stages of development - International Business Growth Radio Network

Practical Solutions to Difficult Problem, Why you should listen to season 4 - Jeremy Gray

3/1/2021

Jeremy Gray - "Practical Solutions to Difficult Problems"

Although we cannot predict what 2021 will bring, one thing is certain – to grow your business you will need to evolve, make changes, maybe introduce new products or services, improve productivity, enhance your planning processes, acquire a competitor, or improve your business analysis capability.

During season four I will guide through the last three activities:

I will spend three weeks discussing strategic planning:

Starting with an introduction to strategic planning,
Then how to prepare a strategic plan that works
Finally and, probably most importantly, how to implement your plan.

Why Have a Strategic Plan?

Through research, discussion, and goal setting, the strategic planning process helps you and your employees understand the current status of your business and where you want it headed in the future.
Increased Organizational Alignment With a properly made strategic plan, everyone in your business can be on the same page.
Determining Your Business’s Direction One of the benefits of strategic planning is choosing the direction the business is going toward.
Setting Business Goals Strategic planning also gives you the opportunity to set meaningful, realistic, and measurable goals and objectives.

Mergers and Acquisitions or M&A.

Many small business owners believe that M&A is only for larger companies
But a well planned and well executed acquisition can lift your business to the next level
When is the right time to make an acquisition? My answer when you find the right target.
Target selection along with integration planning is key.
Valuation of your target is important – is the price you are going to pay the right price?
The right target, the right price and proper due diligence are all important but far more important than any of these is integration planning. This should start day one of the acquisition process and continue as long after the deal as is needed. You as the business owner, along with your CFO if you have one, must take responsibility for planning and implementing the integration process. This should not be delegated.

Financial Planning and Analysis.

An often misunderstood business function that is not always well managed.
I believe that a good FP&A department can be a profit center not a cost of doing
Some CFOs believe that FP&A is a cost centre because that is what it is in their organization. And the reason that their FP&A function fails to add value is because they hire the wrong people.business.
A good FP&A analyst is curious and genuinely interested in your business. They will regularly visit the shop floor – meet with the operators as well as plant management, they will want to travel with sales people, meet customers. They will spend time with your marketing team and your product development folks.
Some typical FP&A activities:
- Evaluating whether the company’s current assets and investments are the best use of the company’s capital, by looking at return on investment (ROI) and comparisons with other ways the company might utilize its cash flow. Managing Cash Flow – minimizing working capital.
- Monitoring the company’s overall financial health, primarily by using key financial ratios such as the debt to equity ratio, current ratio, and interest coverage ratio
- Determining which of the company’s products or product lines generate the largest portion of its net profit and identifying way to increase sales of these products
- Identifying which products which have low or negative margins and EBIT. This is one of the fastest ways to improve a company's profitability. It’s almost certain your business has some poor performing products and raising prices will deliver dollars to the bottom line.