Steven Mugglestone

The more I learn, the less I know

Archive for the ‘Leicester accountants’ Category

Business Challenges that raised over £5,000 for Rainbows Hospice for children and young people

leave a comment »

MGC Hayles, the independent firm of Chartered Accountants and Business Advisers with an office in Leicester, are partnering Rainbows Hospice for children and young people as their chosen charity and are carrying out a number of fund raising initiatives throughout the year.

As the business has recently merged, Leicester based director, Steven Mugglestone, split the business into seven groups and to help with both business skills and team-working, similar to challenges in The Apprentice, gave each team £100 as a business start-up loan, with a time limit of seven weeks to create one or more businesses to make money, legally and report back in a presentation to all of the company at the end of June.

All of the teams at least doubled their money, with selling initiatives from ice creams, plants to books through to winning two bets on football matches.  One team hosted a quiz night, obtaining prizes from businesses throughout Leicestershire.  Another team went about selling breakfasts, renting out car park spaces and running a stall on Leicester market and perhaps the most ambitious of all the teams hosted a networking Indian banquet for 120 guests, including the Leicester Asian Business Association, the chair of Leicestershire county council, the Leicester Riders and representatives from Air India, all of this done within six weeks, whilst the staff also carried out their day jobs.

In total the challenges raised over £5,300, which is all to be donated to Rainbows.

Leicester director, Steven Mugglestone, commented.  “I think that is fair to say that this proved not only to be a great success for Rainbows, but also for our team and the lessons they have learnt, not only in teamwork, but how quite a lot of the time, you have to ask for help from so many others to make business work.  The only negative though, is that this was started by me asking for seven volunteers, who were to become the team leaders, which I got within 10 minutes.  I doubt if I will get such a quick response to the same request again.

 

Written by Steven Mugglestone

July 8, 2013 at 7:37 am

Cash flow worries for many small businesses yet most do not systematically manage their cash and working capital

leave a comment »


Nearly half of all small and medium-sized business owners in the East Midlands are worried about their cash flow over the next 12 months, according to a survey by banking group Santander.  A total of 42 per cent of the East Midlands business which responded to the Santander study reported they were “worried” about cash flow, with a further 15 per cent saying they were “very concerned”. 

Late or failed payments from customers were given as the main reason for cash flow issues followed by weak product sales and customer demand.

Despite all of these worries, and before finding alternative sources of finance, we find that many businesses do not systematically mange their working capital and cash, as many do not have the help and resources available to have an experienced Finance Director as part of their team.  We are finding that we are dealing more and more with hands on management support for our business clients and new clients, as they have not received this support and help from their own accountants.

Instead of worrying, there are a number of systems and improvements that can be put in place to really help improve cash flow and put the business owner back in control.  These include:

  • Ensure that you have a rolling 13 week cash flow, updated weekly, to ensure that you can foresee the peaks and troughs and overall requirements and start to manage your cash flow.
  • Actively manage key working capital areas, ensuring that you understand your stock and debtor levels and requirement/supply times.
  • A back to basics understanding of their own gross margins and profitability to understand that, whilst cash is king, selling less of more profitable goods and services may be better than selling volume of less profitable.
  • Many businesses still hold too much stock and, in particular retail businesses, seasonal and fashion changes will mean that stock held at the end of season will need to be significantly discounted, significantly reducing profitability as well as tying up cash for the period.
  • Many businesses still do not have a systematic and written credit control procedure.
    o   Ensure that customers accept their invoices as soon as possible and deal with any problems immediately.
    o   Ensure that you have an appropriate contract with all customers and that credit control and credit policies are included in that contract.
    o   Ensure that there is a system of letters and calls and stick to that.  Keep in contact with your customers who owe you money.  Sometimes you may need to solve their cash problems by introducing finance to them.  Many businesses have access to providers of finance for their customers.
  • Keep communicating with your suppliers and creditors, ensuring that you obtain the best credit terms but do not leave them in the dark, which may result in cessation of supply and court action.
  • Keep communicating with your bank, as neither side like surprises and they may be able to help and/or compromise

·         There are alternative sources of finance available and many businesses are missing out on effective alternative financing solutions, such as invoice or supply chain finance and in doing so opening themselves up to cash flow volatility.

It is quite remarkable that nearly half of businesses are concerned, but have not either sort or been offered help from their own accountants.  This is partly the difference in experience and commercial approaches that real business advisers provide.  If you are a business facing this challenge, please do make contact with us and we will help to provide support and some of the answers to you.

Written by Steven Mugglestone

May 2, 2013 at 8:37 am

Our Lessons in Change and Improvement:

leave a comment »

All organisations realise that change is inevitable to achieve continued improvements. Change and improvement is an on-going process and part and parcel of the life and success of a business. Sometimes, however, in order for the business or organisation to achieve the aims and ambitions that they set out with, change has to be a bit more urgent and radical.

Sometimes also an SME has to face radical change to help the owner build the business and achieve a successful exit. Most corporate finance advisers agree that to maximise the value of a business, the owner should be able to walk away from that business and it should be able to operate successfully by itself, without their input. This can be radical change for an entrepreneur who can be typically driven and controlling. How can you ensure that the required change and improvements are implemented successfully and this is sustained without the owner/manager reverting to “doing everything themselves”.

Here are some of the areas that from experience we believe can be the key to the success of change and improvement:

• Love your employees
• Building capacity
• Connect peers with purpose
• Learning is the work, consistency and innovation
• Transparency and openness
• System learn (and improve)

Love your employees

Focus has to be given to your employees. The key is both bringing them into the development of the organisation and ensuring continuous learning and development. Appraisal systems, development programmes, sharing information and regular staff consultation is not just for large organisations. It is the key to ensuring that your employees are part of the journey of the business and an integral part of the team and this will help to ensure successful change and improvement continues.

Building capacity

Automation and documented practices are the order of the day, but people are the real key to building capacity and the ability of the business to achieve and produce more. To successfully build capacity for your organisation it will mean looking at competencies, resources and motivation. To use an analogy getting the right people on the bus; getting the wrong people off the bus; getting the right people in the right seats; ensuring that all are motivated (and remunerated, seeing that they are sharing in the success of the business) to achieve and ensuring that the bus is in good working order.

The other key to building capacity is a documented system/process. Without the need to go into details, successful organisations such as McDonalds can look to ensuring that a new restaurant franchise is successful in opening and continued operations as the systems and processes are well established and documented, ready to be used and adopted as and when required.

Connect Peers with Purpose

Your staff can learn from you and each other (which can also mean carrying on doing the same thing in the same way over and over again, as that has it has always been done). Staff, generally want to learn and improve and a key way to achieve this, is to share good practice with others.

Purposeful interaction works effectively under three conditions:
• When the values of the organisation and those of the individuals and group gel and mesh
• When information and knowledge about effective practices are widely and openly shared
• When monitoring systems are in place to detect and address ineffective actions, whilst reinforcing and consolidating effective practices

How can a small business achieve this (without fear of losing staff). One suggestion is that your accountant will act for a number of businesses. They can either help directly, perhaps look at having one of their own staff help one of yours directly to share good practice and ideas. They could even introduce you to another client with similar aims and look to their own staff to start to share good practice (under an appropriate agreement).

Learning is the work – consistency and innovation

Looking at the success of such organisations as Honda, the single greatest difference with them and other organisations is the depth of understanding of their employees regarding their work.

The essence of Honda’s approach to improving performance consists of three components:
• Identifying critical knowledge
• Transferring knowledge using job instruction
• Verifying learning and success

The key to all of this is relentless consistency so that everyone fully understands their work, helps to train others and all are continuously appraised.

Transparency and openness

On-going data and access to seeing effective practices is vital for success. Employees need to understand the road that they are on and be given information which shows that the business is on that road, or if not how the business is getting back on it. Information sharing is key, it does not mean everything, but key performance indicators should be identified, agreed, shared and monitored.

Another key area of transparency is to consider a 360 degree appraisal system, where the directors/owners of the business are open to appraisal, review and recommendations by their staff. This can be scary for some, but has proved to be effective for all and many large and successful organisations now use a 360 appraisal system.

Systems Learn

Continuous development and learning depends on developing all of the staff, all of the time. The fact that organisations such as Honda and Toyota can succeed over decades and that these companies show no leadership effects or changes from succession and continuity is because of a robust set of inter-related management practices and philosophies that provide advantage above and beyond the ideas or inspirations of a single individual.

Once a system and process is agreed, it should be documented. Improvements to the system can be addressed and documented accordingly. The key efficiencies gained from this are:
• Staff understand what is expected and have guidance for work
• The systems will continue to reflect the best possible practice available
• Staff will be supported by the process and knowledge
• Staff changes and new staff can be accommodated efficiently