These guys and girls have an incredibly difficult task, they operate under a geographically distributed model.  They operate in small teams that might see each other once a week, they may only come to the head office a few times a year.  In addition they operate in an environment where they are often having to educate their customer as to why they have a problem and then sell them a solution with sometimes radically  new software products.

 I was amazed to see the level of entrepreneurialism within the team.  Each sale person, presales and inside sales executive worked like a chess master to unpick the sales objections and shared ideas and strategies readily with their colleagues to come up with the optimum strategy.  How much  of the behaviour was driven by company culture or  US culture and how much was driven by necessity is probably the stuff of books.  Looked like the ingredients for a successful year from where I was sitting.

Mike O’connell, CEO, Isosceles Finance

I worked with Nick at the GL Company, a very effective sales professional with a long track record of success.  The book is packed with amusing anecdotes  ……….there’s always a “W” in every company, if you don’t know who it is, its because you’re the  “W”……….. and a lifetimes insight into how the sales process works.    The book is easy to read with a simple introduction to empathy selling and the use of  emotional intelligence. 

It might even improve your golf.  

www.acethesale.co.uk  or follow Nick on Twitter @nickgom  or visit Amazon 

Mike O’connell, CEO, Isosceles Finance

The truth is that if £2M results in a net amount saved of say £750K, a £3M sale results in an increase in amount saved of something like £1.6M more than double.  Holding on just a little bit longer can have a much more dramatic effect on wealth.

The other issue of course is that once the sale is concluded it isn’t the case that the entrepreneur sails off into the sunset.  The new acquirer will be squeezing the entrepreneur for the full value of their acquisition.

Our first time entrepreneur needs to take significant comfort from the fact that a potential acquirer has found them, that a credible offer has been made.  If it can happen once by accident it can surely happen again if planned for properly.  Selling a business is no different to selling your best product or service – it is best done through a considered campaign.  An entrepreneur who sells too early or too readily has plenty of time after to rue their decision.  Frustration may eventually drive our first time entrepreneur to do it all again – breaking all those promises made to partners and family – this too can have a dramatic effect on lives.

A second time entrepreneur now there’s a different story…..

Mike O’connell, CEO, Isosceles Finance

Perhaps an offer resulting in our entrepreneur making £2M is the one tempting enough to make that sale.  However in my experience of entrepreneurs who sell at this stage, what sounds like a large sum of money quickly depreciates.   For a start the agreed £2M isn’t all cash up front, the deal starts to spread it over 2-3 years.  Part of the proceeds are dependent on the performance of the business, part is put away in escrow.  Lawyer and accounting fees come along -  wow 5% is wiped off very quickly.  Then there is some tax to pay.

Before long our £2M becomes worth £1.5M net, still sounds a lot.  However, once the mortgage has been repaid or more likely a larger house purchased and that new car you promised yourself as a bonus for working so hard.  You may have done a little something for charity or other family members -  perhaps there is £750K left in the bank.   This is still a large sum isn’t it?  Invested properly you can make something like 5-10% a year.  However your lifestyle became more expensive also, you joined the golf club, you go on those more exclusive holidays -  skiing and a summer holiday.  You buy from the more expensive boutiques, after all you’ve earned it. 

Before very long you realise you need a job, you start on the treadmill again. 

At this point I should apologise, it is surely immoral to make an argument in a world still full of poverty that £2M is a small amount of money.  For anyone earning the national average salary please take consolation from the research that shows happiness does not increase once one earns about £10K more than the average wage – anyone can be as happy as our first time entrepreneur by working just a little bit harder or getting a little bit luckier.  However in the context of an entrepreneur who has potentially risked everything for the success of their business, the dream must be to one day sell the company and make enough to have to never work again or at least to work by choice rather than necessity.

The final instalment to follow soon.

 Mike O’connell, CEO, Isosceles Finance

Sure the management books tell us to plan 12-24 months in advance develop relationships with the companies that could become potential predators.  Raise your profile in the eyes of the predator; establish relationships, joint ventures, partnership agreements -  where your offerings are complimentary to the target predator, target the predator’s key customers or staff where you are competitive.  Run your business to maximise growth or profitability, whatever you think will be most attractive to your predator.

The truth is very few companies are able to plan like this.  Few first time entrepreneurs are bold enough to engage a banker to sell their business for them. 

A large number of transactions come out of the blue.  Our stressed and stretched first time entrepreneur is dealing with the latest major business challenge when an offer comes from a trade buyer with warning at all.

One of our clients was recently faced with such an issue.  Our entrepreneur will only sell his or her business once – one transaction that will have a profound effect on their life.  The business is likely to have gone through a number of cycles  -  one day all could be lost, the next the company could be the best thing since sliced bread.  It may have taken many years of blood sweat and tears before this business became viable.

So here comes the first credible offer for the business.  What should our entrepreneur do?  It is so tempting to cash in while the going is good.  A few million or several hundred thousand pounds would pay off the mortgage, pay the school fees, buy a new car or that place in Spain.  This represents a chance to take a breath of fresh air, take away the stress, start sleeping at night and do all the things your partner or children have been nagging you to do.  Perhaps the amount isn’t enough to never work again, but it beats losing everything in the next down turn – doesn’t it?

Parts 2 and 3 to follow shortly.

 Mike O’connell, CEO, Isosceles Finance

Whilst it would be imprudent of me to tell you that its is possible to eliminate the chance of a claim it is definately possible to minimise the risk or mitigate  the impact of any claim by taking a few basic precautions and ensuring that your employment contracts comply with this new legislation.  

Speak soon? moconnell@isoscelesfinance.co.uk

Mike O’connell, CEO, Isosceles Finance

There has been much speculation in the press over the last couple of weeks about a double dip recession.   Whilst no one can predict with certainty when, or indeed if, it will happen, one thing is for sure the likelihood has significantly increased.

I hope and pray, like you, that it doesn’t happen but I must prepare myself for the fact that it might.  I need to review and tweak my Plan B  – the one I wrote at the beginning of 2009 but thankfully didn’t need to execute!

‘Plan B’ encompasses many things for example: better cash management; better debtor management; identification of alternative sources of funding; cost reduction; labour force reduction.  In a ‘nut shell’ it identifies the creative ways of achieving more with less.

 I have prepared a paper to get you started 10 Things to Include in Your Plan B.  I must emphasise at this point though that just because you have a Plan B doesn’t mean you have to execute it – but never has the saying ‘better safe than sorry’ been more apt.

Invariably the development and execution of ‘Plan B’ is easier (less painful?) with expert help.  It’s not without its challenges but we have guided many businesses through difficult times. 

“The only thing harder than planning for an emergency is explaining why you didn’t” (Unknown)

 Mike O’connell, CEO, Isosceles Finance

Here are 10 things to consider when developing ‘Plan B’

1. Honestly and rationally assess where your product or service is in its lifecycle.  Is it really a product fit for mass production and marketing or is it an early stage prototype requiring more investment? This will help prioritise resources.
2. Define the core skills and processes required for the business at this stage. Do you need an expensive business development director if the product is still only a prototype.  Likewise, do we need a fat development department if have with a mature product?  Do I need a full time FD when a part time FD will suffice?
3. Identify which members of the management team are appropriate for the business at this stage?  Who are the fighters?  Who can roll their sleeves up? Which members of the management team can perform multiple roles?   
4. Determine which one or two key markets have the lowest barrier to entry – i.e. where are you likely to get the easiest and earliest success?   Investors often take more confidence from a small and growing pipeline rather than one or two big deals.
5. Swift and decisive communication with staff is paramount. Staff usually know exactly what is going on within their company.  They know sales are down, suppliers are complaining.  They see the investors in the office.  They will take confidence from knowing management understand the situation, are taking decisive action and are truthfully keeping everyone in the picture. 
6. Identify areas for cost cutting and cut costs as early as you can.  Try to do it so deep that you do not need to repeat the activity.  Don’t forget that management also need to be seen to make sacrifices not just the staff.  Avoid extravagant demonstrations of spending in order to buy staff goodwill.
7. Change the shape of sales deals.  Get some cash up front or agree staged payments.  Consider software rental, maintenance holidays, trade reduced maintenance for longer terms – be as light footed and as flexible as you can.
8. Pay very special attention to cash flow and debt.  Work hard to reduce your aged debt – incentivise your credit controller and sales people.  Renegotiate with suppliers and debt providers for example agree staged payments with HMRC for PAYE. Get all allowances in early, e.g. R&D tax credit. 
9. Now may be a good time to collaborate.  It takes a brave management team to actively seek out potentially competitor companies and strike up a relationship.  Yes you may have to give up a little margin.  But in times of crisis more imaginative ways of getting your product to market are required.  Few companies are truly identical.  Few have the same technical strengths, the same scale and geography of operation. 
10. Develop Plan B before you need it. Be clear on your KPIs (key performance indicators) and  how you measure performance.   Agree the point at which you will execute Plan B and stick to it.

Invariably the development and execution of ‘Plan B’ is easier (less painful?) with expert help.  Isosceles have guided many small and medium companies through difficult times. It’s not without its challenges but with positive action at the right time, it is possible to shape your future!

 Mike O’connell, CEO, Isosceles Finance

If we engage a builder, plumber or decorator we find it is easy to generate an expectation of the result we want and to measure the output against this expectation. We can be a very exacting customer indeed. If we buy a product off the internet, we now spend hours reading reviews comparing prices and again make an exacting purchase – the best quality for the money we can afford.

I find it interesting to contrast this with how businesses generally measure the output of their employees. How many companies set out a detailed SLA for each employee? How many companies measure the performance each month against that SLA before they pay an individual’s salary?

In the world of accounting we may agonise before buying a software product for a few thousand pounds say to help with accounting or reporting, but if a Financial Controller spends a month building a spreadsheet do we really acknowledge that the model costs thousands. What about the ‘opportunity cost’ of what they should have been doing?

As an outsourced accounting services provider I find the process of defining an SLA and invoicing every month means that my customers ask themselves (and me) “What is the real cost of the finance department?” “What value has finance brought to my business during this month?” “Why did it take that length of time to deliver that task?” “Why did that activity cost that much?” “Are we monitoring and measuring the right things?” This level of scrutiny is a positive thing, in my opinion, it keeps our standards high and I genuinely feel that out outsourced accounting service gives a better value for money service than an in-house team where the monthly cost of finance has not been monitored for a long time and gets washed into the general bucket of all the other salaries.

Mike O’connell, CEO, Isosceles Finance

Some of the best IT successes have come about after a turnaround, but just like second marriages the odds are stacked against rather than for.  The challenge for the VC must be to find a co-investing entrepreneur, a team from a previous success or to retain some essence from the original founding team who can spread the belief.  But what about interim management?

An Interim finance director (or interim FD as they are more familiarly known) can add significant value to both the VC and the company in a turnaround situation because they have the experience and ability to deal with difficult situations objectively.    At Isosceles we do this for a living.  In a turnaround situation we can act swiftly and decisively providing a dispassionate analysis of costs and potential returns.  And because our FDs like what they are doing and are not looking for “a better permanent option” they stay long after the successful turnaround to keep the company on track.

Mike O’connell, CEO, Isosceles Finance