Author Archives: admin

  • -
Company Pulse business health check

In cyberspace nobody need hear you scream: Social Networks for business – don’t be scared, be informed

Category : Social Media

Facebook, LinkedIn and Twitter, came top of the preferred vehicles with the biggest benefits of social networking stated being the abilities to generate leads, keep up with their industry, monitor the online conversations about their business, increase profitability, sustain reputation and empower customers and employees to be brand ambassadors. Key stakeholders, and policymakers in businesses need to wake up to a fundamental shift that is taking place in how customers find businesses communicate using the Internet.

Social media culture and social networking platforms are here to stay and are having a major impact on business communication, practices and processes.

Despite this enormous growth of business presences on social networking sites, there are still many businesses that are reluctant adopters or outright zealots against. Some of this can be due fears about the use and impacts of social media – mostly based on incorrect assumptions about Facebook, Twitter etc. As an early sceptic myself I can understand this reticence. However, while not exactly the beneficiary of a “Road to Damascus” conversion, I can speak from experience when I say that if you just park your fears safely behind a wall for a moment and take some time to properly research some of the companies you respect you will see the irrefutable evidence that Linkedin, Facebook, Twitter et al have become as prevalent as business tools as web sites and emails. The trick to moving from our fears to adoption is to base our decisions not on assumptions but on facts. So….as a reformed sceptic… let me try to help cut through the hype, myths and misinformation about business social media use.

Misconception 1: It’s too hard/risky to do all this at once… Small business owners who said they don’t use social media said it was because their customers don’t use it. So….find where your customers and partners are and the best way to reach them. You’ll probably find many are using LinkedIn, which has a business focus, and is a good place to start for the uninitiated. However the worst thing to do would be to rush to get on Twitter and start tweeting without a plan. Time spent up front doing analysis, research, and goal setting will make a social media plan easier to execute. Why not first act as Puck would say, “an auditor” first and “an actor too” later (“A Midsummer Night’s Dream Act 3, Scene 1) In the parlance of social media, being a “lurker” on different social media platforms to see what’s happening and what people are saying is a wise first step. For example, check out what other companies are doing on Twitter and then assess what you like and don’t like before taking the plunge and tweeting yourself. This is especially true for B2B businesses where more specificity in audience targeting may be required.

Misconception 2: At least we only have to do it once! Absolutely not: don’t expect a case of build it and that’s it. You’ve got to keep it current and promote it actively after building it. Cross promote your website with other pages you set up on social media sites. Integrate these social media sites into your business’ offline activities. For example, a retailer may list their fan page URL and Twitter name along with its company’s web site. However, be realistic – this is just one tool and shouldn’t become an overbearing chore. Time spent on social media efforts depends on the type of business and the goals involved. Distil down your goals to revenue and key performance metrics.

Misconception 3: Nobody is talking about us anyway. SME’s may think that if no one is talking specifically about their company on social networks, they don’t need to be there. This is a mistake… They will at least certainly be talking about subjects or competitors in your field. On the other hand, what if your business is being criticised? Better to be aware of it and address it directly on those platforms. Customers nowadays expect to be able to converse with you, and social media makes it easier for them.

Misconception 4: Social Media is only for broadcasting. No- Treating social media as a one-way communication channel is doomed to fail. Checking in regularly with followers and asking for feedback and responding to questions and comments means building personable relationships with customers. “It’s a constant conversational dialogue,” (Warren Sukernek – Social Media Guru).

Misconception 5: Just look at the rubbish it produces! Look only at the articles in daily tabloids or surf the public personal pages on Facebook or Twitter and you may be left with this impression. However – like any facility it can be used in many ways. For business users it is possible to design your use of these tools to operate in the business community and need not be affected by the wider social chatter.

Misconception 6: My staff will spend all day wasting time! Again…like any business tool or facility offered to staff – its proper use or misuse will depend on clearly stated policies, standards and practices; intelligent technical content/access safeguards in place and of course proper policing of these policies. Follow this course and social media need be no more a risk than emails or phone calls (both of which were initially resisted by many due to fears of timewasting).

  • Get feedback
  • Create demand
  • Build links
  • Get publicity
  • Watch the competition
  • Build brand loyalty
  • Establish a community relative to your business
  • Create value
  • Get clients
  • Debunk mistruths about your business
  • Market new offerings
  • Forge relationships

So, if you still need convincing don’t start by looking at public Facebook and Twitter traffic where your assumptions may be reinforced by seeing the predominantly personal social users’ content (although later you may want to leverage the business users communities on these platforms).Start looking at the business users’ applications of these new and (sorry General Ludd) inevitable additions to the business toolkit. Linkedin is probably the most useful and appropriate business application of ‘social networking’ and thoroughly recommended as a start point for the new user. Be bold, be open and in a few months you will be advocating that these applications are essential and beneficial tools for thriving businesses today.


  • -
Company Pulse business health check

One bad decision begets another

Category : Decision Making

If you haven’t already read Daniel Kahneman’s excellent book ‘Thinking, fast and slow’ you might want to put it to the top of your ‘to read’ list. It fundamentally challenges much of the received wisdom about decision-making. Anyone who needs to make significant business decisions should understand the implications of Kahneman’s work (which earned him a Nobel Prize in economics).

The fundamental point he makes is that most people don’t make most decisions rationally.

Kahneman explains that we all have inbuilt biases, most of which we are unaware of – and when we are aware of them, we often find it difficult to overcome them. This doesn’t make us irrational, it just means we don’t conform very well to the ‘rational agent model’ which underpins classical economics and traditional theories of management decision-making.

Some of our main biases, which mean we don’t evaluate potential gains and losses equitably, are:
• Loss aversion (the fear of losing is greater than the hope of gaining)
• The endowment effect (the maximum price we would pay to acquire something is less than the minimum we would be prepared to sell the same thing for)
• The sunk-cost fallacy (taking into account sunk costs, which should rationally be set aside, leading to ‘throwing good money after bad’)

The title for Kahneman’s book refers to our two natural ways of thinking: ‘System 1’, the automatic, fast and intuitive way; and ‘System 2’, the slow one we use for complex problem solving which also can, with effort, overrule the quick and easy suggestions made by System 1.

A recent article in the Economist (see link 1 below) describes research into gambling which adds to this thinking. Winning gamblers tend to choose safer and safer odds, which often extends a winning streak, whereas those on a losing streak take ever riskier bets, making it more likely their losses will continue.

Furthermore, research published in Neuroscience (see link 2 below) suggests that rats ‘regret’ decisions – implying that our decision-making behaviours have evolved way back, are shared with many other animals, and are deeply embedded in our subconscious (these form part of System 1).

Taking all this together it is clear that there are significant risks that we don’t always make a ‘rational’ business decision (i.e. choose the option with the best potential outcome, given the information to hand). And in a tough business environment, particularly if an earlier decision has not turned out well, the temptation to make a riskier decision is greater.

Just because things are going well doesn’t mean we will naturally make better, more rational, decisions – then there is a tendency to be conservative, potentially missing out on a good opportunity by being too risk-averse.

The implications are clear if you are a decision maker – you need to work at making rational decisions. Use quantitative techniques and apply them appropriately. But most of all, be aware of yours, and others’, biases and try to set them aside.

1. The Economist:

2. Neuroscience:

  • -
Company Pulse business health check

What is a business health check?

Probably the question we are most frequently asked at Company Pulse is “So what exactly is a business health check?” followed by “and how does it differ from an audit or financial review / due diligence / a strategic review?”

Put simply, a business health check is an all-round review of an organisation’s business health. The review should encompass all the key elements that contribute towards business health, including people, processes, infrastructure, strategy, financial results, governance and customer relationships.

A good business health check will also benchmark your organisation against those of comparable size and operating in a similar sector. Performance benchmarks are one of the best ways to see how you compare with best practice and therefore understand your relative strengths and weaknesses.

Since a business health check is so wide-ranging, the output needs to be in some form of balanced scorecard or dashboard. How else can you assess the relative importance of, say, business process quality against customer satisfaction levels or returns on investment? And, because of the breadth of the review, the results really need to be in an intuitive, graphical format.

For a business health check to be really worthwhile, it should also provide you with an action plan or road map on how to improve the business. This should contain practical measures for minimising weaknesses, building on strengths, mitigating risks and exploiting any opportunities identified. It should also propose priorities for implementation, not just be a ‘shopping list’.

Moving on to the supplementary question, there are many similarities between a business health check and other types of review. One with perhaps the greatest overlap is due diligence. However due diligence tends to be of a different nature and intent: it tends to be quite technical and detailed and relating to a specific transaction, for example a proposed acquisition of financing. Due diligence usually aims to uncover hidden negative factors – reasons not to do the deal – and not finding any problems is the ideal result. A business health check, by contrast, is looking for both positives and negatives, and seeking to understand and learn from them.

That perspective invokes similarities with a strategic review. But a strategic review often looks at potential new directions for the business: Should we enter new export markets or launch a new product line? What about mergers or acquisitions? What would be the benefits of rationalising our supply chain? In order to answer these sorts of questions a strategic review will spend a lot of time focusing on the external environment, whereas a business health check places most importance on current capabilities and how to improve them in the light of market prospects.

By contrast, an audit or financial review (which may or may not include a controls review) is almost exclusively internally focused. It also tends to focus on historical results and recent trends. Of the three other types of review considered, an audit is least like a business health check, its main concern being with finance and governance and with little or no emphasis on people, operations or other areas of critical importance.

Business health checks, therefore, stand in a class of their own. Done well, they provide an assessment of a business across all key areas; benchmark against comparable organisations; present finding in a balanced scorecard or dashboard format; and deliver a practical set of recommendations and an action plan for improvement.

  • -
Company Pulse business health check

There’s more to business health than financial results

Ask a manager or owner how business is going and the chances are that you’ll get an answer about sales, profits or growth. But there’s a lot more to being a healthy business than financial results.

Healthy businesses should naturally post healthy results. But the characteristics of healthy businesses mean that they will post consistently good results and be better able to cope with adverse changes than less healthy competitors.

So what characterises a healthy business?

  • Strong sales growth
  • High levels of profitability and returns to equity
  • Solid balance sheet
  • Satisfied customers
  • Top quality employees
  • Best-practice management
  • Effective use of the latest technology
  • Adaptable organisation and strategy
  • Resilient infrastructure

Of course, the correct answer is all of the above.

Nowadays there is an increasing emphasis on a holistic approach to business health. Research by McKinsey (see the link below) indicates that the best performing businesses “don’t merely learn to adjust themselves to their current context or to challenges that lie just ahead; they create a
capacity to learn and keep changing over time.” The healthiest companies actively manage all key aspects of their business including some areas that may seem “fluffy” – but this attention to detail across the board allows them to reap sustained and long-term rewards.

And just because a business is small doesn’t mean it can’t have the attributes of successful larger businesses – you don’t need an HR department to have good staff recruitment practices. SMEs may have insufficient resources to put into formal processes, risk management and the like, but well-run SMEs can adopt a mind-set of quality in everything they do without adding unnecessary costs. This sort of enlightened approach leads to better long-term results even in the smallest of companies.

So how should you start the journey to improving your business health? The obvious first step is to measure your current business health by taking a business health check. This should give you a balanced scorecard type assessment of your business across all key dimensions: people, processes, infrastructure, strategy, customer relationships and, yes, financial results. A good business health check will also provide you with an action plan for how to improve, focused on minimising any business weaknesses and exploiting your strengths.

A business health check is just the start to improving your business health. You then need to prioritise, develop and execute your business health improvement plan. And keeping your business healthy won’t just happen, it needs constant attention, monitoring and review – but the rewards are worth it.

McKinsey link:

  • -
Company Pulse business health check

When should you review your business strategy?

You might want to ask yourself “when should I review my business strategy?”

A strategy review is not a trivial task (at least when done properly), so you should only carry out a review when you really need to.

That said, there are several events that should prompt you to review your business strategy:

  • A significant new entrant in the marketplace (not just new competitors, but major new suppliers or customers can dramatically alter the competitive landscape)
  • Withdrawal of a significant market player – perhaps through insolvency or a tactical retreat
  • Merger of major players in your competitive arena
  • Development of new technologies that facilitate new products, production processes or ways of doing business
  • Major legislation or regulatory changes that affect your operating environment
  • Fundamental changes to the economic or business landscape

To be relevant triggers for reviewing your strategy, such events need to be potential “game-changers”: major developments with medium- or long-term effects. You should also look out for developments in complimentary and substitute markets as well as those in your current field.

Not all such changes will be dramatic revelations – quite often, the significance of new developments takes time to emerge. You need to be alive to new developments as often an accumulation of small changes leads to a big shift in the competitive landscape.

There is no substitute for continually monitoring the business environment. If any of these game-changers occur in your business environment, they create an opportunity to rethink your business strategy – and they might transform your business.

Returning to the question, one response might be “Not during the budgeting process”. Although the annual budget often prompts a rethink of your strategy, you really need to have locked down your strategy before you start the budgeting process – then use your strategy to inform your budget.

It is advisable to ask a few strategic questions before embarking on your budget process:

  • Is my current strategy still suitable for current trading conditions and my current operating environment?
  • Is my current strategy still feasible? Or, put another way, Does my business have the right resources and capabilities to deliver its strategic goals?
  • If my strategy is achieved, will it still deliver acceptable returns?
  • If you can’t answer “Yes” to these three questions, you probably need to review your business strategy before preparing your budget.

So, the best answer to the question “When should I review my business strategy?” is “Whenever a game-changing shift happens in your operating environment”. You therefore need to keep monitoring the environment for such changes. Also you should check annually that your strategy is still relevant, well in advance of preparing your budget.

Of course, if you don’t have a proper business strategy in place you should start developing one now as a matter of priority.



  • -
Company Pulse business health check

Business Transformation – ‘Eating The Elephant’

At some point, whether due to mergers, cut backs, new products, new business models etc. most organisations at some point will initiate a “Transformation Programme” or “Change Programme” in which, as George Harrison put it, “All things must pass”. Unsurprising perhaps in the ever moving 21st Century business environment? Maybe not but what is surprising is that, in many cases, more thought and planning is out into deciding a sufficiently impressive name for this magnum opus than into a comprehensive design and delivery plan for it. For instance:

  • It is not uncommon to see the posters go up, the press releases out and the mouse pads imprinted for “Programme GeeWhiz” while management still haven’t decided what this actually is and most staff are completely unaware of the existence of it at all or what role they might have in it.
  • If anyone does have an idea of what its about then it is probably only a small part – they can only see a part of the “Elephant” so no one knows what the whole one really looks like yet.
  • Most of all the management team can fail to realise that a transformation programme is not just another change project – by nature it is holistic – impacting on all areas of operations with many interdependencies and complexities so no area or persons can opt out or assume non involvement.
  • If any transformation start off this way then it is almost certain this uncertainty and communicative confusion will remain throughout the programme up to and including the acceptance of, recognition of and quantification of success for any outcomes.

To avoid this sorry state takes only a few underlying pre-requisites:

1) Forget the Name – start with REALLY understanding why you want to start this programme – “Why are we doing this?” Amazingly many organisations can’t clearly articulate this. Consequences of starting in this way will be endless scope creeps and uncertainty that nobody will feel satisfied at any stage. You simply can’t do a “design and build’ make it up as you go approach with such comprehensively impacting change. You must have a clear reason/driver for it and a clear vision of the end state before starting.

2) Have a champion with real clout in the organisation – preferably the CEO – A high-level executive buy-in for the change will help both sell and maintain enthusiasm and support for the duration of the programme. If this person can regularly and clearly state the vision in terms all can relate to then it will be worth ten project managers working in a fog.

3) Ensure the senior and middle management really understand the impacts on their areas and don’t just pay lip service to the Chief Executive:

  • This is the holy grail of a successful transformation programme. Many programmes fail or drag because these people only realise the impacts well into the programme and then start withdrawing support or making changes.
  • At the outset, change is as much about ensuring buy-in from executive and functional leaders within the organisation than actual operational changes themselves. Each of these managers need to fully understand and buy in to the implications of the programme for them and what is required in the programme of them, their business areas and their people.
  • This will also have an added benefit in driving the overall behavioural/cultural change which is often required to work within the new operational environment. The supportive and “lead by example” visible behaviour of leaders and key role players will visibly speak to the new way things should be done. Over time staff will mirror this until the new ways will become “emprinted” permanently.

4) Build a Foundation of Good Governance bare essentials to ensure a successful achievement of the goal are:

  • A clearly defined, scope managed business case – i.e. you know what you are trying to achieve and what it will look and feel like when you do achieve it and any changes to the goal in flight will be reflected in the expectation of the look and feel of the outcome. An overall programme manager who understands all the disciplines involved and how to manage them all holistically towards the end goal
  • Relevant numbers of project managers to take responsibility for specific outcomes within the overall delivery of the goal.
  • Defined best practices, controls and measures for Project progress, review and tracking governance.
  • A programme management office to set, and report on those PM governance practices.
  • Be happy with your success – if you achieve what your vision was then acknowledge it – don’t look for additional benefits that were never promised – the “ Oh I thought you said we would get xxxx from this…” crocodile tears disappointments stated are often from managers who did not fully participate in all of the previous steps above.

But as a last word on governance – I return to the first words: ” A clearly defined, scope managed business case”. If you’ve defined what you want and managed as above you will get it – so be VERY clear on the what……….

“As long as I sit in this chair, all future catastrophes will be planned by me.” (‘allegedly’ – President George W. Bush)

“Don’t worry, I have plans: Plan A – Mess up a perfectly clean house. Done that.” (The Cat in The Hat (movie) – Dr Seuss) –



  • -
Company Pulse business health check

How can your business refinance its debt?

Over the last few years many businesses have found it difficult to refinance their debts. Although the overall economy is improving, most evidence shows the position is not getting any easier. This should not be surprising. Banks are still repairing their balance sheets which reduces their ability to lend. The situation will probably only improve slowly as some banks may still be carrying doubtful quality loans, many are still paying compensation for previous mis-selling and all need to meet tougher capital adequacy requirements. Banks are responding by demanding tougher terms from the businesses they are financing, in particular:

  • Higher margins – for example, businesses that were able to borrow at margins of 150-250 basis points over LIBOR three years ago may now only be offered finance at LIBOR + 300-450 bps
  • Lower loan to value ratios – whereas it was common to be advanced 75-80% LTVs before the credit crunch, 60-65% is now more typical
  • Tighter financial covenants, particularly in respect of EBITDA multiples and debt service (cash flow available to service interest and repayments)
  • More intrusive monitoring of business performance

In addition, banks are conducting more rigorous due diligence before advancing new loans. Consequently, the refinancing process now takes longer with banks’ credit committees requiring greater disclosure from and asking more questions of potential borrowers. Against this tough background, there are some actions you can take to improve the chances of refinancing your business. If your business holds debt that is due to expire in the next two years, you should really start planning your refinancing now. First, you should prepare a robust business plan. Your business plan will need to be realistic – banks are likely to challenge many of your assumptions – and you should carry out sensitivity analysis on the key variables in your plan. You can expect prospective lenders to ask for sensitivities, probably with (what you consider) fairly dramatic downsides on your base case. Second, you should analyse your cash flows in the period before you are due to refinance, as well as after, and maximise available cash – in case you aren’t able to refinance all your existing debt. With reduced LTVs and a more pessimistic valuation of your assets and future cash flows, it is likely that any new advance will be less than your outstanding debts. You therefore need to prepare for this by having more stringent criteria for your investment decisions and by careful management of working capital. Otherwise you may have to inject equity into your business to cover any shortfall. Third, you should research which lenders are currently providing finance in your sector. You may find that your existing lender is not the best choice (even if willing to lend) as many more non-traditional financial institutions are available than in the past. A well-prepared business that can pull together a credible proposal, underpinned by a robust business plan, and pitch that proposal to the right lenders should be able to refinance successfully, even in the current difficult financial environment. After all, banks are in business to lend – you have to make the lending decision easy for them.

Post Categories

Posts Archive

Site Map