Are you getting the most from the information you have?

James Law’s - Etesian Group

You can find the Etesian Group at www.etesiangroup.com.au

Contact James Law on 0409 199 547

I can also be found on Twitter and Linkedin

Location – Perth Western Australia

Client base includes Western Australia, South Australia and Northern Territory.

“ to spoil the ship for a ha'penny worth of tar ...” ( cont)

Fair weather managers……….

Does your company employ one or more bookkeepers? How many accountants? Any financial controllers? Who set up the chart of accounts? How and why? What do your financial reports tell you? Who is overseeing the accountants? Are your results timely and meaningful? What strategic advice do you get from your accountants? Are your accountants more focused on compliance and tax? Do you rely on your external tax accountant? How are you controlling your cash flow? Are you in breach of any of your borrowing covenants? What are GAAP?

I could go on………! The reality is that the vast majority of businesses can’t and don’t use there financial information. Furthermore the majority of those that try to aren’t getting the right information, and rather dangerously for them don’t even know it. Most businesses financial information is designed solely for the taxman and the banker.

Good financial information is forward looking and allows management to make informed decisions regarding the businesses future. Has your business got:

• Effective cash flow management tools?
• Well constructed management reports?
• Effective budgets?
• The appropriate business plans?
• Cost effective processes?
• Financial analysis and strategy formulation?
• Proper internal controls?
• Management of tax issues?
• Good banking relationships?
• Good governance and risk analysis?
• Management of debt and equity funding?
• An appropriate level of profit for the investment, turnover and risk employed?

Really? How do you know?

Maybe its time you applied a bit more tar???????

Don’t wait until it’s too late, call me now for a free business health check, 0409 199 547.

 “the commoner type of success in every walk of life and in every species of effort is that which comes to the man who differs from his fellows not by the kind of quality which he possesses but by the degree of development which he has given that quality. This kind of success is open to a large number of persons, if only they seriously determine to achieve it. It is the kind of success which is open to the average man of sound body and fair mind, who has no remarkable mental or physical attributes, but who gets just as much as possible in the way of work out of the aptitudes that he does possess. It is the only kind of success that is open to most of us.” – Theodore Roosevelt

Cheers

James Law

0409 199 547

Prosper during adversity - Knowledge is power

James Law’s - Etesian Group

You can find the Etesian Group at www.etesiangroup.com.au

Contact James Law on 0409 199 547

I can also be found on Twitter and Linkedin

Location – Perth Western Australia

Client base includes Western Australia, South Australia and Northern Territory.

“gōng kuī yī kuì”  -  “ to spoil the ship for a ha'penny worth of tar ...”

If someone spoils the ship for a halfpenny of tar, they spoil something completely by trying to make a small economy. This is a British idiom. Tar was used to calk ships in the days of wooden ships. Therefore if the shipwright or ships owner didn’t use the right amount of tar, basically they risked sinking the ship. This is therefore a very apt idiom because it refers to the oft times disastrous outcomes that result from inappropriate financial savings.

The adjoining Chinese phrase is an equivalent and translates as - “To ruin the enterprise for the sake of one basketful”.

If you’re like most small – medium business owners, you don’t have enough hours in the day to manage the existing business and grow it as well. The typical day is consumed by unforeseen fires demanding your attention. Running to client meetings whilst chasing staff to ensure other urgent matters (and sales) are attended to. All the while the immediate and long term financial health and strategy of your business takes a back seat. The consequences of this are seen in companies with cash flow issues, lack of profitability, lack of access to capital to grow the business and much more. These issues are amplified during hard economic times as we’ve all seen recently. Matters then further compound themselves because managers try and save money inappropriately and rather than recognizing the problem, getting organized and seeking the appropriate advice and strategies, ostrich like management buries its head in the sand and tries to get through.

Warren Buffet famously said….”Accounting is the language of business”

Downturns can be a good. Many businesses succeed and prosper during hard times. If you are organized and understand your business fundamentals counter cyclical strategies can work very well. The way to do it is to have a long term financial strategy in place, capable financial advisers, strong cash flow control, and a good understanding of your businesses financial fundamentals. These and other strategies and controls are the basis for success. The catch of course is that most businesses do not have the in house ability to execute the necessary disciplines.

How can your business secure its financial health without crippling itself with additional costs?

Hire an outsourced, part time CFO! Knowledge is power. Greater knowledge is greater power. Your task as the business manager is to maximise profit. You cannot possibly achieve this without the appropriate information on which to base informed decisions. Furthermore most of us benefit from an experienced partner with whom we can discuss the issues affecting our business.

For most businesses the “tar” which if applied too frugally can (and often does) sink the proverbial ship is (the right business) advice.

In the next blog we will look at what advice you may consider.

Don’t wait until it’s too late, call me now for a free business health check, 0409 199 547.

“Don’t agonize. Organise.” -  Florence Kennedy, 20^th century American activist.

Cheers

James Law

0409 199 547

The Future is what you make of it!

James Law’s - Etesian Group

You can find the Etesian Group at www.etesiangroup.com.au

Contact James Law on 0409 199 547

I can also be found on Twitter and LinkedIn

Location – Perth Western Australia

Client base includes Western Australia, South Australia and Northern Territory.

Australia’s multi-speed economy……..

A great deal has been written about Australia’s two speed economy. The reality is that there are many sections to Australia’s economy and stating that it is two speed is almost certainly an oversimplification. Look at the differing performances being exhibited by mining, manufacturing, building, hospitality, tourism and agriculture. Within those categories think about the differences between residential building and commercial building, not to mention regional hospitality and hospitality within the major cities. After that we have the great divide between W.A and Queensland (and potentially in the future NT) and the other States, particularly N.S.W., Victoria and Tasmania.

What underpins these vast gulfs? Is it mining? Is it distance or funding?

Maybe its just attitude?

A few years ago I asked one of my son’s friends what he wanted to do when he left school? He responded that he wasn’t sure. They hadn’t invented it yet. What a fantastically open minded and optimistic attitude! The embodiment of “anything is possible!”

The former States seem to have a can do attitude which does not seem as prevalent in the other States. Today, more than ever before anything is possible. If you can imagine it, you can probably make it happen. How? That’s the thing, isn’t it? You’ve got to outline the concept, plan how to make it a reality, effectively project manage every part of it, eliminating the objections, hazards and obstacles to make it happen. You also have to be able to measure every part of it effectively so you can be sure the project is on track, and that when it becomes a reality the measurement facilitates proper management thereby ensuring the best possible results. Everyone agrees with this part. Where it breaks down is when you start to ask…”So what’s this going to cost?” That’s where we start to lose people. The next time we see them is when they come back to us with a problem. Usually the problem is about commercial survival. Unfortunately when they come back it’s often too late. The number of times people say to me, “I wish I’d come to see you 12 months ago!”

The only certainty about the future is that it can be exciting and offers enormous opportunity.

The only certainty about now is that we all need to be as professional as possible. We need to measure our performance to the best of our ability. The reason we have a multi speed economy is because it is undergoing fundamental change. To survive you have to be able to understand your businesses fundamentals, measure them proactively and strategize the future effectively.

Don’t wait until it’s too late, call me now for a free business health check, 0409 199 547.

“God is with those who patiently persevere”- The Koran (2:153)

Cheers

James Law

0409 199 547

KNOW YOUR BUSINESS...........

James Law’s - Etesian Group

You can find the Etesian Group at www.etesiangroup.com.au

Contact James Law on 0409 199 547

I can also be found on Twitter and Linkedin

Location – Perth Western Australia

Client base includes Western Australia, South Australia and Northern Territory.

Times are getting tougher………..

I’m passionate about what I do………are you? Most of us start our businesses because we are enthusiastic about what we are doing. During good times management is easy, and relatively speaking, so is success.

Times are changing however, and even in Australia we are going to find business life a lot more difficult over the next year or two.

Even to a casual observer it is readily apparent that times are getting much worse. Unfortunately, some would have us believe otherwise, however this is more about their own position than reality.

We have a mining tax, carbon tax, high levels of corporate administrations, high operating costs, tight capital, high government debt, sliding house prices and very low building approvals, large numbers of businesses reporting losses, retail trade in a desperate plight, commodity prices dropping alarmingly……..and more.

What can you do? Traditionally most businesses tighten the belt and try and tough their way through. Tightening the belt can be a good strategy in some ways, but it can also be a critical mistake in other ways.

What can you do? I am strongly of the opinion that the majority of SME’S and middle market businesses make what I call “accidental profits”. Too often I hear the catch phrase …”The harder you work the more successful you will be”. Reality check! There is no doubt that hard work is a key ingredient, however “Working Smart” can be the difference between staying in business and making money, versus going broke.

Working smart eliminates accidental profits (and losses) because it means that businesses thoroughly understand their financial fundamentals and how they make profits. With that knowledge they can fine tune their businesses ensuring profitability and longevity.

The Etesian Group seeks to provide niche services for SME’s and middle market enterprises aimed at assisting clients to improve their performance. Whilst Etesian looks at ALL aspects of a clients business, it is not a coaching service. Etesian is focussed on the businesses key financial fundamentals using financial and commercial tools to maximise a businesses results and to help management truly understand their business. Etesian does not replace your business coach, taxation adviser, or external accountant. Etesian works collaboratively with such consultants to maximise performance. It is however impossible for any coach or business manager to maximise a businesses performance and achieve necessary goals if the businesses underlying fundamentals are not understood, reported on or managed properly. This is the essence of any business.

“Etesian’s focus is to increase shareholder value and profit. We love to transform businesses in partnership with great management teams to create successful companies”.

Etesian offers a very broad range of services including business change and re-engineering, business sales, mergers and acquisitions, financial modelling, and advice regarding distressed assets / businesses. Etesian advises directly to Boards and CEO’s, provides business reviews, strategic advice, financial reviews, budgets and forecasting. Etesian staff are compliance experts, and can assist with company secretarial and CFO services.

At Etesian each of us has many years of experience assisting businesses in many diverse industries improve their performance. Few consultants have the track record, diversity of experience, networks and strategic and technical qualifications that through genuine cooperation with management can deliver value creating transformations to business.

Our track record includes companies involved in mining and mining services, mechanical services, pharmaceuticals and medical supplies, hospitality, MV retail and car rental, healthcare products and medication management systems, labour hire, recruitment, manufacturing, property investment and development, finance and insurance, telecommunications, legal, rural enterprises, managed investment schemes and more.

In addition to the above Etesian is able to offer operational and management reporting solutions to business and Government. To manage it, you need to be able to measure it. Information must be accurate, timely, pertinent and understandable. We can assist your business with business reporting and consulting as well as the implementation of reporting tools to allow you to better minimise costs and understand what is happening within your business.

“Know your numbers’ is a fundamental precept of business”- Bill Gates

Cheers

James Law

0409 199 547

How Compelling is your Businesses Vision?

James Law’s - Etesian Group

You can find the Etesian Group at www.etesiangroup.com.au

Contact James Law on 0409 199 547

I can also be found on Twitter and Linkedin

Location – Perth Western Australia

Client base includes Western Australia, South Australia and Northern Territory.

“Key Principles to consider when running any Business”

 Clear Compelling Corporate Vision

All stakeholders must be able to take ownership of, and focus on a clear, inspiring, meaningful and believable vision of the entity, its purpose, people and mission. Vision statements must be uplifting and believable. Such statements must inspire stakeholders to fulfill them.

Empowering manpower

An entities workforce must pursue inclusiveness, creativity, passion, excellence and professionalism. For its part the business should pursue the best possible people, realizing that its success is merely a function of their ability. Quality people will inevitably pay for themselves because they will have an inherent need to do well and for them to be a part of a successful operation.

Communication

Communication both internally and externally must be honest and transparent. It must engender confidence and belief. All stakeholders must be able to have faith and trust all communication. Communication must also be capable of (as appropriate) challenging, empowering and inspiring.

Proactivity

Organisations must act with a sense of urgency. Tasks, actions and projects must be guided, clearly communicated, obstacles must be overcome and success must be recognised. Such activity must also be balanced, considered and professional.

Professionalism

The pursuit of success and should never be at the expense of quality, honesty, or other intrinsic standards. It is always better to over-deliver than to disappoint. People who are disappointed rarely buy at the same business again, nor do they tend to stay with employers who promise more than they deliver.

Customer Loyalty

Great businesses are built on repeat business. It costs a lot more to win a new customer than it does to retain an existing one. Additionally happy customers are a businesses best form of advertisement. Creating a great customer experience by going that little bit further, ensuring customers believe and trust a business, by delivering service excellence, a business will ensure its success.

By way of example……

The John Hughes Group in Victoria Park, Perth is the largest selling single location motor vehicle retailing company in Australia. Given the comparative sizes of Perth to Sydney and Melbourne, this is no small achievement. John Hughes company philosophy is………..“We are a friendly and efficient company, trading with integrity and determined to give our customers the very best of service.”

Says it all……….

Cheers

James Law

0409 199 547

Great wisdom survives times passing.......

James Law’s - Etesian Group

You can find the Etesian Group at www.etesiangroup.com.au

Contact James Law on 0409 199 547

I can also be found on Twitter and Linkedin

Location – Perth Western Australia

Client base includes Western Australia, South Australia and Northern Territory.

“If ignorant of both your enemy and yourself, you are certain to be in peril” – Sun Tzu, The Art of War, 500 BC.

This simple but poignant philosophy was written by a Chinese General some 2500 years ago. In spite of the time, cultural and technological differences between Sun Tzu’s era and today this philosophy could not be more apt.

Business conditions in Australia have fallen to their lowest point in three years according to the NAB Business Survey (AAP 12/06/2012). “The degree of weakening in activity over the past couple of months suggests that the economy is struggling, with conditions in some of the previously strong industries, namely mining and finance / business / property also looking somewhat laggard at present. Forward indicators of demand provide no signs of improvement, with particularly low levels of capacity utilisation not boding well for activity in coming months.”

This comes directly on top of last months blog which quoted ASIC’s Adrian Brown who stated……”The first quarter of 2012 calendar year saw external administrations increase by 16.7% compared to the same quarter in 2011 and is a rise of 2.5% over the previous quarter.”

Know your enemy….your enemy is the current state of the economy, both at home and overseas. Your enemy is also the lack of consumer and business confidence. What can you do to ensure your business is not adversely affected, or at worst any effect is mitigated as much as possible? Who are you talking to who can help you best understand your market and how to deal with it.

Know yourself….do you really know where your business is at, financially and strategically. Are you getting accurate timely advice? What do your financial fundamentals look like? Who have you discussed your fundamentals with?

Historically the strongest businesses are those that have access to the best advice and have the facility to internally discuss and debate results, directions and strategies. The most successful entrepreneurs are the ones who acknowledge their own limitations and seek to fill their knowledge voids with experts.

Who are you talking with?

Cheers

James Law

0409 199 547

Something the Pollies forgot to mention...........

James Law’s - Etesian Group

You can find the Etesian Group at www.etesiangroup.com.au

Contact James Law on 0409 199 547

I can also be found on Twitter and Linkedin

Location – Perth Western Australia

Client base includes Western Australia, South Australia and Northern Territory.

Confused ……….you're not alone!!

“Know your numbers’ is a fundamental precept of business” - Bill Gates

Let’s face it Gates should know. Here’s a sobering fact…………

ASIC figures show corporate insolvencies remain high

By Australian Government | 10/05/2012 | 

This release was originally published by the Australian Government

According to figures released by ASIC today, the March 2012 quarter is the third consecutive quarter in the current financial year in which external administrations exceeded 2,500 per quarter.

ASIC’s Senior Executive Leader of the Insolvency Practitioners team, Adrian Brown, said the quarterly results show external administrator appointments remain at historically high levels.

The first quarter of the 2012 calendar year saw external administrations (EXADs) increase by 16.7 per cent  compared to the same quarter in 2011 and is a rise of 2.5 per cent over the previous quarter, Mr Brown said.

You won’t find the pollies telling you that! The reality is that times are very tough, and many businesses are struggling. Now is the time to make sure you are doing everything you should be doing to run your business as efficiently as possible.

Know your numbers!

• Do you know what your cash flow is doing, and why? Now and in the coming weeks.
• Do you have timely and meaningful financial reporting?
• Are your reports aimed at helping you into the future, or are they historical and of benefit only to the ATO?
• Do you understand what the numbers are telling you?
• Is your future planning based on real knowledge or wishful thinking?
• Is your planning realistic?
• Do you have professional budgets and business plans?
• Are you getting warning signs? If so act now, don’t wait until it’s too late.

Yes, consultants do cost money, but unless you have strong financial credentials we are a lot cheaper than the alternatives!

Cheers

James Law

0409 199 547

Are your results truly meaningful????????

James Law’s - Etesian Group

You can find the Etesian Group at www.etesiangroup.com.au

Contact James Law on 0409 199 547

I can also be found on Twitter and Linkedin

Location – Perth Western Australia

Client base includes Western Australia, South Australia and Northern Territory.

Why is it?????????

Why is it that so many managers / directors concentrate on increasing sales, when in reality they do not really understand their businesses current performance? Most businesses do not receive regular, timely monthly profit and loss reports. Of those that do, most P & L’s are poorly laid out and do not provide management with a proper understanding of the businesses underlying performance.

The profit and loss is not the be all and end all of reporting, however it is the pinnacle report which brings everything together. As such it is the most valuable report. The P & L is not merely a historical document. In its most common guise the only people really interested in the P & L are your bankers and the tax man. Used properly a businesses report, especially the P & L can become a valuable tool for helping understand past performance and with that information clearly defined future performance is unlocked, understandable and capable of being guided to extract the best possible result.

Turnover alone is not the key to greater profit. Many companies I have done turnarounds on have performed better with lower sales volumes, but more targeted performance. This has resulted from in depth analysis of the businesses operations and better quality reporting.

Do you understand the fundamentals behind your businesses results? Are your businesses reports meaningful? Are you getting the best possible reports that help management maximise performance?

Respectfully, for most of you………..I doubt it. Give me a ring and set up a free appointment. Let’s see what can be done to truly put you in control of your own destiny.

Cheers

James Law

0409 199 547

James Law’s - Etesian Group

You can find the Etesian Group at www.etesiangroup.com.au

Contact James Law on 0409 199 547

I can also be found on Twitter and Linkedin

Location – Perth Western Australia

Client base includes Western Australia, South Australia and Northern Territory.

Networking………..

For many of us networking and personal or direct business referrals is the basis of our businesses. This is especially true for professionals and service providers such as myself. I belong to a couple of networking groups in Perth and enjoy them.

As a young man I was lucky enough to befriend one of Perth’s most successful and prominent businessmen. I will not identify him here as that would be wrong, however he has helped me greatly over the years. I have often reflected on the way he and a group of his business (and personal) friends have networked over the years. From the time I first met him / them over 40 years ago, each of them actively traded with each other, referred business to each other, invested in each other business, and helped each other establish new businesses. When things were difficult they also helped each other get through the tough times. Don’t think for one minute this was pure friendship. Whilst they were undisputedly friends, the assistance always made each of them money. Nothing was for free, but it was constructive and designed for each of them to win. It is noteworthy that each of these men is now very, very wealthy. More importantly they have each had highly satisfying careers. I have always greatly admired this / them, and have shared this philosophy with my children in the hope that they will learn to act as a team throughout their lives.

I am sharing this with you because I am interested in starting an on line network. Whilst I am very happy with the two networks I am in, I would like to do more. Networking should not be about networking fees, etc. It is about business and working together. In that spirit I am therefore curious to explore those possibilities with you. Please respond to me letting me know if you share my beliefs regarding this, and whether you are interested in starting an on line networking group. Who knows what we can achieve. I suspect it could be very significant. Your thoughts?

Cheers

James Law

0409 199 547

Performance Issues...............

James Law’s - Etesian Group

You can find the Etesian Group at www.etesiangroup.com.au

Contact James Law on 0409 199 547

I can also be found on Twitter and Linkedin

Location – Perth Western Australia

Client base includes Western Australia, South Australia and Northern Territory.

Financial & IT Issues………….

20.    Does your business have a formal system of storing and retrieving information?

21.    Do you benchmark your business against other like businesses & industries?

22.    Do you strategically pursue turnover in the hope of gaining additional profit, or are you targeting profit and thereby adding net value to shareholder worth?

23.    Are you properly analysing your financial measures to best understand the underlying performance and fundamentals of your business?

24.    How closely do you monitor your opposition’s products, services, innovations and performance?

25.    Do you entertain regular independent checks of your business by outside professionals?  

26.    Is your businesses technology up to date or lagging? How far behind is it, and what is the opportunity cost?

27.    What has been the true investment in R & D in the last 12 months?

28.    Is your marketing effective?

29.    Is your capital equipment up to date and effective?

30.    Are your business costs monitored and how do they compare with your competitors?

31.    Do you know your underlying cost of production, and its component parts?

32.    What is the cost of your businesses quality of production, i.e. scraps, re-works errors, inspections, customer complaints, replacements, returns, money back, etc?

33.    What proportion of your deliveries to customers is in full, on time and to specification?

34.    What is your staff turnover ratio?

Seriously, businesses that do not engage in proper independent analysis will (at best) never perform to their potential. Modern business is becoming increasingly technical. It is all about ensuring that all facets of the business are professional, engaged and accountable. Turnover is not king. The primary function is to increase shareholder value. Turnover is only one part of that.

Most businesses spend a large amount on generating a sale, and concentrate massive resources on obtaining additional sales, without ever thinking that they could generate more profit (for much less cost) by increasing the efficiency of existing sales.

Think about it!

Cheers

James Law

0409 199 547

Quality and Satisfaction Issues......

James Law’s - Etesian Group

You can find the Etesian Group at www.etesiangroup.com.au

Contact James Law on 0409 199 547

I can also be found on Twitter and Linkedin

Location – Perth Western Australia

Client base includes Western Australia, South Australia and Northern Territory.

A Business Survey for you to consider………….

11.  Does your business measure supplier quality as this reflects in turn on your

       business?

12.     Do you work with key suppliers to improve processes?

13.    At what level does your business contact key suppliers?

14.    Are non managerial employees encouraged to take ownership of quality issues?

15.    Do you measure employee satisfaction regularly?

16.    Do you conduct formal employee performance reviews?

17.    Do employees get paid incentives relative to their performance?

18.    Does your business offer in house or sponsored external employee training?

19.    Do you have OH & S processes and training programs in place?

Financial and IT issues will be next………….

Cheers

James Law

0409 199 547

A Business Survey.................

James Law’s - Etesian Group

You can find the Etesian Group at www.etesiangroup.com.au

Contact James Law on 0409 199 547

I can also be found on Twitter and Linkedin

Location – Perth Western Australia

Client base includes Western Australia, South Australia and Northern Territory.

A Business Survey for you to consider………….

1. Does your business have a formal planning process that sets goals for the future (i.e. 12 months to 3 years)?
2. In developing goals does your business consider the requirements of customers, suppliers or employees?
3. Does your business have a vision statement?
4. To what extent does your business promote a set of company values to employees?
5. Does your business sponsor local or community activities?
6. Does your business need to consider reducing it environmental impact?
7. Does your business have set procedures for dealing with customer complaints?
8. When was the last time you visited some of your (major) customers, rather than merely sending sales and marketing staff?
9. How often does your business systematically measure customer satisfaction?
10. How much do you involve customers in product or service development / improvements?

More to come soon…………………..

Cheers

James Law

0409 199 547

Some thoughts for non-profits............

James Law’s - Etesian Group

You can find the Etesian Group at www.etesiangroup.com.au

Contact James Law on 0409 199 547

I can also be found on Twitter and Linkedin

Location – Perth Western Australia

Client base includes Western Australia, South Australia and Northern Territory.

Think About This……..

Ten key financial questions nonprofit board members should ask:

1. Have we run a gain or loss? (i.e., Are we better or worse off financially than we were a year ago?)
2. Are our key sources of income rising or falling? If they are falling, what are we doing?
3. Are our key expenses, especially salary and benefits, under control?
4. Do we have sufficient reserves?
5. Has the board adopted a formal policy for the establishment of reserves? Is our cash flow projected to be adequate?
6. Are we regularly comparing our financial activity with what we have budgeted?
7. Is our financial plan consistent with our strategic plan?
8. Are our staff satisfied and productive?
9. Are we filing on a timely basis all the reporting documents we are supposed to be filing?
10. Are we fulfilling all of our legal obligations?

Cheers

James Law

0409 199 547