of your business.
It's crucial, therefore, that your succession plan is about more than just finding someone who is capable of running the day-to-day operations, but who can also provide you with a financial exit plan.
These conversations should be had well in advance, so that when the time comes, you know exactly when and on what terms you'll be willing to hand the business over.
When the right solutions are found and implemented to address these three issues, you stand to gain a number of significant benefits, including:
• Less pressure from stakeholders (including creditors and financiers)
• Reduced likelihood of any "nasty surprises"
• The ability, when something does come out of left-field, to deal with it effectively
There's little doubt that for many of New Zealand's SME owners, wearing all of these hats is the norm, and has been for many years.
However, with the current economic climate, and the unique challenges and opportunities that it will continue to present, it is more important than ever that SME owners equip themselves with the right team, and the right structure, to help them ensure the best outcome.
• David Webb, NZ Managing Partner, PPB Advisory.
