Read how you can improve your Business performance with benchmarking, restructuring and succession planning
When entrepreneurs first establish a company, they’re often focused on achieving best practice and striving for success. With all efforts driving growth and productivity, they’ve rarely had time to consider their business’ comparable performance within the industry, or to imagine the inevitable day their leaders will exit the business. Business performance benchmarking, restructuring and succession planning don’t often make an entrepreneur’s top ‘to-do’ business activities. This often-neglected trio is of great import to the success of a business.
In today’s blog, we deliver insights on the key indicators of business success, the benefits of business benchmarking and the importance of a sound succession plan.
What is the difference between an entrepreneur whose business thrives, and one who may fail?
Some entrepreneurs are visionaries, whilst others have rock-solid ideas they implement with planning, structure and budget. They’ll also often have a good team surrounding them.
That’s not to say that they’re not constantly learning from experiences – as they often do change direction – but if they have processes in place for improvisation, they’re likely to have a better success rate.
Concerns arise when entrepreneurs fail to consult the right people. Instead, they put money into reactionary quick fixes and hope they will pull through. Successful entrepreneurs take risks, but they’re measured, and they know when to stop.
How does working with Wilson Pateras help to improve business performance?
Wilson Pateras initially meet with an entrepreneur or business owner to identify their goals and objectives. Then, we work with them to achieve those goals!
Wilson Pateras support business owners to build a robust plan and to achieve the goals they’ve set out. This support presents in a variety of ways – a mix of monitoring, accountability and strategy.
What are your favourite tools for measuring performance?
Activity, liquidity, solvency and profitability. These are the four areas of focus. To consider these more specifically, gross profit margins are the most common indicator we’d use to ensure a business is performing at the top line.
A business’ breakeven point is another key indicator. In terms of liquidity, a business needs to keep a careful eye on current assets versus current liabilities and make sure that sufficient cash flow is available to service debts and overheads.
Could you explain benchmarking?
Benchmarking is the process of measuring your business performance against other businesses that are considered to be the best in the industry. The Australian Tax Office (ATO) has issued over 100 benchmark figures for different industries. Wilson Pateras will consult with clients and inform them of the ‘best practice’ benchmarking – this is the data that indicates where they sit within their industry.
What is succession planning?
Succession planning is the process of identifying and developing new leaders who are well-equipped to replace a company’s present leaders when they retire.
Those with a family business often appoint a son or daughter to take over, but many small businesses have difficulties with succession planning when a clear successor does not exist.
Very few businesses have succession plans formalised, as people consider it too challenging. Succession planning often involves considering the next five to ten years for their business, where most people are only thinking about the next twelve months.
Sometimes the answers are not obvious and business leaders need expert guidance around this.
What stands in the way of business owners failing to execute their succession plans?
The main factors that stand in the way would be the talent pool available, time constraints, family or younger generation successors may not be prepared or suitable to take over or a business owner might ‘go with their gut’ rather than considering credentials.
At Wilson Pateras, experience has taught us that engaging an accountant from the get-go is a non-negotiable for any entrepreneur or startup. You’ll find that your accountant will become a year-round business partner, protecting you from unnecessary risks, helping you to scale and assisting you to remain compliant. As you grow, they will also help to minimise your tax exposure and audit risk. When bootstrapping in the early days of your business, don’t neglect to invest in expert advice.