Posts Tagged ‘Fear’
“The only thing we have to fear, is fear itself!” (To be precise and the actual famous statement)
These are very famous words, spoken by Franklin D Roosevelt at his inaugural presidential speech and talking about the US depression and the prospect of turning the economy around. This is looking as relevant today as it was when the words were said back in the 1930s. To succeed and change, to build a business or an economy, to be a successful entrepreneur, we need to be fearless and we need to look to build success. Successful entrepreneurs, the Steve Jobs’ (he seemed not to even fear death), the Sir Richard Bransons’, The Lord Sugars’ did not fear the task at hand.
Yet fear itself sells; fear underpins many sales strategies; fear is the bedrock of many legal, accountancy and other professional service business sales training. I was part of a large brand accountancy business and I was trained to sell fear.
How do we sell fear?
It is relatively easy. Identify and find an issue or problem or something that a person loses sleep at night about. Discuss this further and make it worse, take the issue to its most extreme conclusion, anything, the lack of growth, lack of cash, no pension, no will, a large tax bill or undeclared income. Ensure that we can all see and understand what “could” be the result of the continuation of this situation; fines, court action, bankruptcy, failure or even death. Make them feel really bad about something that they have created themselves. Then, after a short period of time…… offer the solution, the solution that you knew all along. Add on to that, the famous approaches of “you can’t do that,” “ that, sounds wrong, you need ours,” “really need to stick with this, use ours, everything else is too small, too big, too risky, wrong, etc, etc.” Fear sells by the bucket load.
I have never at all agreed with this as a sales strategy, it has never sat well with my own positive outlook on life and the wish for my own success, my business success and success for my clients businesses and any business that I am associated with. We, as a business, do not adopt this approach, we wish to promote, ensure and share in the success of our clients and we want to do everything we can to help promote and ensure that success. Yes, we acknowledge problems and pitfalls and look to plan for those, but underpinning this is a positive approach rather than the negative one of fear.
As well as selling fear, we sometimes see fear as a solution to our behaviour ……
Have you heard about the man who owned a parrot ……… that swore like a sailor? This parrot was so terrible, it could swear for five minutes straight without repeating itself. One day the man finally got tired of this parrot’s horrible speech, and decided to do something about it.
He grabbed the parrot by the throat, shook it really hard, and yelled, “QUIT IT!” every time the parrot said something ungodly. But this just made the parrot mad, and it swore more than ever. Next, the man tried locking the bird in a kitchen cabinet. This really aggravated the parrot, and it clawed and scratched furiously until the man finally let him out (upon which the bird released it’s fury in a torrent of language so horrible it could never be repeated).
At that point, the man was so frustrated that he threw the parrot into the freezer. For the first few seconds the parrot made a terrible amount of noise in protest to this treatment, kicking, clawing, and thrashing about. But after a few moments it suddenly went very quiet. As the silence grew longer the man started to think that the parrot may be hurt. After a couple more minutes of silence, he became so worried that he opened up the freezer door. The parrot calmly climbed onto the man’s outstretched arm and said, “Awfully sorry about the trouble I gave you. I’ll do my best to improve my vocabulary from now on.”
Of course, the man was astounded. He could not understand the transformation that had come over his unruly parrot. Then the parrot asked, “By the way, what did the chicken do?”
Growth, the solution
Easy to say, and what do accountants know about this anyway. Well some accountants think that they do, because they offer an associated marketing support system, but this really is only part of it.
Marketing and sales support is vital, and we have access to material and support, together with the creative expertise to help most businesses in this area, but that is really only part of the solution and a business needs to assess what it has to offer and what is its business strategy well before engage the creative juices.
Form our own business background and from working within businesses at board level, we ensure that our clients are equipped to grow their business successfully, and as our strategy we will also look to include this as a formal product and service area of our own.
Start with the sales strategy
This is addressed by identifying, promoting and assisting with the following:
- An understanding of leadership with the vision and missions of the business, in order to effectively lead growth
- An understand of the business theory (McKinsey) to effectively lead and evaluate growth
- An understand of the key aspects of organic growth, the market, the business proposition, the people, the tools and the systems and processes, together with appropriate funding
- An understanding of the key skills of account management, key client management and how to retain and expand existing relationships and value
- An understanding of key marketing techniques and how to win new work and new clients and how to lead a sales strategy
- An full understanding of how to create and fully utilise a business plan to set the agenda for a business and to use that plan as a road map and driver for success
- After all of this we can then look at the creative marketing, sales and support services available through our associates to promote and accelerate this area
Build on to this, skills and approach of the Finance Director
I have touched up this before in detail as a former Finance Director, who will look to set areas for improvement covering support, operational and strategic areas and will look to structure the improvements in these areas, to be able to drive the business, with an article called “How an FD Drives a Business when sometimes Accountants are just catching up,” on http://wp.me/pQyUg-j.
The key points to this, in my opinion can be seen as funding, operational improvements and controlled delegation.
Funding is vital to any business, but the funding needs to be appropriate to the business and for appropriate uses. One key area that we see time and time again is a business losing control of their working capital and short term cash flow. This is in essence the life blood of any business. We always ensure that our client consider and implement appropriate strategies for the control of working capital, be it stock, purchases, creditors, taxation and cash flow. A key tool is a 13 week rolling cash flow, which seeks to ensure that a business has a full understanding of the peeks and troughs of cash requirements to ensure that it is able to deal with this area. Another key positive outcome of this tool is that for many businesses, it also allows the business to look to channel cash to appropriate growth areas and growth strategies in the shorter term.
Without including another chapter, then there is the external funding and the growth by acquisition or sale, the banks, the grants, the business angels and the private equity investors. As being part of a number of organisations supporting these areas in the midlands, as well as helping fund new start-up businesses, buying and selling private SME businesses and floating and managing public company share issues, as both finance directors and as advisers, we have access and a little bit of expertise in this area as well.
Operational improvements can be assisted with both key performance indicators, KPIS and benchmarking with other businesses. This allows an understanding of what are the key areas of business performance that have the most significant impact on its success. Benchmarking is not about either complacency or fear and worry that your business is either doing any better or worse than others, it is an understanding that if your performance ranks as low compare to many similar businesses operating within your industry, then it points to something that you doing wrong and helps to start to correct that performance.
Aligned to this is controlled delegation or internal controls. These are not considered for the sake of it. Controlled delegation is about identifying the skills and attributes of a business team and allowing individuals with the most appropriate skills to work in areas most suited for those skills, whilst doing this under a documented structure and system that everyone understands. An example of this is a business that engaged a new part time finance director, adopting the same approach to business that we encourage and utilise. That finance director looked at some numbers and KPIs etc and this included monthly sales patterns. The patterns showed two months of good sales and one month of poor sales and this was consistent for quite a long period of time. When looked into and queries further, the reason was that the main owner/director, who was also the key person for sales, re-wrote the company catalogue every three months and so was not engages in selling. A relatively simple solution, with appropriate controls and checking ensure that another member of staff was engaged in this role and the business increased sales by 20% in the following year and profits and cash accordingly.
Add on appropriate tax planning support and additional cash
As a business grows and becomes more complex, bigger and with more profits, so can the complexity of its tax planning and more complicated and expensive areas are available to support that business and its owners.
There are, however, still simple and legal ways to ensure that new and growing businesses do not give away profits or incur large tax bills. We work with our clients to ensure that these areas are all considered and adopted accordingly. Without going into detail, these are few:
- Consider the need to incorporate at an early stage or the valuable tax breaks later if you choose not to,
- The use of unincorporated businesses, such as partnerships and limited liability partnerships to grow a new area of a business, a new market, a new product a new geographical area etc, to share in the tax breaks of incorporation of these areas at a later stage,
- A review of tax breaks available including the still over looked capital allowances within properties, as well as a business costs of research and development where even more tax incentives are available, including tax credits against other tax areas
- The use of pensions such as SIPPS, SSAS and ORBS to increase wealth, lower a tax charge, finance and acquire properties and even provide cash for the business to utilised to grow further.
Our own view is that businesses need to be fearless to be successful and we embrace that approach. We as a business always aim to be positive to ensure that our clients succeed and grow, which we adopt for ourselves. This does not mean that we do not plan for the problems, the downsides, the tax issues, the cash shortages, the plan Bs, the risk registers. It is just that share in our clients’ vision to want to aim for the stars. I really like the saying that if you aim for the moon and miss, you will at least end up in the stars, and that it the philosophy that we encourage and promote.
Going forward, our own business is in its own way looking to help ensure that businesses can grow in the midlands region. In the new-year we are aiming to create cost effective business groups in the Birmingham, Nottingham and Leicester area to share in the skills that we have touched upon in this article as well as introducing even more cost effective monthly accounting support to smaller businesses by use of new cloud technologies, after recently introducing our 33% reduction in audit and accounts costs to established businesses.
As Roosevelt famously said himself and we are embracing, “The only thing we have to fear, is fear itself!”
Steven Mugglestone BA FCA,
Finance Director Services
McGregors Corporate, Entrepreneurial Chartered Accountants and Business Advisers
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McGregors Corporate are a Member of Probiz Tax, providing Innovative Tax Solutions to Owner Managed Businesses.
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