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Chartered Accountants &
Business Advisors

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WELLINGTON

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WELLINGTON

6 Steps to Becoming a Profitable Business

15 Sep 2022 | Biz Strategy

“You can’t have a healthy society unless you have healthy companies that are making a profit, that are employing people and that are growing.” – Michael Porter

Are you in business to make a social impact, serve your community, or to create the lifestyle of your dreams? Whatever your motivation, achieving your goal is unlikely without some measure of profit. Although profitably alone is not necessarily ‘success’, business success without a profit is difficult to attain.

Profitability needs to be a key objective of every business owner, rather than an embarrassing admission as an indicator of greed. Even social entrepreneurs need profits to supplement fickle donations if they are to sustain a lasting social impact.

Being a profitable business is not about exploiting ways to rip-off customers and squeeze employees. Nor does it need to come at the expense of a work-life balance. Let’s skip the ‘profit is a bad word’ ideology, as we discussed in our blog Why Making Profit is a Good Thing. Now, let’s further the discussion of how to do it.

 

Solid Steps to Profit

“You know what’s a savvy business move? Making a profit.” – Cenk Uygur

The foundational pillars for a profitable business have endured the test of time no matter the changing marketplace. It’s worth revisiting the basics, so you can evaluate how your business operations are aligned with them.

Step 1: Solve a problem. Fill a need and become the go-to solution for your customer’s problem – they’ll have no hesitancy paying for it. A solution that is grounded in reality, clearly understood and with a tangible result is an easier sell compared to an abstract “nice to have”. Save the ideological products, such as helping a social issue, for special campaigns or as bonus add-ons. Instead, ensure your ‘recession-proof’ solution matches their vital need that they’ll pay you for.

Step 2: Solve it well. In our previous blog Building a Profitable Business is Not a Race to the Finish Line we described a realistic formula for profit which included focusing on one or two ‘signature’ products and making it great. Customers who receive specific solutions with a top-notch buying experience will reward you with loyalty and 5-star reviews. Providing your focused solution(s) with consistent quality that endures changing trends will set you apart from competitors. Speaking of the competition….

Step 3: Stand out from competitors. How do you differentiate your product or service in the marketplace? What makes your offering unique? Whether it’s your years of experience, convenient access, an inspirational brand, use of eco-friendly materials, meeting an under-served niche, or supporting a social cause, be the business that customers regard as having something special to remember you by that’s uniquely you.

Step 4: Be customer-focused. If there’s anything worth getting radical about, it’s being radically customer-service oriented. Beyond the quality of a product and an exceptional buying experience, make them feel genuinely appreciated. Be it referral discounts, bonuses or rewards, an informative newsletter, membership club or a special following-up, go beyond the ordinary by making customer service an art that you’re continually improving upon. This alone can be your unique quality discussed above, if you’re stuck on how to differentiate from the competition.

Step 5: Build a winning team. As we like to say, the right bums in the right seats make all the difference in building a profitable business. A thriving team culture is productive, inspired and invested in the success of the business, as summarised perfectly in this quote; “You don’t build a business, you build people, then people build the business.” – Zig Ziglar. With the right team comes the need for systems in place to support them to perform at their best, as outlined in this blog, How to Build an Effective Management System.

Step 6: Target and track. Create short-term and longer-range financial forecasts to set a target to work towards. Without a growth strategy and financial objectives to commit to, you won’t know if you’re on track and making progress toward profitability. This is where the expertise of a business advisor will be invaluable.

 

The Next Step for a Profitable Business…

…is to take action today! If you’ve settled for thinking a sustainable profit is an elusive ‘nice to have’, let’s change that. We’re ready to help you bulletproof your ideas, revise your business model and get you on the right track to achieve your goals. Let’s get started.

Building a Legacy Won’t Happen by Itself – You Need a Plan

19 Aug 2022 | Legacy

“Even though your time on the job is temporary, if you do a good enough job, your work there will last forever.” ― Idowu Koyenikan, Wealth for All: Living a Life of Success at the Edge of Your Ability

Building a legacy won’t happen by itself. It requires your creative input and a grounded strategy.

In a previous blog, Life goal #3: Building a Legacy, we started the discussion about the definition of a legacy, reasons for creating one, and how that vision differs for everybody. We then mapped out the three critical elements of succession planning, which includes your team, the structures and processes needed, and the cost component.

Let’s continue the discussion about succession planning to ensure your legacy continues to thrive whether you’re on an extended absence, for when you move on to other aspirations, retire, or pass it on to loved ones after you are gone.

 

Why Think About Succession Planning?

“Succession planning is a process and strategy for replacement planning or passing on leadership roles. It is used to identify and develop new, potential leaders who can move into leadership roles when they become vacant.” – Wikipedia

Consider the following questions, and you’ll know why a legacy cannot be established without it:

  • What will happen when you leave the business? Will it fall apart without you, and everything you built will no longer exist?
  • What will happen if any of your key team members leave without you having someone else, already trained, to step into their place?

Succession planning is not only about putting structures in place for when you leave, but also for when any of your key employees leave. Why would you, or team members plan to leave?

  • Perhaps you or one of your team wants to retire in ‘x’ years.
  • You may be the CEO who takes over a business to turn it around, but then want to leave for your next career challenge.
  • Or you may be an entrepreneur with a great idea that you want to develop, but you don’t want to run the company afterwards. You may choose to either sell the business or get a CEO to run it for you.

Whatever the reason or circumstance, you need the right people and the right structures in place for a successful transition.

 

When Should You Start Thinking About Succession Planning?

Yesterday. No pressure.

You cannot wait one year before you retire or move on to haphazardly throw it together. Why? Your first succession plan may not pan out the way you thought, and you may need to start from scratch again.

If you aspire to build a legacy, then yes, you should start thinking about it from day one. We know, it may feel like putting the cart before the horse, but planning for it goes hand-in-hand with your business practices now. It’s about building the right culture in the business that will live on.

“Make a difference, change the game for the better, leave a legacy, be a guide that someone else can follow and make better, and then someone else will follow that and make that better.” ― Carlos Wallace, The Other 99 T.Y.M.E.S: Train Your Mind to Enjoy Serenity

 

How to Start the Process

Putting a succession plan in place might feel overwhelming, but it doesn’t have to be. Our experience proves that a formula for success takes you through four stages.

 

Stage 1 – Take stock of where you are now:

  • How is your business performing? What are the numbers?
  • Who are the key people? What talent gaps do you have?
  • Evaluate the processes and procedures for their effectiveness or redundancy.

 

Stage 2 – Create your masterplan for the future:

  • Where do you want to be in two, five or ten years?
  • What is your vision for the business at that time, and its potential opportunities?
  • Do you currently have the team you’ll need to make your vision a reality?
  • How much money do you need to implement the succession plan? If you don’t have the money, how will you solve that? Our blog, Life goal #3: Building a Legacy, gives more detail on the financial costs to consider.

 

Stage 3 – Implement your plan:

  • Put the structures in place and document procedures. Train people to follow the processes.
  • Invest in retaining your best employees and prepare them for their future roles.
  • Develop and train your team within the key positions.

 

Stage 4 – Review & tweak:

  • Test and adjust procedures and processes as needed.
  • Do a trial run to determine whether your team can carry on without you by going away for two weeks. Then extend another absence to a month, with no contact.
  • Send other managers on holiday and let people step into that position to see how they fare.

 

Ready to Get Started?

The team at BWMD would love to hear your ideas for what a legacy looks like for you. Our experience can help you put the processes, structures and team in place to make it happen. Contact us today to get started!

Applying For a Loan?

5 Aug 2022 | Biz Finances

How to Prepare for Your Best Chance of Approval

 “Growth is never by mere chance; it is the result of forces working together.”– James Cash Penney, JCPenney founder

It takes money to make money, so the saying goes. Whether it’s for new equipment, expansion, or a new product line, at some point business owners will face the inevitable need for acquiring a loan.

But how you approach the application process matters, and similar to any business endeavour, you need to put some thought into it, and a plan. These tips will help you be prepared and on solid ground for the best chance of approval.

What Do Lenders Look For?

First and foremost, they want to understand your business the way you do. Beyond your hopes and ideas, they need an explanation of how your business works, and your plans for the future.

Not sure where to start? We’ve got you covered. The key components of a successful business loan application include the details of the following:

  • Your ‘Why’. Describe your motivation for why you are in business, and what you’re aiming for. Include your Vision Statement for what you want with your business. This will provide the foundation for your business strategy.
  • The Purpose. Clearly outline what the funding will be for, the reason for the application, and the improvements the loan will make to your business.
  • Your Competency. Lenders need confidence in your capability, experience and skills – and that of your team. Be ready to describe your technology, business processes, staff, and plans for continual improvement and upgrades. Read our blog How to Build an Effective Management System for ideas.
  • Your Financial Standing. Lenders would want to see how your business is performing financially. Provide them with management reports (get in touch to let us help you with that) and also describe how your numbers compare to previous years. Also be prepared to provide details of your personal financial standing, such as your credit rating and history of repaying personal debt.
  • Your Financial Forecast. A 12-month projection is commonly requested. You also need to have a ‘plan B’ if things don’t go as planned. Putting in the thought behind the numbers is a worthwhile exercise in itself. BWMD can help you to create your budgets and forecasts.

Putting it all together is the next step. The professional presentation of this information should ideally be a well-formatted document that is easy for the lender to read, without having to navigate 20 pages in order to find the important details. Once you have this document created, it’s easy to update it to use again, if needed.  

Other Important Considerations

“Good business leaders create a vision, articulate the vision, passionately own the vision and relentlessly drive it to completion.” – Jack Welch, former chairman and CEO of General Electric

Now that you’ve documented the key components of your application, what else might influence the decision of a lender?

  • Your track record as a business owner is just as important as your future plans, which is why establishing good habits early can make all the difference to your success. You’ll need to show a history of being responsible with your money, and running your business well without reckless behaviour. Be sure to read our blog 10 tips to Improve Your Habits and Business.
  • Having a governance process reassures lenders that they can trust you to uphold your repayment obligations. Working with a team of professionals such as accountants, a lawyer and industry advisors demonstrates your compliance and commitment to investing in support to not only keep ‘the man’ happy, but be a responsible business owner.
  • Your character Cash flow is important, but so are your behaviour, experience, skill-set and leadership, which complete the package of your loan application. They’ll assess things like your ability to articulate your cash flow forecast, and your passion for the business.

Funding for Success

Completing these steps can make your loan application more likely to succeed. Formulating a loan application plan will not only reassure lenders, but also give you a solid sense of your business and a clear path to realising your dream lifestyle.

Need help with putting a loan application plan together? Get in touch with us so that we can help you achieve the best chance of approval.

How to Operate Your Non-profit Like a Business

22 Jul 2022 | Biz Strategy, Non-profit

 

Whether it’s to help autistic children have access to tutoring or to provide affordable housing for the elderly, the mission of your non-profit organisation is the focus, and requires innovation and business savvy to make an impact.

We reviewed some of the unique distinctions of non-profits in our blog, Non-Profit Accounting and Tax Tips 101. But when it comes to similarities, the parallel between them and conventional business is the approach in which they are managed to provide value. This approach is what we want to focus on in this blog.

Whether a new organisation or well established, there’s plenty of tips here for all stages of a non-profit, so let’s go!

 

Why You Should Follow a Business Approach

There’s no getting around the fact that providing value, in whatever form or desired outcome, requires the same level of operational proficiency as a conventional business.

However, what is perceived as ‘value’ differs. A non-profit solves a problem with either a product or service, but the value it brings is providing a solution to a societal problem. Whether to feed the hungry or preserve wildlife, a donor’s gratification comes from knowing their investment is supporting the greater good.

In order to realise the greatest societal impact, non-profits must invest in their organisations, as any business would – if not more!

“Everyone wants charities to spend as little as possible on overhead. That’s backwards. Overhead is what drives growth. If charities can’t grow, they can’t solve problems. So overhead is a good thing. And I’m overhead.” – Dan Pallotta, author

 

Key Components of a Business Approach

In our blog What You Should Know Before Starting a Non-profit in New Zealand, we emphasized that a ‘not for profit’ doesn’t mean ‘for loss’, and explained why you need to put your entrepreneur hat on. We said, “just like a regular business, if you run an efficient operation, you’ll be able to provide a much better service to the people or cause you’re trying to serve.”

A non-profit has accountability to both the community and donors, to operate in a way that meets revenue goals each year, without making unnecessary expenditures.

The following tips will ensure the best chance of making the greatest societal impact.

Act, Speak, and Perform Like a Business

It might seem obvious, but your attitude matters, and will determine your behaviour, choices and habits. Have a look at our blog, Ten Tips to Improve Your Habits and Business on how to disrupt and reboot behavioural patterns that might be holding your non-profit back. Operating it like a business will help cultivate relationships in your community, and develop win-win collaborations with donors or members.

Create Models of Sustainable Income

Donations are fabulous, until they stop. Investing in building stable revenue generating programs or services will ensure you’re not reliant on donor dollars or government grants alone. By making the mission profitable with revenue-generating services at the core of your organisation, you’ll have less dependency on philanthropy.

Understand the ROI

Track, analyse, pivot. Focus on short and long-term returns on investment to ensure your strategy and efforts are bringing in the greatest bang for your buck. Effectively working with the proceeds you have while maintaining expenditures within your budget is a result of responding to positive or negative ROI outcomes. Similar to conventional businesses, doing a costs and benefits analysis could help you to make better decisions on which activities and strategies to pursue.

Take Innovative Risks

Non-profit organisations are in the business of disrupting what is currently the norm, but also a problem to solve, and filling the role as ‘change agents’ to bring improvement to social issues. Making an impact will sometimes require taking calculated risks, which like any business, is necessary for making progress. Seek new ideas and opportunities, and assess short and long-term opportunities to scale.

Keep a Steady Eye on Expenses

Stay vigilant about what funds are not used efficiently. No matter what your income is, it won’t result in much impact if money is going down the drain. What could be trimmed, or donated? For example, evaluate what expense could be procured with a gift-in-kind campaign, to not only cut costs, but attract practical support and involvement from the community.

Invest Smartly

While monitoring expenses and the ROI as mentioned above, put your revenue to its best possible investment in the following areas.

  • Your Team. High quality staff results in a high quality organisation. Onboard the best talent for key positions, providing competitive benefits, salaries or hourly wages. Build a company culture that they love to work with, and take care of your people so they are invested in the success of your non-profit. Commit to building your leadership and teambuilding skills. You can learn how active listening can make a big improvement in this area by reading our blog, When Great Minds Don’t Think Alike, Exceptional Things Happen.
  • Marketing. It goes without saying that a polished presentation is a deal-breaker in todays’ society. The top necessities are a modern website that is easy to navigate, a solid brand that is unique and recognisable, local advertising, and social media presence. Newsletters, social media with engaged membership groups, and video marketing with a YouTube channel provide limitless opportunities for free marketing and visibility, so don’t skimp on keeping up with any of these activities in one form or another.
  • Technology and Equipment. Whether from donations, grants or raised funds, your technology and operational equipment needs to drive the engine of your non-profit. Make the most of free tools and software, but also have the mindset for growth and staying current.

Invest in the Right Accountant

We know that successful non-profits require a unified approach of building a solid foundation, measuring performance, having confidence in your decisions, and evolving strategically in the direction you want. Contact the team at BW Miller Dean to see how we can help your non-profit thrive.

How a Business Mentor Can Help You Achieve the Impossible

8 Jul 2022 | Biz Strategy

 “Show me a successful individual and I’ll show you someone who had real positive influences in his or her life. I don’t care what you do for a living—if you do it well I’m sure there was someone cheering you on or showing the way. A mentor.” – Denzel Washington

Without mentoring, many great accomplishments that shaped our world would never have happened. Without mentors, we would not know of the successful artists and industry leaders that we look up to today.

As a business owner with so much to stay on top of, understanding the complexities of finances is often at the bottom of the list. This is why a business mentor is the missing link if you’re struggling, because very often, the only way to achieve your goals is to learn directly from someone with expertise in the area which you lack.

Even well-established businesses could benefit from a fresh strategy that mentors can provide, so read on to learn why it’s worth considering teaming up with one.

 

Every Business Needs a Mentor

“A great mentor helps you to achieve what seems impossible.” – Mariela Dabbah

You’re the expert in your business. The expertise of a business advisor is to help you succeed on your terms, by designing your business as a tool to achieve your goals.

Business mentors can look at your business with a fresh and neutral perspective, which on its own is advantageous in many ways. They can tell you what you might not want to hear, but need to, for making the necessary changes to move forward. Sure, co-workers, friends and family can offer moral support or advice, but a mentor can offer the benefits of their professional experience and knowledge.

Do Your Numbers Stack Up?

Numbers tell the story of your business – but knowing how to read that story and change the plot when needed, that is where a qualified business mentor comes in. They can help you understand whether or not your numbers support your goals, and empower you by teaching you how to read the story of your business through numbers. How?

By first getting a clear understanding of your lifestyle goals and the financial story required to make that happen. Another way to put it is, knowing how you want the story to ‘end’ and working backwards to adjust the storyline to reach that conclusion.

Ready to get excited about your numbers? You will be when you tie them to your goals and the dream lifestyle you want to achieve.

Working Backwards to Move Forward

What do you need to earn in order to live, pay the bills, or put the kids through college? What are your goals? How many hours do you want to work, versus free time for family, hobbies or travelling?

Answers to these questions can determine what numbers you need to support that, and how much you need to earn per year.

With a solid grasp of how much your monthly or annual income should be, you can work out the appropriate price to sell your product(s) for, or how much to charge for your service(s).

Determining how many hours a week you currently work (or want to work), versus how much money you actually make, is another important key to understanding your numbers. If after breaking it all down, you’re only making $5 per hour, something’s gotta change!

For example, if you charge by the hour, and want to only work 25 hours a week, then your hourly rate needs to be ‘x’. However, if that rate is unrealistically high, cost-cutting is necessary elsewhere, in a strategic way that won’t hinder performance and efficiency. Helping you streamline expenditures and trim the fat in your business without taking it out of your pocket is where business mentors shine.

Ready to Make Your Numbers Stack Up?

The team at BWMD has the expertise to support the dreams and challenges of business owners like you. We bring clarity to your vision and goals, and help design your business to achieve them. Our collaboration will set your business on the right path. Contact us today to get started!