Improve your Business’ Financial Performance with Business Coaching
19th Aug , 2019
There are many areas in which International Business Mentors is asked to provide a business mentor or business coach to assist business owners. Critically, one of the most frequent catalysts is to help examine and improve the business’ financial performance. This may be to address a specific problem or as part of the inability of the business to fund its own business growth strategies.
With the help of a well-matched business mentor or business coach who can cast fresh and independent eyes over your business’s financial performance, you as a business owner or senior management can better examine your financial data. You can then start to discuss what can be done and put into place strategies to improve profits, returns and net cashflow. These improvements should lead to a better ability to financially perform and consequently attract better funding to support the growth of your business.
Each business has its own financial dynamics, and different factors will be relevant at different times depending on the business configuration, including:
- Its products or service mix
- Ability to drive price or not
- Loyalty of customers
- Fierceness of the competition
- Security of supply
- Changes in demand patterns
- Ease to market
- Growth in markets
- Ability to scale up the business
- Ability to control costs and get economies of scale, size and appropriateness of the organisation structure
- Need for and ability to give and receive trade credit
- Levels of stock
- Lead times with suppliers
- Need for investment in plant and equipment, IT assets or Intellectual property
For the purpose of this article, we will give an overview of some of the more common issues business coaching and mentoring can help with.
Areas Where a Business Coach or Mentor Can Help
Some of the specific strategies that need to be considered and discussed with your business mentor or business coach might include:
- Care well for and protect all assets – whilst this may seem an obvious must, it is surprising how many businesses don’t heed this crucial approach. This includes adequate insurance, repairs and maintenance, physical security, and legal protection for Intellectual Property.
- Operating cost reduction – Buy better and implement supply chain management. Look to moving up and down the supply chain and get better credit terms with suppliers to improve net cashflow.
- Overhead cost reduction – Look at the indirect costs in doing business and take a critical look at the overheads. Why do these exist and what benefits to the organisation are being delivered?
- Deeper business relationships, including deeper customer, employee and supplier relationships – Any business coach will tell you that relationships are important to the success of a business; if one relationship is damaged, the running and success of the business can deteriorate. There needs to be specific strategies to target in order to maintain these critical relationships. For example, with customers there should be a customer contact policy that sets out the needed level of contact with each customer segmented by the type of customer. This should be documented in the CRM (customer relationship management) system and reviewed for performance.
- Sustainable competitive advantage – Define your sustainable competitive advantage, improve and protect it. All businesses have competition; you must define or create a unique selling point and maximise this to your advantage. Unless you have and market your sustainable competitive advantage to those customers who value yours, then you will not be chosen by the potential customers you market to.
- Good industry knowledge – Develop good industry knowledge and influence in the right places. If you are not an expert in your field, then become one, or employ or align yourself with the right people to give yourself better credibility and confidence.
- Brutal financial analysis – Strictly enforce discipline in the analysis of profit, returns, balance sheet management, net cashflow, budgets, forecasts and targets. You can then use this information for the creation of business growth strategies.
- Get the best pricing for what you do – Ensure that pricing is effective and not drifting down because it is easy to make sales. Your pricing needs to be realistic with the market and adjusted as changes occur in your markets. Pricing is part of strategy, so for example, you might decide to drop prices to gain market share, increase volumes, and reduce your unit costs as a result. You might also go the other way and differentiate your offering as a higher quality service in the market.
- Get excellent systems, information and security – These are all equally important and relevant to each other. If any of these falters, the business is vulnerable to cyber-attack and may not have the information it needs to compete in the market or fulfil its orders.
- Good performance and development leadership – Good leadership must understand how to get more performance and develop the business to produce good financial outcomes, and business coaching can assist with this. This impacts every facet of the business: customers, marketing, sales, operations, people, supply chain management, and the financial impacts that are driven by good leadership on profit, cashflow and returns of every single decision or strategic choice made.
- Deal with the competition – Be aware of what your competitors are doing. A good understanding of competitors and an ability to out-manoeuvre or block their actions in your market or with your customers is critical. This will help retain customers, win new business and stop your competitors getting bigger and becoming more of a threat to your business’ financial performance.
- Improve your offer to the market – Improve the market and sales potential for products, services or expertise. This depends on your industry, and the position you hold in the market. Make sure you are delivering an excellent quality product that your customers want to use at the right price in the market segments of your choice.
- Invest in products and services – Manage the life cycle of your products or services, otherwise they will ‘wither on the vine’ at the same time. Enhance, refresh or replace aging offers in products or services to maintain volume and margins.
- Plan to have great financial performance – Planning is critical to ensure you have good business plans and business growth strategies, solid organisational structure and people, correct pricing and credit processes, and the right sized cost structures so that you can compete and make a decent profit, returns and net cashflow. This will need regular review and changing if markets or cost structures change rapidly.
- Risk management – Review and implement risk management systems and practice. This must be across the business. You need to identify where the potential risks are and how you will or can manage that risk, or indeed if you actually want to take that particular risk.
Get Assistance from a Business Coach or Mentor Today
The above issues are critical to any business’s financial performance. As a business owner or senior management, you can become consumed with the day-to-day running of the business, meaning higher level approaches get missed and you can become exposed to higher risks and lower financial performance. It therefore makes great sense for you to set aside time to step out of the day-to-day grind of your business and review these aspects of your business that can improve financial performance. You can do this with a well-matched business mentor or business coach from International Business Mentors. With personal experience running successful businesses, not only can they assist with the examination of the issues affecting the financial health of your business, but they can also assist with improvements and offer confidential support.
Contact International Business Mentors to experience the benefits of business coaching and help you deal with business performance challenges.