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

Fabio, Fabio, Fabio where were you? On show last night were all the qualities necessary to build a world beating team. There was determination, self sacrifice, everywhere individuals ready to lay down their bodies for the glory of their team and more than just a little skill.

For the teams – Celona, Emergent, InsightSoftware.com, Solsis, Line, Design Inc and Isosceles – the pressure was actually off all had qualified and made it safely into the last eight, something England hadn’t managed.

During the group stages the matches were extremely tight; games were pinched by the odd goal here and there. This was demonstrated by the fact that the 3rd/4th and 5th /6th play offs all went to penalties.

The surprise package of the evening were Line Communications, their team newly formed and lacking match practise turned in magnificent performances. Line also won the award for the best turned out team, arriving off their coach in their Line monogrammed three-piece suits. Line also won the award for the best supporters who flew in from the four corners of the earth to support their team and enjoy the evening. I can’t help but feel that Line were mugged somewhat, they were far more competitive and skilful than their final position suggested. They also fired a warning shot to the other teams – with a couple more games under their belt this was going to be a tough team to beat.

Celona coughed and spluttered somewhat never quite igniting the purring engine that lies within their team, in patches they were sublime and in patches lemon and lime. There were rumours of discontent in the camp – Maria falling out with the coach and refusing to play in the final game, but this was shrugged off simply as tiredness in the post match press conference. Celona had travelled a long distance to play in the tournament; their efforts were rewarded in a victory on penalties in their final playoff. Celona’s players could return home with their heads held high.

Solsis arrived full of confidence, having made a few new signings over the summer, we were all slightly intimated by their newly found sponsor Waitrose. The confidence seemed well placed with some particularly good early performances, but in the end their football turned into a Delia Smith recipe all the right ingredients but rather plain. Graham Stead was overheard commenting that next

year they would look at sponsorship from Sainsbury’s, perhaps a Jamie Oliver recipe would add a bit more spice.

Emergent and Insight joined forces to form a new team EmergInsight – sounding like a spin off from the TV show Casualty, but there was nothing A&E about their football. EmergInsight quickly found their rhythm and played some very neat football. Patrick Howard ended up lodging an appeal to the tournament organisers to argue that EmergInsight actually were the winners of the cup since they finished the tournament unbeaten, but then it was discovered that he was in fact a software salesman and the appeal was dismissed on principle.

Then after all of the huffing and puffing, the pump and the grind of the group and playoff stages there were two left standing – Isosceles and Design Inc. This is somewhat of a Germany v England fixture close neighbours who know each other’s players well. The final turned out to be more one sided than many had predicted. Design Inc sported a new centre-forward, Isosceles looked concerned when they found out he was a young Brazilian named Sam Ronaldo Maradona Pele Jesus Zico – but Julian assured our team that he would ” ’ave ‘im”. Design Inc were worthy winners and assured the assembled press that they would accept the cup in a spirit of friendship and humility and that they would keep this low key, they would be unlikely to brag, wave the cup around, put posters on their office door and generally remind Isosceles of their ignominious failure on a daily basis henceforth.

Many congratulations and thanks to all the teams that participated, this was a thoroughly enjoyable event and we appreciate your efforts in coming and sharing the evening with us.

After all the hype, anticipation and excitement, the Isosceles World Cup is over ….until next time

Mike O’connell, CEO, Isosceles Finance

This truly is a World event with the teams coming from the four corners of the South East.  Tomorrow evening seven teams will pit themselves against each other for the glory of the Isosceles World Cup.  Teams from Emergent Biosystems, Line Communications, Celona, Solsis,  InsightSoftware , DesignInc as well as Isosceles (or the big seven as they are known in world football) will battle it out to be the last team standing.

By quirk of timing this event offers not just a football tournament, but instead the chance of redemption, the opportunity to be cleansed, to wash away the dirt of German superiority that is weighing so heavily on our aching bodies.  The players have the chance to move the way Rooney should have, to shoot the way Frank wanted to, and possibly to save the way that Green didnt.

Roll on tomorrow!

The Department for Business, Innovation & Skills (BIS) recently revealed that 20% of business owners are worried that they are getting their employment obligations wrong, while a further 34% believe that employment legislation is not relevant to their business.  That adds up to a high proportion of employers at risk of infringing employment law.

It comes as no surprise therefore that the most recent Employment Tribunal statistics (to March 2009) show that claims have rocketed again this year to 266,542 – a rise of some 40% - the cost to employers was £2.6bn 

Whilst it would be inprudent 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 the lastest employment legislation.

Never let it be said I’m not a generous man.  Click here for a bit of free consultancy and your own copy of Employment Legislation – 10 Ways to Mimimse your Risk  Exposure.

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

Timing is becoming an ever more important factor in the success of a venture-backed business.  The technology highway is littered with the road kill of fantastic technology that was too soon for the market – companies that perhaps burnt too much fuel too early and didn’t have enough to make it to the ultimate destination. 

During these types of circumstances the venture capitalist backing a bleeding edge technology company then starts to get more and more involved in the day to day running of the business.  Eventually the VC has a difficult decision, “do I bring in another investor and suffer severe dilution?” or “do I cut back to the bare bones, batten down the hatches  and ride out the storm until the timing is right to then find passage to the new world?”  The problem with the latter course of action is that in the acrimonious debate as to why the company hasn’t lived up to expectations and why the VC is limiting further investment quite often the original management team either bail out or are pushed out.  Who will then steer this corporate boat?

The issue for the VC is that they have to steer the boat themselves or bring in a new team.  If a new team is brought in, the new team appear like a hired gang of gun slingers – kicking over the bodies of the fallen trying to see where the treasure is buried.  But why would the hired hands believe in the vision of a company which has failed once already?  Why would a top class executive leave a top class job to take on this challenge?  The truth is most won’t. The VC will have to find executives who are “out of a permanent role” who will “give it a go”.  Therein lies the VC turnaround problem, the new interim management team are people who don’t believe in the product or the company and will give it a go until either they suffer a conversion and the company turns around or something else more permanent comes along.   There is no passion or belief from the new management team only from the investor – the cart is very definitely before the horse.

In the meantime the VC has had to put in another round of funding to give the team some sort or running chance.  The board room becomes an audience to phrases like “It’s not my money, but if it were I would do …………”.  One of the most dangerous phrases in the board meetings I have found.

Mike O’connell, CEO, Isosceles Finance

To be continued ……….

If you remember Mr Brown’s first reaction was to ask “who” put me in this situation, he pauses as he scans his vast database of a mind and  momentarily a name flashes up “Sue I think” he then spits out the word “ridiculous”.

I couldn’t help wondering what Sue must be feeling.  From Gordon’s tone, Sue was in big trouble wasn’t she?  She was in for a massive dressing down and the placement of a big black flag next to her name on Gordon’s people database.  Sue was going to receive the most disapproving of glances and a shake of the head for a few days to come.

If Sue is travelling in the car with Mr Brown today, I wonder what the conversation is about, the weather, the football, tonight’s debate?  My bet is that it’s pretty quiet in Gordon’s car.

The truth is that some of us have done a “Gordon” at some time, but all of us have been a “Sue”.  Sue simply put the man in charge in touch with reality  – “Gillian”.  We see it in business every day – often it’s the Finance Director or the Financial Controller who has to deliver the unpalatable truth, puncture the ego.  Sue will just have to take what comes her way and continue to do her best.  She must not allow this to stop her from delivering the truth and reality to the top man – otherwise she is deceiving him , the people and ultimately failing at her job.  It’s just the sort of resilience all of Isosceles’ interim FD’s and part time FD’s have to show to do their job properly.

Mike O’Connell, CEO, Isosceles

I believe there are only three ingredients to a successful venture-backed business excellent people, timing and luck.

Mike O’connell, CEO, Isosceles Finance

To be continued ……….